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Connecticut towns got $1.5 billion from feds. They’ve budgeted roughly 1% for housing

CT housing.PNG
CT Mirror
A demolition crew tears up part of the foundation of the former St. Thomas Aquinas High School. The city is using $1.9 million in federal funding from the American Rescue Plan Act to clear the site so that 11 new affordable homes can be constructed.

Connecticut’s cities and towns received a combined $1.5 billion in federal stimulus funding over the past year to help people recover from the pandemic and to allow local leaders to make transformational investments in their communities.

But despite rising rents, skyrocketing home prices and pleas from the Biden administration, very little of that money has been used, so far, to help create more housing in Connecticut or to counter affordability problems throughout the state.

Data collected by the federal government in April shows Connecticut’s 169 municipalities budgeted roughly $15 million — around 1% of their share of the federal money — for housing-related projects.

The federal rules developed for the American Rescue Plan Act enabled local officials to spend the funds on rent and mortgage assistance, housing-related planning, energy efficiency upgrades for people’s homes, assistance for those experiencing homelessness, or the development and preservation of affordable housing.

Housing advocates and some Connecticut lawmakers view the lack of spending on local housing initiatives so far as a significant misstep.

The millions of dollars the federal government handed to cities and towns, they argued, offers a once-in-a-generation opportunity to expand or preserve affordable housing options in every corner of the state.

“I would have expected the percentage of money put toward affordable housing to be more, because that is a very critical priority,” said state Senator Saud Anwar, who sits on the legislature’s Housing Committee. “The reality is the economic engine of our state is dependent on the workforce, and the workforce is linked with affordable housing.”

Connecticut currently lacks an estimated 85,400 homes that are available and affordable to renters with extremely low incomes, according to data from the National Low Income Housing Coalition. The same group also reported earlier this month that renters in Connecticut now need to earn more than $57,000 annually in order to avoid spending more than a third of their income on a two-bedroom apartment, which is the level that is considered affordable.

Organizations that advocate on housing issues in Connecticut said there are likely several reasons that local boards, committees and councils shied away from investing the federal stimulus money into housing-related projects.

Many cities and towns didn’t have shovel-ready plans in place when they received the funding, and Connecticut’s lack of regional governments ensured each municipality was largely working in its own silo. Compounding the problem, advocates said, is that many local leaders simply don’t view housing as a municipality’s responsibility, like they do for other local infrastructure.

If you want to know where Connecticut prioritizes its housing affordability challenges, take a look at the budget.
CHRISTIE STEWART, DIRECTOR OF THE FAIRFIELD COUNTY CENTER FOR HOUSING OPPORTUNITY

Then there are the local politics.

Christie Stewart, director of the Fairfield County Center for Housing Opportunity, said it remains politically unpopular in many communities in Connecticut for local leaders to spend money — even if it is federal grant funding — on building or sustaining affordable housing projects.

In past legislative sessions, zoning reform proposals that aimed to increase the state’s stock of affordable housing met fierce opposition from lawmakers and groups who argued that the measures diluted local control.

The fact that cities and towns allocated less than 1% of the federal funding to help reduce Connecticut’s housing problems, Stewart said, is clear evidence that the issue continues to be a “political lightning rod” in the state.

“That’s kind of all you need to know about Connecticut,” she said. “If you want to know where Connecticut prioritizes its housing affordability challenges, take a look at the budget. I think that’s true at every level of government.”

Housing investments

The vast majority of the housing-related spending that has been approved to this point has taken place in Connecticut’s cities, where most of the affordable housing stock already exists.

New Haven’s elected leaders, for instance, dedicated $749,000 to provide services to the city’s homeless residents. New Britain set aside more than $2.9 million to acquire properties and to demolish an old school so the land can be used to build new housing developments, which will include affordable units.

CT housing 2.PNG
CT Mirror
New Britain’s leaders plan to use $240,000 in federal funding from the American Rescue Plan Act to acquire blighted properties along Farmington Avenue so that the land can be redeveloped into affordable housing.

And Bridgeport, Connecticut’s largest city, budgeted $5.5 million for rental assistance payments, a local home weatherization program, the development of new affordable housing and funding for nonprofits that provide transitional housing to individuals and families.

There were some smaller towns and mid-sized cities in Connecticut that also spent significant portions of their federal stimulus funding on housing-related expenses.

The town of Clinton, for instance, budgeted nearly 9% of its $3.5 million for the town’s housing authority and for rental assistance to senior citizens and lower-income families.

Stonington allocated roughly $170,000 — 3% of its federal funds — for housing-related projects, including a revolving loan fund that will help low- and moderate-income homeowners make repairs on their properties.

And Norwich, which is home to roughly 40,000 people, set aside $889,000 for rental and mortgage assistance and another $1.2 million to help create and preserve affordable housing in the city.

But those examples are the exception in Connecticut at this point.

The state is also spending millions on affordable housing creation, homeless assistance and a program that provides legal aid to renters during an eviction. But that is separate from the municipal allocations.

An easier sell

According to the data collected by the U.S. Department of the Treasury, most of Connecticut’s municipalities have yet to budget any of their federal funding for housing-related projects.

