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General Assembly Raised Bill No. 7179
January Session, 2019
LCO No. 4397
Referred to Committee on INSURANCE AND REAL ESTATE
Introduced by:
(INS)
AN ACT CONCERNING CR UMBLING CONCRETE FOUNDATIONS .
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective July 1, 2019) (a) For the purposes of this 1
section: 2
(1) "Applicant" means a person that files an application with the 3
commissioner pursuant to subdivision (1) of subsection (c) of this 4
section; 5
(2) "Captive insurance company" means the captive insurance 6
company established pursuant to section 38a-91vv of the general 7
statutes, as amended by this act; 8
(3) "Commissioner" means the Commissioner of Housing; and 9
(4) "Person" means an individual, corporation, partnership, limited 10
liability company, association, joint stock company, business trust, 11
unincorporated organization or other legal entity. 12
(b) The commissioner shall establish, within available 13
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appropriations, a grant program to support the development of 14
methods and technologies that reduce, by an amount that is not less 15
than one hundred thirty-five thousand dollars, the average cost of 16
repairing or replacing concrete foundations in this state that have 17
deteriorated due to the presence of pyrrhotite. For the purposes of this 18
section, the General Assembly finds and declares that the average cost 19
of repairing or replacing such a foundation is one hundred seventy-20
five thousand dollars. 21
(c) (1) Each person that develops a method or technology described 22
in subsection (b) of this section and wishes to receive a grant under this 23
section shall file an application with the commissioner that includes: 24
(A) Such person's name and address; 25
(B) A description of such method or technology; 26
(C) Information sufficient to demonstrate, to the satisfaction of the 27
captive insurance company, (i) that such method or technology will 28
reduce the average cost of repairing or replacing concrete foundations 29
in this state that have deteriorated due to the presence of pyrrhotite, 30
and (ii) the amount of such reduction; and 31
(D) Such additional information that the commissioner, in the 32
commissioner's discretion and in consultation with the captive 33
insurance company, may prescribe. 34
(2) Not later than thirty days after a person files an application with 35
the commissioner pursuant to subdivision (1) of this subsection, the 36
commissioner shall file the application with the captive insurance 37
company. 38
(d) If the captive insurance company notifies the commissioner, 39
pursuant to subparagraph (A) of subdivision (13) of subsection (b) of 40
section 38a-91vv of the general statutes, as amended by this act, that an 41
applicant is eligible to receive a grant pursuant to subsection (b) of this 42
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section, the commissioner shall, not later than thirty days after 43
receiving such notice, award a grant to such applicant in one of the 44
following amounts: 45
(1) One million dollars, if the captive insurance company 46
determines that the method or technology described in the applicant's 47
application will reduce the average cost of repairing or replacing 48
concrete foundations in this state that have deteriorated due to the 49
presence of pyrrhotite by an amount that is not less than one hundred 50
thirty-five thousand dollars; 51
(2) Two million dollars, if the captive insurance company 52
determines that the method or technology described in the applicant's 53
application will reduce the average cost of repairing or replacing 54
concrete foundations in this state that have deteriorated due to the 55
presence of pyrrhotite by an amount that is greater than one hundred 56
thirty-five thousand dollars but less than one hundred sixty-five 57
thousand dollars; or 58
(3) Five million dollars, if the captive insurance company 59
determines that the method or technology described in the applicant's 60
application will reduce the average cost of repairing or replacing 61
concrete foundations in this state that have deteriorated due to the 62
presence of pyrrhotite by an amount that is not less than one hundred 63
sixty-five thousand dollars. 64
(e) The commissioner may adopt regulations, in accordance with 65
chapter 54 of the general statutes, to carry out the provisions of this 66
section. 67
Sec. 2. Subsections (b) to (h), inclusive, of section 38a-91vv of the 68
general statutes are repealed and the following is substituted in lieu 69
thereof (Effective July 1, 2019): 70
(b) In addition to any other requirements imposed by law applicable 71
to captive insurance companies, the captive insurance company 72
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established pursuant to this section shall: 73
