Sec. 8-395. Tax credits for housing programs.
Sec. 8-395a. Workforce housing opportunity development projects.
Secs. 8-396 to 8-399. Reserved
Sec. 8-395. Tax credits for housing programs. (a) As used in this section, (1) “business firm” means (A) any business entity authorized to do business in the state and subject to the corporation business tax imposed under chapter 208, (B) any company subject to a tax imposed under chapter 207, (C) any air carrier subject to the air carriers tax imposed under chapter 209, (D) any railroad company subject to the railroad companies tax imposed under chapter 210, (E) any regulated telecommunications service, express, cable or community antenna television company subject to the regulated telecommunications service, express, cable and community antenna television companies tax imposed under chapter 211, or (F) any utility company subject to the utility companies tax imposed under chapter 212, (2) “nonprofit corporation” means a nonprofit corporation incorporated pursuant to chapter 602 or any predecessor statutes thereto, having as one of its purposes the construction, rehabilitation, ownership or operation of housing and having articles of incorporation approved by the executive director of the Connecticut Housing Finance Authority in accordance with regulations adopted pursuant to section 8-79a or 8-84, (3) “workforce housing development project” or “project” means the construction or substantial rehabilitation of dwelling units for rental housing where (A) ten per cent of the units are affordable housing, (B) fifty per cent of the units are rented to the workforce population designated by the developer, in consultation with the municipality where such project is located, and (C) forty per cent of the units are rented at a market rate and includes, but is not limited to, an eligible workforce housing opportunity development project, as defined in section 8-395a, (4) “affordable housing” means rental housing for which persons and families pay thirty per cent or less of their annual income, where such income is less than or equal to the area median income for the municipality in which such housing is located, as determined by the United States Department of Housing and Urban Development, (5) “substantial rehabilitation” means either (A) the costs of any repair, replacement or improvement to a building that exceeds twenty-five per cent of the value of such building after the completion of all such repairs, replacements or improvements, or (B) the replacement of two or more of the following: (i) Roof structures, (ii) ceilings, (iii) wall or floor structures, (iv) foundations, (v) plumbing systems, (vi) heating and air conditioning systems, or (vii) electrical systems, and (6) “market rate” means the rental income that such unit would most probably command on the open market as indicated by present rentals being paid for comparable space in the area where the unit is located.
(b) The Commissioner of Revenue Services shall grant a credit against the tax imposed under chapter 207, 208, 209, 210, 211 or 212 in an amount equal to the amount specified by the Connecticut Housing Finance Authority in any tax credit voucher issued by said authority pursuant to subsection (c) of this section.
(c) The Connecticut Housing Finance Authority shall administer a system of tax credit vouchers within the resources, requirements and purposes of this section, for business firms making cash contributions to housing programs developed, sponsored or managed by a nonprofit corporation, as defined in subsection (a) of this section, which benefit low and moderate income persons or families which have been approved prior to the date of any such cash contribution by the authority, including, but not limited to, contributions for a workforce housing development project. Such vouchers may be used as a credit against any of the taxes to which such business firm is subject and which are enumerated in subsection (b) of this section. For taxable or income years commencing on or after January 1, 1998, to be eligible for approval a housing program shall be scheduled for completion not more than three years from the date of approval. For taxable or income years commencing on or after January 1, 2024, to be eligible for approval, a workforce housing development project shall be scheduled for completion not more than three years from the date of approval. Each program or developer of a workforce housing development project shall submit to the authority quarterly progress reports and a final report upon completion, in a manner and form prescribed by the authority. If a program or workforce housing development project fails to be completed on or before three years from the date of approval of the project, or at any time the authority determines that a program or project is unlikely to be completed, the authority may reclaim any remaining funds contributed by business firms and reallocate such funds to another eligible program or project.
(d) No business firm shall receive a credit pursuant to both this section and chapter 228a in relation to the same cash contribution.
(e) Nothing in this section shall be construed to prevent two or more business firms from participating jointly in one or more programs or projects under the provisions of this section. Such joint programs or projects shall be submitted, and acted upon, as a single program or project by the business firms involved.
(f) No tax credit shall be granted to any business firm for any individual amount contributed of less than two hundred fifty dollars.
