OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sSB-998
AN ACT ESTABLISHING A TAX ABATEMENT FOR CERTAIN
CONSERVATION EASEMENTS.
AMENDMENT
LCO No.: 9655
File Copy No.: 427
House Calendar No.: 584
Senate Calendar No.: 240
Primary Analyst: MP 6/2/23
Contributing Analyst(s): (FN)
OFA Fiscal Note
See Fiscal Note Details
The amendment adds new provisions related to housing. The
sections with a fiscal impact are described by section below.
Section 501 prescribes civil penalties of up to $2,000 per violation of
municipal ordinances relating to safe and sanitary housing. If multiple
violations are discovered on the same day, only one violation will be
issued. This results in a potential revenue gain to municipalities
beginning in FY 24, to the extent that these penalties occur.
Section 507 makes changes to the existing security deposit guarantee
program (SDGP) administered by the Department of Housing (DOH).
As DOH already restricts program participation to less than the
currently eligible population in statute to stay within a budget of about
$175,000 per year, the amendment is not likely to result in additional
costs associated with the new rules unless more funding is provided for
the program.
The changes may result in more recipients receiving smaller
guarantees and/or some participants receiving grants for one month’s
rent, leading to the same spending but to benefit a different number of
recipients. Some of the changes likely to reduce the average state cost 2023SB-00998-R00LCO09655-FNA.DOCX Page 2 of 9
per guarantee include: (1) increasing certain tenants’ contribution to the
security deposit, and (2) decreasing the time during which a landlord
can make a claim following the end of tenancy from 45 to 20 days.
The section results in a potential cost of up to $50,000 for consultants
to assist the agency in modifying SDGP regulations. If additional
funding were to allow program expansion in line with expanded
eligibility, DOH is likely to incur costs for a new program manager at
an annual cost of $134,251 in FY 24 and $137,607 in FY 25, for salary and
fringe benefits, in addition to costs for additional guarantees or grants.
The program manager would monitor compliance and supervise the
non-profit providers that would likely be tasked with administering an
expanded program.
Section 508 requires DOH to create and publish on its website a one-
page notice for landlords to use to inform protected tenants of their
rights. The agency may incur a one-time cost of $500 in FY 24 to translate
the notice into Spanish and another one-time cost by FY 29 of up to
$1,500 to translate the notice into additional common languages in the
state.
Section 511 results in a one-time cost of less than $5,000 to DOH in
FY 24 to translate into Spanish the standardized rental agreement forms
the agency must develop. DOH must also translate the standard rental
agreement into the five most commonly spoken languages by FY 28,
resulting in an additional one-time cost for translation services in the
out years, which will depend on: (1) the cost per page, and (2) the
number of pages in the form.
Section 512 results in a potential minimal cost of less than $5,000 to
municipalities in FY 24 and FY 25 to provide housing code violation
complaint forms in English and Spanish.
Section 515 assigns responsibilities to the Office of Responsible
Growth within the Intergovernmental Policy Division of the Office of
Policy and Management (OPM). This results in a cost of $71,147 for one
additional position in FY 24 and a cost of $213,441 for two additional 2023SB-00998-R00LCO09655-FNA.DOCX Page 3 of 9
positions in FY 25 (for a total of three new positions in FY 25) to OPM
and associated fringe costs of $30,465 in FY 24 and $91,395 in FY 25 to
the Office of the State Comptroller.
Section 516 requires OPM, in consultation with commissioners of the
DOH and Department of Economic and C ommunity Development
(DECD), to do the following by December 1, 2024: (1) assess the
affordable housing need in each of the state's planning regions and (2)
develop a methodology for allocating each municipality's fair share of
affordable housing units.
The amendment results in a cost of approximately $200,000 to OPM
in FY 24 for a Planning/Research Consultant to develop the
methodology and make estimates for the ten-year planning horizon.
This section creates new processes and requirements regarding
affordable housing.
Section 516 also creates a process by which a municipality can
challenge the fair share allocation and exempts municipalities with a
federal poverty rate of 20% or greater.
Section 517 requires all towns, cities, and boroughs with a population
under 25,0000 to adopt an ordinance that creates a fair rent commission
by July 1, 2024, while (as in current law) all others must do so by July 1,
2023. Any town, city, or borough with a population that exceeds 5,000
that fails to create a fair rent commission by the required date will be
ineligible for discretionary infrastructure funding. These entities may
regain eligibility for funding two years after the creation of the
commission. This may result in a revenue loss to various municipalities
beginning in FY 25.
Section 520 requires DOH to affirmatively seek to expend all funds
appropriated for the Rental Assistance Program (RAP) on an annual
basis. To the extent that this section encourages DOH to release more
RAP vouchers than would otherwise be provided, annual expenditures 2023SB-00998-R00LCO09655-FNA.DOCX Page 4 of 9
for RAP could increase beginning in FY 24.