(1) Upon request of the joint standing committees of the General 74
Assembly having cognizance of matters relating to planning and 75
development, public safety and housing, or the Governor, make 76
recommendations regarding the expansion of eligibility for financial 77
assistance pursuant to this section and modifications to improve the 78
efficiency and operation of the captive insurance company in order to 79
serve its public purpose; 80
(2) Establish a board of directors who shall serve in a volunteer 81
capacity. The membership of the board of directors shall include, but 82
need not be limited to, a real estate agent or broker, two owners of 83
residential buildings who have concrete foundations that have 84
deteriorated due to the presence of pyrrhotite, a chief executive or such 85
chief executive's designee of a municipality in which residential 86
buildings with concrete foundations that have deteriorated due to the 87
presence of pyrrhotite are located, an individual with professional 88
investment experience and currently registered as an investment 89
adviser pursuant to title 36b, the executive directors of the Capitol 90
Region Council of Governments and the Eastern Region Council of 91
Governments or such executive directors' designees and 92
representatives from the insurance and banking industries, who shall 93
not have professional relationships with any bank or insurance 94
company that has a financial interest in residential buildings subject to 95
the provisions of this section and sections 7-374b, 8-441, 8-442, 8-443, 8-96
444, subparagraph (B) of subdivision (20) of subsection (a) of section 97
12-701 and section 29-265f. The speaker, the minority leader of the 98
House of Representatives, the president pro tempore of the Senate and 99
the Senate Republican president pro tempore shall each appoint a 100
member of the General Assembly as a nonvoting, ex-officio member of 101
the board of directors. It shall not constitute a conflict of interest for a 102
member of the board of directors, who is the owner of a residential 103
building which has a concrete foundation that has deteriorated due to 104
the presence of pyrrhotite, or the spouse or dependent child of such 105
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member, to apply for or receive assistance from the captive insurance 106
company established under this section, to repair or replace such 107
concrete foundation, provided such member shall abstain from 108
deliberation, action or vote by the board of directors in specific respect 109
to such member's application or the application of such spouse or 110
dependent child; 111
(3) Develop eligibility requirements and underwriting guidelines for 112
financial assistance for repair or replacement of concrete foundations. 113
Such requirements and guidelines shall, not later than thirty days prior 114
to their adoption, amendment or modification, be published on a 115
public Internet web site maintained by the captive insurance company; 116
(4) Develop in coordination with the Department of Housing, 117
Connecticut Housing Finance Authority and participating lenders in 118
the Collapsing Foundations Credit Enhancements Program, 119
established pursuant to section 8-442, a single, unified application for 120
owners of residential buildings to apply for all financial assistance 121
available pursuant to this section and sections 8-442 and 8-443; 122
(5) Provide financial assistance to such owners of residential 123
buildings for the repair or replacement of concrete foundations that 124
have deteriorated due to the presence of pyrrhotite, including, but not 125
limited to, financial reimbursement to [homeowners] owners who 126
have had such repair or replacement performed prior to October 31, 127
2017; 128
(6) Assist such owners of residential buildings to obtain additional 129
financing necessary to fully fund the repair or replacement of concrete 130
foundations that have deteriorated due to the presence of pyrrhotite; 131
(7) Approve contractors or other vendors for eligibility to perform 132
foundation repairs or replacements on behalf of claimants; 133
(8) Disburse such financial assistance to approved contractors or 134
other vendors on behalf of claimants; 135
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(9) Ensure that the financial assistance is used solely for costs of 136
repairing and replacing concrete foundations that have deteriorated 137
due to the presence of pyrrhotite; 138
(10) Require the disclosure of the amount of all financial 139
compensation received by an owner of such a residential building, if 140
any, arising out of a claim for coverage under the property coverage 141
provisions of the personal risk insurance policy, including, but not 142
limited to, a homeowners policy, for foundation deterioration due to 143
the presence of pyrrhotite and ensure that such amount is considered 144
