Courtney: Tax Increment Financing To Fund Cncrete Repairs?
HARTFORD — U.S. Rep. Joseph D. Courtney, D-2nd District, is pursuing a new source of funding to assist homeowners with crumbling foundations, and continues to push for a program of which the state Department of Housing commissioner is skeptical.
Tax increment financing, he said, has been used for economic development throughout the country to revitalize areas facing blighted or deteriorating properties, and might be able to help with the concrete issue here.
“We should be vigorously pursuing every option that’s out there,” Courtney said. “It’s clear right now that there are other sources of money.”
TIF, as it’s commonly known, requires the creation of tax increment districts in which a town can “acquire, construct, reconstruct, improve, preserve, alter, extend, operate, or maintain property to promote development intended to meet the objectives of the district master plan,” according to state statute.
Essentially, a town would be able to borrow money, then loan it to a developer to rebuild homes with faulty foundations. Because the homes would be worth more after the fix, the tax additional tax revenue generated from the improved property would be used to pay back the loan.
The process is similar to what is used to bring life back to abandoned mills.
Once the loan is repaid, towns would benefit by having property assessments, and the taxes paid on those assessments, returned to their levels prior to the discovery of crumbling concrete.
Some affected towns are seeing property assessments cut by as much as 60 percent as a result of the structural defect, Courtney said, adding that he realizes those affected towns could be wary of taking out a loan in the midst of their current fiscal struggles.
Tax increment district back to top
A town’s governing body can create a tax increment district, assuming it complies with its charter.
In order to qualify as a district, a “portion” of the real property within the area must meet at least one of several criteria, including deterioration, according to state law.
The districts can “accept grants, advances, loans, or other financial assistance from the federal government, the state, private entities, or any other source, and do any and all things necessary or desirable to secure such financial aid,” according to state law.
“There’s enough belief by people who understand TIF that it should be one of the options,” Courtney said.
In addition to TIF, Courtney continues to pursue other options despite criticism from state officials.
State Housing Commissioner Evonne Klein sent Courtney a letter this month, in which she said that Section 108 of the Community Development Loan Guarantee Program is only a loan guarantee program, which would have to be paid back by the town or homeowner to which it is granted.
Courtney said he was slightly taken aback by Klein’s letter, adding that he never intended to “give false hope” to homeowners, as the letter stated, and his assertion has always been that a patchwork of funding sources likely would be required to fix all affected homes.
He insists that the Section 108 option is still viable, noting that he didn’t present it as a grant program and the information that he’s received regarding the funding comes from the U.S. Department of Housing, not Courtney’s office.
“It’s one of the options that should at least be on the state’s radar screen,” he said of Section 108. “This came from HUD. This didn’t come from me. … We are in a place where we should be pursuing every option.”
Courtney agreed that the funds would have to be repaid, but taxpayers also would be on the hook for other proposals before the General Assembly, including Gov. Dannel P. Malloy’s bill that would provide $5 million for testing, but not redevelopment.
Section 108 would be more flexible, and should “absolutely” still be considered as a source of funding, Courtney said.
He said Malloy should continue to seek support from the Federal Emergency Management Agency, considering there is a new presidential administration since the state was turned down twice.
Courtney noted, however, that President Donald Trump’s budget calls for an 11 percent cut to that agency’s budget.
Courtney is stressing that to completely repair all affected homes will require a variety of funding sources for an issue that Malloy estimates could be a $1 billion problem.