(g) Any tax credit not used in the taxable income year during which the cash contribution was made may be carried forward or backward for the five immediately succeeding or preceding taxable or income years until the full credit has been allowed.
(h) In no event shall the total amount of all tax credits allowed to all business firms pursuant to the provisions of this section exceed ten million dollars in any one fiscal year, provided, each year until the date sixty days after the date the Connecticut Housing Finance Authority publishes the list of housing programs or workforce housing development projects that will receive tax credit reservations, two million dollars of the total amount of all tax credits under this section shall be set aside for permanent supportive housing initiatives established pursuant to section 17a-485c, and one million dollars of the total amount of all tax credits under this section shall be set aside for workforce housing, as defined by the Connecticut Housing Finance Authority through written procedures adopted pursuant to subsection (k) of this section. Each year, on or after the date sixty days after the date the Connecticut Housing Finance Authority publishes the list of housing programs or projects that will receive tax credit reservations, any unused portion of such tax credits shall become available for any housing program or project eligible for tax credits pursuant to this section.
(i) No organization conducting a housing program or project eligible for funding with respect to which tax credits may be allowed under this section shall be allowed to receive an aggregate amount of such funding for any such program or project in excess of five hundred thousand dollars for any fiscal year.
(j) Nothing in this section shall be construed to prevent a business firm from making any cash contribution to a housing program or project to which tax credits may be applied which cash contribution may result in the business firm having a limited equity interest in the program or project.
(k) The Connecticut Housing Finance Authority, with the approval of the Commissioner of Revenue Services, shall adopt written procedures in accordance with section 1-121 to implement the provisions of this section. Such procedures shall include provisions for issuing tax credit vouchers for cash contributions to housing programs or projects based on a system of ranking housing programs. In establishing such ranking system, the authority shall consider the following: (1) The readiness of the project to be built; (2) use of the funds to build or rehabilitate a specific housing project or to capitalize a revolving loan fund providing low-cost loans for housing construction, repair or rehabilitation to benefit persons of very low, low and moderate income; (3) the extent the project will benefit families at or below twenty-five per cent of the area median income and families with incomes between twenty-five per cent and fifty per cent of the area median income, as defined by the United States Department of Housing and Urban Development; (4) evidence of the general administrative capability of the nonprofit corporation to build or rehabilitate housing; (5) evidence that any funds received by the nonprofit corporation for which a voucher was issued were used to accomplish the goals set forth in the application; and (6) with respect to any income year commencing on or after January 1, 1998: (A) Use of the funds to provide housing opportunities in urban areas and the impact of such funds on neighborhood revitalization; and (B) the extent to which tax credit funds are leveraged by other funds.
(l) Vouchers issued or reserved by the Department of Housing under the provisions of this section prior to July 1, 1995, shall be valid on and after July 1, 1995, to the same extent as they would be valid under the provisions of this section in effect on June 30, 1995.
(m) The credit which is sought by the business firm shall first be claimed on the tax return for such business firm's taxable income or year during which the cash contribution to which the tax credit voucher relates was paid.
(P.A. 87-377, S. 1, 5; P.A. 88-264, S. 1, 2; P.A. 90-195; May 25 Sp. Sess. P.A. 94-1, S. 12, 130; P.A. 95-250, S. 23, 42; 95-309, S. 4, 11, 12; P.A. 97-295, S. 13, 25; P.A. 98-262, S. 4, 22; P.A. 99-173, S. 33, 65; P.A. 00-170, S. 23, 42; June Sp. Sess. P.A. 01-8, S. 6, 13; P.A. 06-186, S. 65; June Sp. Sess. P.A. 10-1, S. 19; P.A. 11-61, S. 134; 11-64, S. 2; P.A. 14-134, S. 27; P.A. 23-207, S. 30; P.A. 24-86, S. 1.)