when determining the amount of financial assistance offered to such 145
owner; 146
(11) When appropriate, apply for, qualify for and receive any 147
federal funds made available under any federal act, for assistance to 148
owners of residential buildings [and residential condominium units] 149
having concrete foundations that have deteriorated due to the presence 150
of pyrrhotite. To the extent permissible under federal law, all such 151
federal funds shall be deposited into the Crumbling Foundations 152
Assistance Fund established pursuant to section 8-441; [and] 153
(12) Enter into agreements, as necessary, with the Connecticut 154
Housing Finance Authority and any participating lender, as defined in 155
section 8-442, to develop and implement additional loan programs or 156
financial products to assist such owners to repair or replace concrete 157
foundations that have deteriorated due to the presence of pyrrhotite, 158
while employing terms and conditions that are preferable to the open 159
market; [.] and 160
(13) (A) Establish an innovation board within the captive insurance 161
company that consists of volunteer members. The membership of the 162
innovation board shall include, but need not be limited to, an attorney 163
who is a member of the bar of this state with experience in intellectual 164
property law, a chemist, an individual with experience in the 165
construction industry, a licensed professional engineer who is a 166
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structural engineer, a materials scientist, an individual with experience 167
in the technology industry and a venture capitalist. The board of 168
directors of the captive insurance company shall appoint the members 169
of the innovation board and each member of the innovation board 170
shall have one vote on such innovation board. The innovation board 171
shall, on behalf of the captive insurance company, (i) review each 172
application filed by the Commissioner of Housing with the captive 173
insurance company pursuant to subdivision (2) of subsection (c) of 174
section 1 of this act, (ii) determine, by a majority of the members of 175
such board voting, (I) whether the person who filed such application is 176
eligible for a grant pursuant to said section, and (II) if the method or 177
technology described in such application will reduce the average cost 178
of repairing or replacing concrete foundations in this state that have 179
deteriorated due to the presence of pyrrhotite by an amount that is not 180
less than one hundred thirty-five thousand dollars, greater than one 181
hundred thirty-five thousand dollars but less than one hundred sixty-182
five thousand dollars or not less than one hundred sixty-five thousand 183
dollars, and (III) notify the commissioner, not later than thirty days 184
after the innovation board received such application, of such 185
determination. 186
(B) No member of the innovation board established pursuant to 187
subparagraph (A) of this subdivision shall participate in any 188
deliberations concerning, vote on or otherwise take any action with 189
respect to an application filed with the innovation board pursuant to 190
subdivision (2) of subsection (c) of section 1 of this act if such member, 191
or a spouse or dependent child of such member, has a pecuniary 192
interest in the person who filed such application. 193
(c) Except as provided in subsection (d) of this section, such captive 194
insurance company shall not be considered a state agency for purposes 195
of any provision of the general statutes, and shall not be considered to 196
perform a governmental function for purposes of chapter 14. Such 197
captive insurance company may, subject to the provisions of this 198
section, do all things necessary and desirable in its discretion to 199
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accomplish its purposes, including hiring employees and contracting 200
for administrative or operational services, and entering into 201
agreements with the Connecticut Housing Finance Authority created 202
pursuant to section 8-244 and any participating lender, as defined in 203
section 8-442, to develop and implement additional loan programs or 204
financial products that will assist owners of residential buildings to 205
repair or replace concrete foundations that have deteriorated due to 206
the presence of pyrrhotite on terms and conditions that are preferable 207
to the open market. Not more than ten per cent of all moneys allocated 208
or made available to the captive insurance company in any calendar 209
year shall be used for administrative or operational costs. 210
(d) Employees and agents of the captive insurance company shall 211
not be deemed state employees, except that employees and directors 212
shall be subject to the provisions of sections 1-84, 1-84a, 1-84b, 1-85 and 213
1-86. Any agent, consultant or contractor of the captive insurance 214
