Connecticut Senate Bill SB01263

Connecticut 2025 Regular Session

• Introduced: 2/6/25
• Refer: 2/6/25
• Report Pass: 3/6/25

Caption

An Act Concerning Tax Credits For The Conversion Of Commercial Properties.

Summary

SB 1263 creates a new state tax credit voucher program to encourage the conversion of commercial buildings into residential developments. The program would be administered by the Commissioner of Housing, who must establish it by January 1, 2026, set standards for eligible projects, and review conversion plans before work begins. Eligible projects include conversions of commercial buildings such as hotels, retail space, office buildings, and industrial buildings into structures containing one or more dwelling units. The bill provides a tax credit equal to 10% of qualified conversion expenditures, with the credit issued only after the project is completed and verified. To qualify, an owner must generally spend more than $15,000 on eligible conversion costs, and the credit is capped per dwelling unit at $30,000 for non-nonprofit owners and $50,000 for nonprofit corporations. The total amount of credits that may be reserved statewide is limited to $3 million per fiscal year, and the commissioner must consider whether a project creates or preserves affordable housing when approving applications.

Impact

The bill would add a new section to the general statutes creating a housing-conversion tax incentive and would affect both the Department of Housing and the Department of Revenue Services. It would allow credits against the personal income tax under chapter 229 and the business entity tax under chapter 208a, with unused nonprofit credits carried forward for up to four years and excess credits for some taxpayers treated as overpayments subject to refund. The measure is designed to reduce the cost of adaptive reuse projects and may encourage redevelopment of underused commercial properties into housing, especially projects that include affordable units.

Sentiment

The available voting history suggests generally favorable support for the bill. The House committee reported the substitute bill favorably by a 16-2 vote, indicating broad agreement on the policy goal of promoting housing development through tax incentives. No committee transcript was provided, so there is no recorded discussion here showing detailed debate, but the vote margin suggests the proposal was viewed positively overall.

Contention

The main points of potential contention are likely the use of state tax credits, the annual $3 million cap, and the distribution of benefits between nonprofit and for-profit owners. The bill gives larger per-unit credits to nonprofit corporations than to other owners, which may raise questions about equity and program design. Another likely issue is whether the credit is sufficiently targeted to affordable housing, since the commissioner is directed to consider affordability but the credit is available for commercial-to-residential conversions more broadly. The requirement that only certain construction costs count as qualified expenditures may also affect how developers structure projects.