History: P.A. 87-377, S. 1, effective June 19, 1987, and applicable to income years of business firms commencing January 1, 1988, and thereafter; P.A. 88-264 substituted commissioner of revenue services for commissioner of housing and substituted contributions for charitable purposes in Subsec. (j), inserted new Subsec. (l) re contributions resulting in an equity interest and redesignated existing Subsec. (l) as Subsec. (m), effective June 3, 1988, and applicable to income years of business firms commencing on and after January 1, 1988; P.A. 90-195 amended Subsec. (m) to require regulations establishing a ranking system of housing programs eligible for contributions that qualify for tax credit vouchers; May 25 Sp. Sess. P.A. 94-1 amended Subsecs. (a) and (b) by eliminating references to telecommunications service company tax imposed under chapter 210a, effective July 1, 1994; P.A. 95-250 replaced Commissioner of Housing with the Connecticut Housing Finance Authority and made technical changes; P.A. 95-309 added Subsec. (n) re validity of vouchers issued before July 1, 1995, and Subsec. (o) requiring the authority to adopt written procedures by October 1, 1995, effective July 1, 1995, and changed effective date of P.A. 95-250, Sec. 23 from October 1, 1995, to July 1, 1995; P.A. 97-295 amended Subsec. (c) to add new eligibility criteria for income years commencing on or after January 1, 1998, added Subsec. (m)(6) and (7) for income years commencing on or after January 1, 1998, added new Subsec. (p) re year in which credit may be claimed, and made technical changes in Subsecs. (a), (b), (h) and (m), effective July 8, 1997, and applicable to tax returns filed for income years of corporations under Ch. 208 and of air carriers under Ch. 209 commencing on or after January 1, 1997, calendar years of insurance companies under Ch. 207, railroad companies under Ch. 210 and express, telegraph, cable and community antenna television system companies under Ch. 211 commencing on or after January 1, 1997, and calendar quarters of utility companies under Ch. 212 commencing on or after January 1, 1997; P.A. 98-262 revised effective date of P.A. 97-295 but without affecting this section; P.A. 99-173 amended Subsec. (f) to increase the credit cap per business from $50,000 to $75,000, Subsec. (i) to increase the cap for the total amount allowed as a credit from $1,000,000 to $5,000,000 and Subsec. (k) to increase the amount an entity can receive in the aggregate from $300,000 to $400,000, effective June 23, 1999, and applicable to income years commencing on or after January 1, 1999; P.A. 00-170 amended Subsec. (a) to define “nonprofit corporation”, amended Subsecs. (c), (d), (g), (j), and (m) to require eligible contributions to be in cash, amended Subsec. (f) to remove a per-business cap on credits under this section, deleted former Subsec. (g) re a restriction on eligibility under this section for banks and similar institutions, deleted former Subsec. (j) re a requirement for amounts contributed to be same or greater than the year previous, deleted former Subsec. (o) re adoption of procedures by the authority, and relettered the remaining Subsecs. accordingly, effective May 26, 2000, and applicable to income years commencing on and after January 1, 2000; June Sp. Sess. P.A. 01-8 amended Subsec. (h) by adding provisions re set aside of tax credits for the Supportive Housing Pilots Initiative, effective July 1, 2001 (Revisor's note: In Subsec. (h), “Pilot” was changed editorially by the Revisors to “Pilots” for accuracy and consistency with Sec. 17a-485c); P.A. 06-186 amended Subsec. (h) to increase total amount of tax credits from $5,000,000 to $10,000,000, to add the Next Steps Initiative and reserve $2,000,000, rather than $1,000,000, for that or the Supportive Housing Pilots Initiative, and to reserve $1,000,000 for workforce housing, and amended Subsec. (i) to increase limit per organization from $400,000 to $500,000, effective July 1, 2006; June Sp. Sess. P.A. 10-1 amended Subsec. (h) to change date re when tax credits must be set aside from November first of each year to date 60 days after date authority publishes list of housing programs that will receive tax credit reservations, to add “or any other supportive housing initiative” and to make conforming changes, effective July 1, 2010; P.A. 11-61 amended Subsec. (h) by substituting “permanent supportive housing initiatives established pursuant to section 17a-485c” for “the Supportive Housing Pilots Initiative, the Next Steps Initiative established pursuant to section 17a-485c or any other supportive housing initiative”, effective June 21, 2011; P.A. 11-64 made identical changes in Subsec. (h) as P.A. 11-61, effective July 1, 2011; P.A. 14-134 amended Subsec. (a) by deleting references to telegraph companies and making technical changes, effective June 6, 2014; P.A. 23-207 added Subsecs. (a)(3) to (a)(6) to define “workforce housing development project”, “affordable housing”, “substantial rehabilitation” and “market rate” and made substantial technical and conforming changes throughout, effective June 1, 2024; P.A. 24-86 amended Subsec. (a)(1) to add Subpara. designators (A) to (F) to existing provisions and make conforming changes and amended Subsec. (a)(3) to modify required percentages for workforce housing units from 40 to 50 per cent and market rate housing units from 50 to 40 per cent in a workforce housing development project, effective June 1, 2024.