company shall be subject to the provisions of sections 1-86e and 1-215
101nn. The Office of State Ethics shall have the authority to enforce the 216
provisions of this subsection. 217
(e) Notwithstanding sections 38a-11 and 38a-91bb, the captive 218
insurance company shall not be required to pay a license fee for the 219
first year of licensure or a renewal fee for any year thereafter, as set 220
forth in said sections. 221
(f) In addition to any report required to be filed by not-for-profit 222
entities generally under regulations of the Internal Revenue Service, 223
the captive insurance company shall submit quarterly reports to the 224
joint standing committees of the General Assembly having cognizance 225
of matters relating to insurance, finance, planning and development, 226
housing and public safety on its operation and financial condition. 227
Such quarterly reports shall include, but need not be limited to, 228
information concerning: (1) Moneys allocated or made available to it 229
pursuant to this section, (2) total financial assistance and financial 230
assistance, by town, provided to owners of such residential buildings 231
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pursuant to this section, (3) administrative and operational 232
expenditures, (4) the total number and number, by town, of 233
applications for assistance received during the quarter and to date, (5) 234
the total number and number, by town, of applications for assistance 235
granted during the quarter and to date, (6) the average time to process 236
applications, and (7) the total number and number, by town, of 237
applications pending and amount of such claims. 238
(g) The joint standing committees of the General Assembly having 239
cognizance of matters relating to insurance, finance, planning and 240
development, housing and public safety shall, not less than annually, 241
hold a joint public hearing on the operation and financial condition of 242
the captive insurance company. 243
(h) [A] Except for an application filed with the innovation board 244
established pursuant to subdivision (13) of subsection (b) of this 245
section, a decision on an application for assistance pursuant to this 246
section shall be made in writing and provided to the [homeowner] 247
owner and shall include the information relied upon and the basis for 248
such decision, including the relevant eligibility and underwriting 249
criteria. An owner of such a residential building may request a review 250
of any decision by the captive insurance company relating to such 251
[homeowner] owner not later than thirty days after the decision. A 252
final determination on such a request for review shall be made in 253
writing and provided to the [homeowner] owner not later than thirty 254
days after receipt of the [homeowner's] owner's request, unless an 255
extension is agreed to by the [homeowner] owner. The final 256
determination shall be subject to approval by the board of directors. 257
There shall be no right to appeal such final determination. 258
Sec. 3. Section 8-440 of the general statutes is repealed and the 259
following is substituted in lieu thereof (Effective July 1, 2019): 260
For purposes of sections 7-374b, sections 8-441 to 8-444, inclusive, 261
and sections 12-701, 29-265f and 38a-91vv, as amended by this act, 262
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"residential building" means [a one-family, two-family, three-family or 263
four-family dwelling including, but not limited to, a condominium 264
unit or dwelling in a planned unit development] (1) a single-family or 265
multifamily residential dwelling, including, but not limited to, (A) a 266
residential unit in a condominium, as such terms are defined or used 267
in section 47-68a, and (B) a unit that is used for residential purposes 268
and located in a common interest community, as such terms are 269
defined in section 47-202, and (2) a building containing one or more of 270
the residential dwellings described in subdivision (1) of this section. 271
Sec. 4. Section 38a-331 of the general statutes is repealed and the 272
following is substituted in lieu thereof (Effective July 1, 2019): 273
(a) (1) [Beginning on January 1, 2019, until December 31, 2029, there] 274
There shall be imposed a surcharge at the rate of twelve dollars: [on 275
the named insured under] 276
(A) For the period beginning on January 1, 2019, and ending on June 277
30, 2019, on the first person named as an insured under each [policy of] 278
homeowners insurance policy delivered, issued for delivery, renewed, 279
amended or endorsed [on or after January 1, 2019, for a] during such 280
period providing personal risk insurance [policy on] coverage for (i) an 281
owned [dwellings] dwelling with four or fewer units, or [on 282
condominiums. Such] (ii) a condominium; and 283
(B) For the period beginning on July 1, 2019, and ending on 284