1
Because RAP only expends
funds when voucher recipients are renting a unit, funds designated for
new voucher recipients are often unspent for several months while
recipients find eligible units. For reference, the average monthly state
cost for a RAP voucher was $919, and the program supported about
6,430 units in early FY 23.
Due to inherent variability in the cost of individual RAP certificates
over time, if DOH issues more vouchers than there is guaranteed annual
funding to support (by counting on reduced utilization for several
months while recipients search for units), program costs would likely
exceed the FY 23 appropriation level in some years.
2
Section 521 results in a significant cost to the Department of Veterans
Affairs (DVA). The amendment requires DVA, within available
appropriations, to create and administer a program to make housing
available for homeless or housing insecure veterans. DVA will incur
administrative costs at least $90,000, plus associated fringe benefits of at
least $38,500, to support a State Program Manager or equivalent position
as well as costs for additional staff depending on the scope of the
program. DVA will incur significant costs, including capital costs,
related to building, converting, and rehabilitating properties for
residential use.
Section 522 establishes a process for the erasure of certain housing
related manners and decisions from the Judicial Department's website.
Given the short turnaround (erasure must be complete by July 1, 2024),
this results in a cost for up to six temporary positions at an estimated
cost of $260,000 to identify, test, and process erasure of records. The
amendment would require ongoing work that could potentially require
1
State expenditures on RAP vouchers and associated administration were under the
budgeted amount by $5,285,033 in FY 21 and $6,512,900 in FY 22.
2
Once a voucher is issued, that household receives the rental subsidy indefinitely until
they no longer qualify or otherwise leave the program; however, costs to the state for
their support will vary over time based on changes in rent, family size and household
income. 2023SB-00998-R00LCO09655-FNA.DOCX Page 5 of 9
additional permanent staff in future fiscal years.
Section 523 transfers revenue in excess of $300 million (adjusted for
inflation beginning in FY 27) from the real estate conveyance tax to the
Housing Trust Fund (HTF), resulting in a potential General Fund
revenue loss and a commensurate potential revenue gain to HTF. Based
on the May 1, 2023 consensus revenue projections it is not anticipated
that any transfers would occur until FY 27 at the earliest.
Section 524 exempts from the real estate conveyance tax any deeds
of property with dwelling units where all of the units are deed-restricted
as affordable housing, resulting in a potential General Fund revenue
loss annually beginning in FY 24. The magnitude of the revenue loss is
dependent on: (1) the number of such conveyances, and (2) the value of
the property conveyed.
3
Section 524 also results a in a one-time cost of up to $75,000 to the
Department of Revenue Services in FY 24 only associated with
programming updates to the CTax tax administration system and
myconneCT online portal, and form modification.
Section 525 eliminates a provision that exempted certain rentals from
housing discrimination due to a person's sexual orientation or civil
union status. Violation of this section's housing discrimination
provisions results in a class D misdemeanor which is punishable by up
to 30 days in prison, a fine up to $250, or both. This results in a potential
revenue gain to municipalities beginning in FY 24 to the extent there are
more fines collected.
Section 526, which transfers the responsibility for and permitting of
certain sewage disposal systems from the Department of Energy and
Environmental Protection (DEEP) to the Department of Public Health
(DPH), is anticipated to result in a cost to DPH of approximately
$296,362 in FY 24 and $186,944 in FY 25, and a savings to DEEP of
3
According to the Department of Housing, there were 5,477 deed-restricted affordable
housing units in the state in 2022. 2023SB-00998-R00LCO09655-FNA.DOCX Page 6 of 9
approximately $111,502 in FY 24 and $161,333 in FY 25.
Costs to DPH reflect wages of $104,360 in FY 24 and $151,977 in FY
25 for two full-time Environmental Analysts to inspect and permit small
community sewerage systems and small commercial subsurface sewage
disposal systems with a capacity of between 7,5000 to 10,000 gallons per
day (gpd). Other expenses to DPH of $192,002 in FY 24 and $34,967 in
FY 25 are anticipated. The savings to DEEP reflect the transfer of the two
DEEP Environmental Analysts from DEEP to DPH. Other savings
reflect the reduction of two vehicle fleet leases ($5,850 in FY 24 and
$7,800 in FY 25), two cellular phones ($792 in FY 24 and $1,056 in FY 25),
and office supplies ($500 annually).
Section 527 establishes a $5 million per year tax credit program, to be
administered by DOH, to subsidize the creation or rehabilitation of
workforce housing opportunity development projects, located in
federally designated opportunity zones. As DOH does not currently
administer a tax credit program or have capacity within existing staff,
this section results in program administration costs to the General Fund
of $226,383 in FY 24 and of $361,585 in FY 25, and annually thereafter,
associated with three new staff. The FY 24 cost includes $50,000 for
consultants to assist DOH in adopting regulations as required by the
bill.