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Sec. 8-395a. Workforce housing opportunity development projects. (a) As used in this section:
(1) “Commissioner” means the Commissioner of Housing.
(2) “Eligible workforce housing opportunity development project” or “project” means a project for the construction or substantial rehabilitation of rental housing (A) located within an opportunity zone in this state, (B) designated under subsection (e) of this section for certain professions that work within the municipality in which the project is located and for very low income families and individuals, and (C) that may incorporate renewable energy technology and be transit-oriented.
(3) “Substantial rehabilitation” means either (A) the costs of any repair, replacement or improvement to a building that exceeds twenty-five per cent of the value of such building after the completion of all such repairs, replacements or improvements, or (B) the replacement of two or more of the following: (i) Roof structures, (ii) ceilings, (iii) wall or floor structures, (iv) foundations, (v) plumbing systems, (vi) heating and air conditioning systems, or (vii) electrical systems.
(4) “Opportunity zone” means an area designated as a qualified opportunity zone pursuant to the Tax Cuts and Jobs Act of 2017, P.L. 115-97, as amended from time to time.
(5) “Eligible developer” or “developer” means (A) a nonprofit corporation; (B) any business corporation incorporated pursuant to chapter 601, (i) that has as one of its purposes the construction, rehabilitation, ownership or operation of housing, and (ii) either certified under this section or that has articles of incorporation approved by the commissioner in accordance with regulations adopted pursuant to section 8-79a or 8-84; (C) any partnership, limited partnership, limited liability partnership, joint venture, trust, limited liability company or association, (i) that has as one of its purposes the construction, rehabilitation, ownership or operation of housing, and (ii) either certified under this section or that has basic documents of organization approved by the commissioner in accordance with regulations adopted pursuant to section 8-79a or 8-84; (D) a housing authority; or (E) a municipal developer.
(6) “Authority” or “housing authority” means any of the public corporations created by section 8-40, and the Connecticut Housing Authority when exercising the rights, powers, duties or privileges of, or subject to the immunities or limitations of, housing authorities pursuant to section 8-121.
(7) “Nonprofit corporation” means a nonprofit corporation incorporated pursuant to chapter 602 or any predecessor statutes thereto, that has as one of its purposes the construction, rehabilitation, ownership or operation of housing and that has articles of incorporation approved by the Commissioner of Housing in accordance with regulations adopted pursuant to section 8-79a or 8-84 or that is certified under this section.
(8) “Municipal developer” means a municipality that has not declared by resolution a need for a housing authority pursuant to section 8-40, acting by and through its legislative body. “Municipal developer” means the board of selectmen if such board is authorized to act as the municipal developer by the town meeting or representative town meeting.
(9) “Very low income families and individuals” means families or individuals whose income is thirty per cent or less of the area median income.
(10) “Market rate” means the rental income that such property would most probably command on the open market as indicated by current rentals in the opportunity zone being paid for comparable space.
(b) There is established a workforce housing opportunity development program to be administered by the Department of Housing under which individuals or entities who make cash contributions to an eligible developer for an eligible workforce housing opportunity development project located in a federally designated opportunity zone may be allowed a credit against the tax due under chapter 208 or 229 in an amount equal to the amount specified by the commissioner under this section. Any developer of a workforce housing opportunity development project shall be allowed an exemption from any fees under section 29-263 and any eligible workforce housing opportunity development project shall be assessed using the capitalization of net income method under subsection (b) of section 12-63b.