December 31, 2029, on the first person named as an insured under each 285
personal risk insurance policy delivered, issued for delivery or 286
renewed during such period providing coverage for (i) a single-family 287
or multifamily residential dwelling that is not a mobile manufactured 288
home, (ii) a residential unit in a condominium or a building containing 289
one or more of such residential units, as such terms are defined or used 290
in section 47-68a, (iii) a unit that is used for residential purposes and 291
located in a common interest community or a building containing one 292
or more of such units, as such terms are defined in section 47-202 or 293
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used in chapter 828. 294
(2) The first person named as an insured under each policy that is 295
subject to the surcharge imposed under subdivision (1) of this 296
subsection shall be responsible for paying such surcharge, and such 297
insured shall pay such surcharge, in full, (A) at the time that such 298
policy is delivered, issued for delivery, renewed, amended or 299
endorsed, as applicable, and (B) in any reasonable manner jointly 300
determined by (i) such insured, (ii) the insurer that delivered, issued 301
for delivery, renewed, amended or endorsed such policy, as 302
applicable, and (iii) any person who holds a mortgage upon the real 303
property that is insured under such policy. 304
(3) The surcharge imposed under subdivision (1) of this subsection 305
shall not be considered premium for any purpose and no portion of 306
such surcharge shall be refundable. 307
(b) (1) Acting on behalf of, and as a collection agent of the Healthy 308
Homes Fund established pursuant to section 8-446, each admitted and 309
nonadmitted insurer, or one or more insurance producers licensed in 310
this state acting on behalf of such nonadmitted insurer, shall remit to 311
the [Insurance Commissioner] commissioner, not later than the 312
thirtieth day of April annually, all surcharges imposed under 313
subdivision (1) of subsection (a) of this section [on the named insured] 314
that were collected [during] for the calendar year [next] immediately 315
preceding. [for each such policy delivered, issued or renewed before 316
January first of the then current calendar year.] Each such remittance 317
shall include documentation, in [the] a form and manner prescribed by 318
the commissioner, to substantiate the total surcharge amount being 319
remitted by such admitted insurer, nonadmitted insurer or [licensee] 320
insurance producer acting on behalf of such nonadmitted insurer. 321
(2) All such remittances under subdivision (1) of this subsection, 322
except for the amount of remittances equal to the cost of funding an 323
administrative officer position at the Insurance Department to facilitate 324
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the surcharge collection, shall be deposited in the Healthy Homes 325
Fund established in section 8-446. Not later than thirty days after such 326
deposit in the Healthy Homes Fund, eighty-five per cent of such 327
deposits shall be transferred to the Crumbling Foundations Assistance 328
Fund established in section 8-441. 329
(3) The surcharge imposed [pursuant to] under subdivision (1) of 330
subsection (a) of this section shall constitute a special purpose 331
assessment for the purposes of section 12-211. 332
(c) The commissioner may adopt regulations, in accordance with 333
chapter 54, to implement the provisions of this section. 334
Sec. 5. (NEW) (Effective July 1, 2019) The sum of eight million dollars 335
is appropriated to the Department of Housing, from the General Fund, 336
for the fiscal year ending June 30, 2020, to fund grants awarded by the 337
Commissioner of Housing as part of the grant program established 338
pursuant to section 1 of this act. 339
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2019 New section
Sec. 2 July 1, 2019 38a-91vv(b) to (h)
Sec. 3 July 1, 2019 8-440
Sec. 4 July 1, 2019 38a-331
Sec. 5 July 1, 2019 New section
Statement of Purpose:
To (1) require the Commissioner of Housing to establish a grant
program to support the development of methods and technologies that
reduce the average cost of repairing and replacing concrete
foundations in this state that have deteriorated due to the presence of
pyrrhotite, (2) establish an innovation board to review applications for
grants filed as part of such program, (3) appropriate the sum of eight
million dollars to fund grants awarded as part of such program, (4)
modify the Healthy Homes Fund surcharge, and (5) redefine the term
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"residential building" as such term applies to various statutes
concerning crumbling concrete foundations.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline,
except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is
not underlined.]