It is anticipated that DOH would need to hire, by January 1, 2024,
(i.e., half year personnel costs in FY 24): (1) a housing and community
development manager (salary and fringe benefits of $71,410 in FY 24
and $146,391 in FY 25), (2) an accountant (salary and fringe benefits of
$53,558 in FY 24 and $109,793 in FY 25), and (3) a housing specialist
(salary and fringe benefits of $51,415 in FY 24 and $105,401 in FY 25) to
operate the program.
The section establishes a new tax credit against the personal income
and corporation business taxes for individuals or entities making cash
contributions to eligible developers constructing or rehabilitating
eligible workforce housing opportunity development projects in
federally designated opportunity zones. This results in a revenue loss of 2023SB-00998-R00LCO09655-FNA.DOCX Page 7 of 9
up to $5 million annually beginning in FY 26.
4
Sections 528, 531-532 preclude an increase in grand list growth in
certain municipalities by establishing incentives for workforce housing
development projects that reduce their potential property tax liability,
beginning in FY 26. The amendment: (1) requires certain projects to be
assessed below market value, and (2) allows municipalities to partially
exempt such projects from property taxes for seven assessment years
following project completion. The impact will be dependent on the
value of such projects.
Section 532 requires the Office of Policy and Management to
reimburse municipalities for 70% of the revenue loss they experience if
they choose to partially exempt workforce housing developments
beginning in FY 26. If the total to be reimbursed to municipalities
exceeds the appropriation, then the reimbursements will be reduced
proportionately. This partially offsets any revenue loss municipalities
experience as a result of the incentives.
Section 530 results in a revenue loss to municipalities as it exempts
from building permit application fees: (1) certain workforce housing
opportunity development projects, and (2) workforce housing
development projects.
Section 533 requires the Connecticut Housing Finance Authority
(CHFA) to create a new mortgage assistance program for certain
developers, which will result in additional staffing costs for the quasi-
public agency. Such programs are anticipated to be funded within
CHFA’s resources, which include a combination of tax-exempt private
activity bonds and taxable market-rate bonds.
To the extent the new program extends the uses of CHFA’s resources,
there is some possibility of either reduced use of such resources for
4
Tax credit vouchers may be claimed against state corporation business and personal
income taxes for taxable income years beginning in 2025; it is anticipated that the
timing of the claiming of credits would limit the revenue impact to FY 26 and beyond.
The bill caps the total amount of credits allowed per fiscal year at $5 million. 2023SB-00998-R00LCO09655-FNA.DOCX Page 8 of 9
existing programs or of greater reliance on taxable bonds to increase
overall resources available for the CHFA’s programs. Borrowing
through the use of taxable bonds is typically slightly more expensive
than the issuance of tax-exempt bonds – it is anticipated that any
increase in borrowing costs to CHFA from additional use of taxable
bonds would be passed on to assistance recipients.
Other mortgage assistance programs administered by CHFA have
been supported by General Obligation (GO) bonds. The bill does not
authorize new GO bond authorizations for this program, and
outstanding bond authorizations for CHFA do not appear applicable to
the newly created program, so no change in the General Fund debt
service is anticipated from the bill.
Sections 537-538 shorten the time period by which landlords must
return a tenant's security deposit and interest on deposits, resulting in a
potential revenue gain to the Banking Fund, if the reduced time period
results in increased fines from violations.
Under current law, landlords are subject to fines of up to $250 per
offense for failure to return a security deposit and up to $100 per offense
for failure to pay accrued interest. The Department of Banking has
generally imposed fines for such violations at a rate fewer than once per
year.
Section 541 increases the reimbursement rate for school construction
projects in municipalities that meet specified criteria. To the extent
municipalities are found to be eligible for the reimbursement increase
and relevant projects are submitted, there would be increased costs to
the state and increased revenue to involved municipalities. The impact
of future projects on the school construction priority list will be reflected
when such projects are considered by the legislature in the future.
Section 542 requires DEEP, in consultation with DOH, to establish a
pilot housing program to improve energy efficiency by retrofitting
multifamily residential units built before 2003 and located within
environmental justice communities. The pilot program is to be created 2023SB-00998-R00LCO09655-FNA.DOCX Page 9 of 9
within available appropriations for retrofitting certain multifamily
residencies to improve energy efficiency of such units. The cost will
depend on the size of the grants and the number disbursed in each fiscal
year.
The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely
for the purposes of information, summarization and explanation and does not represent the intent of the General
Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of
informational sources, including the analyst’s professional knowledge. Whenever applicable, agency data is
consulted as part of the analysis, however final products do not necessarily reflect an assessment from any
specific department.