(c) The Commissioner of Housing shall determine eligibility criteria for such program and establish an application process for the program. The Department of Housing shall commence accepting applications for such program not later than January 1, 2025. A developer may apply to the Department of Housing for certification as a developer qualified to receive cash investments eligible for a tax credit pursuant to this section in a manner and form prescribed by the commissioner. To the extent feasible, any eligible workforce housing opportunity development project shall incorporate renewable energy or other technology in order to lower utility costs for the tenants and be transit-oriented. Any eligible workforce housing opportunity development project once constructed or substantially rehabilitated shall be rented as follows: (1) Forty per cent of the units shall be rented at the market rate, (2) fifty per cent of the units shall be rented to the workforce population designated under subsection (e) of this section, where such unit is rented to a member of such workforce population whose income is not more than sixty per cent of the area median income, and (3) ten per cent of the units shall be rented to families or individuals of very low income receiving rental assistance under chapter 128 or 319uu or 42 USC 1437f, as amended from time to time. The program shall provide for a method of selecting persons satisfying such income criteria to rent such units of housing from among a pool of applicants, which method shall not discriminate on the basis of race, creed, color, national origin, ancestry, sex, gender identity or expression, age or physical or intellectual disability.
(d) A workforce housing opportunity development project shall be scheduled for completion not more than three years after the date of approval by the Department of Housing. Each developer of a workforce housing opportunity development project shall submit to the commissioner quarterly progress reports and a final report upon completion, in a manner and form prescribed by the commissioner. If a workforce housing opportunity development project fails to be completed on or before three years from the date of approval of such project, or at any time the commissioner determines that a project is unlikely to be completed, the commissioner may request the Attorney General to reclaim any remaining funds contributed to the project by individuals or entities under subsection (b) of this section and, upon receipt of any such remaining funds, the commissioner shall reallocate such funds to another eligible project.
(e) The developer shall obtain the approval of the zoning commission, as defined in section 8-13m, of the municipality and of any other applicable municipal agency for the proposed workforce housing opportunity development project. After all such approvals are granted, the municipality may, not later than thirty days after such approval, by vote of its legislative body or, in a municipality where the legislative body is a town meeting, by vote of the board of selectmen, designate the workforce population that fifty per cent of the project shall be dedicated to. Such designation may include volunteer firefighters, teachers, police officers, emergency medical personnel or other professions of persons working in the municipality. If the municipality does not vote within such time period, the developer shall designate the workforce population.
(f) For taxable income years commencing on or after January 1, 2025, the Commissioner of Revenue Services shall grant a credit against the tax imposed under chapter 208 or 229, other than the liability imposed by section 12-707, in an amount equal to the amount specified by the Commissioner of Housing in a tax credit voucher issued by the Commissioner of Housing pursuant to subsection (g) of this section.
(g) (1) The Commissioner of Housing shall administer a system of tax credit vouchers within the resources, requirements and purposes of this section, for individuals and entities making cash contributions to an eligible developer for an eligible workforce housing opportunity development project. Such voucher may be used as a credit against the tax to which such individual or entity is subject under chapter 208 or 229, other than the liability imposed by section 12-707.
(2) In no event shall the total amount of all tax credits allowed to all individuals or entities pursuant to the provisions of this section exceed five million dollars in any one fiscal year.
(3) No tax credit shall be granted to any individual or entity for any individual amount contributed of less than two hundred fifty dollars.
(4) Any tax credit not used in the taxable income year during which the cash contribution was made may be carried forward or backward for the five immediately succeeding or preceding taxable or income years until the full credit has been allowed.
(5) If an entity claiming a credit under this section is an S corporation or an entity treated as a partnership for federal income tax purposes, the credit may be claimed by the entity's shareholders or partners. If the entity is a single member limited liability company that is disregarded as an entity separate from its owner, the credit may be claimed by such limited liability company's owner, provided such owner is subject to the tax imposed under chapter 208 or 229.
(h) The Commissioner of Housing shall adopt regulations, in accordance with the provisions of chapter 54, to implement the provisions of this section, including, but not limited to, the conditions for certification of a developer applying for assistance under this section.
(P.A. 23-207, S. 28; P.A. 24-86, S. 2.)
History: P.A. 23-207 effective June 1, 2024; P.A. 24-86 amended Subsec. (e) to modify the required percentage of workforce housing units in a workforce housing opportunity development project from 40 to 50 per cent, effective June 1, 2024.
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Secs. 8-396 to 8-399. Reserved for future use.
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