The old proverb, “The road to ruin is paved with good intentions” can be aptly applied to Gov. Ned Lamont’s Climate Change Adaptation Bill (House Bill 6441), which would grant municipalities the ability to establish a program to mitigate the impacts of climate change by various means, including the purchase of open space in certain circumstances.
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The old proverb, “The road to ruin is paved with good intentions” can be aptly applied to Gov. Ned Lamont’s Climate Change Adaptation Bill (House Bill 6441), which would grant municipalities the ability to establish a program to mitigate the impacts of climate change by various means, including the purchase of open space in certain circumstances.
To pay for this program, the bill would allow towns to impose a new conveyance tax on the sale of real property valued as low as $150,000.
Climate change mitigation is good policy, however, increasing the cost of housing amidst a housing-affordability crisis is not.
One would be correct to argue an expenditure that benefits an entire community ought to be borne by all its residents.
Unfortunately, in the case of HB 6441, simple logic does not prevail. Instead, the bill selects winners and losers by requiring those engaged in the sale of a home to bear the costs of climate change mitigation while everyone else gets a pass.
Proponents might say those moving into a community should assume the cost because they were not around to support previous open space purchases or other mitigation efforts.
Proponents might also argue, because new homes contribute to the growth of the community, they are exacerbating the crisis and therefore it is appropriate that they assume the cost.
This flawed line of reasoning is akin to asking only parents of school-age children to pay for the construction of a new school. This does not occur because new schools benefit the entire community via higher property values and other secondary benefits.
Similarly, the mitigation benefits envisioned in HB 6441 would be communitywide in scope.
Aside from the inherent unfairness, it is precisely the wrong time for a new conveyance tax. Connecticut is in the middle of a deepening housing affordability crisis. If passed, Lamont’s bill will make it even harder for a family to buy a home in Connecticut.
A newly-released U.S. Census report indicates the crisis has already dramatically impacted buying trends. In the past five years, Connecticut has experienced a steep decline in homeownership rates, second only to North Dakota. If passed, HB 6441 will likely worsen this troubling trend.
Those seeking newly-built homes would be disproportionately affected by the conveyance tax as real property is often conveyed several times before a new homeowner takes possession of it. A developer will often purchase the raw land, develop it, subdivide it, and sell individual lots to builders who construct the homes and sell them to new homebuyers.
The new conveyance would be applied to each transaction with the homebuyer absorbing the brunt of the costs. Fewer families will be able to afford a new home, driving demand down and ultimately slowing the production of new housing. The lack of sufficient housing production will contribute to increasing scarcity, which will, in turn, worsen the housing affordability crisis.
And so, the cycle will continue.
The homebuilding industry has been busy during the pandemic, thanks in part to Gov. Lamont’s designation of the construction industry as “essential.”
Finally, Connecticut is emerging from a 20-year trend of depressed housing production. Surprisingly, our industry has been one of the few bright spots during the pandemic, helping to prop up the economy by providing new revenue to the state’s coffers.
But that activity sits on a precarious perch. Builder confidence is beginning to wane as interest rates start to rise, and land scarcity due partially to exclusionary zoning practices continue to drive up the cost of buildable lots. Add to this the exorbitant cost of building materials — lumber is at a 13-year high — and builder’ concerns take on new urgency.
For all these reasons, we implore the legislature and the Governor to do no harm and to support initiatives that will encourage and foster development, allowing more Connecticut residents to share in the American dream of homeownership.
Working together we can help create the generational wealth that is key to closing the equity gap.
Please encourage your legislators and the Governor to explore alternative means of funding climate change mitigation efforts that will not contribute to the housing affordability crisis in Connecticut.
Jim Perras is the CEO of the Home Builders & Remodelers Association of CT.
