Researcher: SM Page 1 3/20/24
OLR Bill Analysis
sHB 5337
AN ACT CONCERNING AFFORDABLE HOUSING DEVELOPMENT
PRACTICES.
SUMMARY
This bill makes two separate changes related to the state’s affordable
housing laws. Specifically, it (1) requires developers to provide a surety
bond in conjunction with their application to build an affordable
housing development under the affordable housing land use appeals
procedure (CGS § 8-30g; hereinafter “8-30g”) and (2) authorizes
municipalities to use tax increment district funds to renovate certain 8-
30g deed-restricted affordable housing in exchange for the owner
renewing the development’s affordability restrictions.
The bill also makes technical and conforming changes.
EFFECTIVE DATE: October 1, 2024
SURETY BOND REQUIREM ENT FOR AFFORDABLE H OUSING
DEVELOPMENTS
The bill requires an applicant (i.e., developer) for a proposed
affordable housing development under 8-30g (see BACKGROUND) to
provide a $100,000 surety bond in favor of the commission’s
municipality. A “commission” means a municipality’s zoning
commission, planning commission, combined planning and zoning
commission, zoning board of appeals, or other agency exercising zoning
or planning authority.
The bond, which acts as surety for the developer’s construction of the
project as described in the application, must (1) be issued by a licensed
insurance company, banking institution, or surety company authorized
to do business in Connecticut and (2) have a one-year effective period. 2024HB-05337-R000065-BA.DOCX
Researcher: SM Page 2 3/20/24
The bill allows a municipality to take action to collect on the bond if
the developer withdraws the application without good cause, as
determined by the commission. Municipalities must use recovered bond
proceeds only for (1) making capital improvements to public property,
(2) acquiring or preserving land designated as open space, or (3)
developing affordable housing (i.e., that for which households earning
no more than the federally determined area median income pay 30% or
less of their annual income).
TAX INCREMENT DISTRIC T FUNDING FOR AFFORDABLE
HOUSING RENOVATION
By law, municipalities that have adopted a tax increment district
generally must establish a “district master plan fund” (see
BACKGROUND). Current law limits the use of the fund to paying for
specified categories of expenses, including costs (1) of certain
improvements made in the district, or outside the district that are
directly related to or necessary for establishing or operating the district,
and (2) related to economic development, environmental
improvements, or employment training associated with the district.
The bill allows municipalities to also use the fund for improvement
costs outside the district for renovating or rehabilitating certain 8-30g
“set-aside developments” (i.e., deed-restricted affordable housing; see
BACKGROUND). A municipality can do so if the (1) development’s
affordability deed restrictions will expire in three years or less and (2)
improvement costs are paid based on an agreement between the
municipality and the development’s owner that the owner will renew
the deed restrictions for at least 40 years.
BACKGROUND
Affordable Housing Developments
By law, an affordable housing development under 8-30g means
“assisted housing” or a “set-aside development.” The former is
generally certain government-assisted housing or housing occupied by
people receiving rental assistance. The latter is a development in which,
for at least 40 years after initial occupancy, at least 30% of the units are
deed restricted based on specified household income limits. 2024HB-05337-R000065-BA.DOCX
Researcher: SM Page 3 3/20/24
8-30g requires commissions to defend their decisions to reject
affordable housing applications or approve them with costly conditions.
In traditional land use appeals, the developer must convince the court
that the municipality acted illegally, arbitrarily, or abused its discretion.
The 8-30g procedure instead places the burden of proof on
municipalities.
Tax Increment Districts
Existing law allows municipalities, through their legislative bodies,
to establish a tax increment district (generally known as a tax increment
financing (TIF) district) to finance economic development projects in
eligible areas (CGS § 7-339cc et seq.). It requires them to adopt a district
master plan for the district and a statement of the percentage or amount
of increased assessed value that will be designated as “captured
assessed value” under the plan (i.e., the percentage or amount of the
incremental increase in property values that is used from year to year to
finance the plan’s project costs). Municipalities generally must establish
a “district master plan fund” for depositing incremental tax revenues
and paying project costs. They must also deposit any benefit
assessments imposed on real property in the district.
COMMITTEE ACTION
Housing Committee
Joint Favorable
Yea 14 Nay 1 (03/07/2024)