Many have instead chosen to use the federal money to pay for things like road repairs, stormwater upgrades, water and sewer improvements, public building renovations, police surveillance technology, small business grants and local recreation projects.

That includes three coastal municipalities — Branford, North Branford and Milford — that purchased “Showmobiles” — large, portable stages that cost more than $200,000 each.
The borough of Bantam in Litchfield also set aside money for rental or mortgage assistance. Not all towns submitted budgeted amounts for each expenditure.

Housing advocates agree that parks, roads, water lines, sewer systems and local recreational facilities are important investments and worthy of federal funding. The problem, as they see it, is that many local governments in Connecticut just don’t view affordable housing in the same way as other local infrastructure.

“I think there are lots of other things — typical infrastructure things — that are an easier sell at the local level,” Stewart said. “It’s much easier to get your budget passed when you are talking about building sidewalks or upgrading roads.”

Take Darien. The town budgeted most of its $6.4 million in federal funding this year on local parks, playgrounds, paddle ball courts, bridge repairs and several large stormwater drainage projects.

During public meetings, Darien’s elected leaders explained that they chose those projects for three primary reasons: they were highly visible in the community, they were long-lasting investments, and the town already had plans to spend money on those projects anyway.

In that way, they explained, the town was effectively able to use the federal funds to reduce the local tax burden for its roughly 21,000 residents in the coming years.

Jon Zagrodzky, a Republican member of Darien’s Board of Selectmen, said the idea of using federal money on affordable housing was not discussed during the public meetings he led because the town’s leadership didn’t view it as a logical use for the funds.

We don’t want the town in the business of doing affordable housing.
JON ZAGRODZKY, DARIEN SELECTMAN

The town, he said, has historically not played much of a role in the creation of affordable housing outside of the planning and zoning process. The affordable housing units that have been added in Darien in recent years, he added, have been prepared, funded and managed solely by private developers.

Zagrodzky said Darien’s elected leaders are supportive of more affordable housing in town, but he doesn’t believe local government should be directly involved that work.

“Those have always been led by private developers, as opposed to municipally developed affordable housing,” he said. “If I were to allocate money, what would we spend it on? I’m not really sure. We don’t want the town in the business of doing affordable housing.”

Some municipalities are purchasing land to use for future affordable housing, subsidizing development costs for affordable units, or providing direct aid so renters and homeowners can pay monthly housing costs.

A fractured landscape

Affordable housing is a hot button topic in Connecticut. And in an election year, it’s often even harder to get politicians to champion the issue, Stewart said.

“This makes people nervous,” Stewart said. “It’s an election year in Connecticut. Do you want this to be the thing you campaign on?”

Housing experts have largely attributed Connecticut’s lack of affordable housing to local zoning ordinances that make it difficult to develop multi-family housing, which tends to be more affordable for people with low incomes.

During the 2022 legislative session, advocates pushed for statewide zoning reforms that aimed to increase the state’s affordable housing stock, but many local officials, particularly from Fairfield County, objected to a perceived loss of local control.

As a result, the measures failed.

The issue is further compounded by a lack of county government, housing advocates explained.

If county governments existed in Connecticut, they would have received $692.5 million each in federal ARPA funding. Instead, that money also went to the cities and towns, which divided up the stimulus funding into 169 different buckets.

Towns behaving sometimes in what they perceive as their best interest is not the state's interest.
SEAN GHIO, POLICY DIRECTOR AT THE PARTNERSHIP FOR STRONG COMMUNITIES

The lack of county government tends to mean there’s less of a regional approach to addressing affordable housing shortages, said Sean Ghio, policy director at the Partnership for Strong Communities.

“Towns behaving sometimes in what they perceive as their best interest is not the state's interest,” Ghio said. “It's not the region's interest.”

Another barrier to dedicating more money to housing, they argued, is the municipalities’ lack of planning. Less than half of Connecticut’s cities and towns met a deadline this year to finish their state-mandated affordable housing plans.

Many of the smaller towns may not have the staffing or expertise to focus on planning around housing, Stewart said.

“This is the type of thing that a county government would lean into,” she said. “And this is an instance where our lack of county government is not serving us well.”

Guidance and shame

Housing advocates in Connecticut recognized that not all municipalities are accustomed to investing public funds into affordable housing initiatives.

That’s why they put out guidance early in the process, instructing local officials on exactly how they could address housing needs with the one-time funding.

In Fairfield County, Stewart’s group compiled a fact sheet for municipalities that explained the various housing-related projects that were expressly allowed under the federal rules.

Maryam Elahi, president and CEO of the Community Foundation of Eastern Connecticut, undertook a similar educational campaign with the 42 municipalities served by her group.

Many did not respond directly to the groups’ outreach efforts.

“Just because ARPA funds had allowable uses that could support housing and affordable housing doesn’t mean elected officials want to use those funds for that, and that is the crux of the problem,” Stewart said.

But each region did see some municipal spending on housing-related projects.

I think this was a once-in-a-lifetime chance to address some of the systemic issues that cause poverty.
MARYAM ELAHI, PRESIDENT AND CEO OF THE COMMUNITY FOUNDATION OF EASTERN CONNECTICUT

In Fairfield County, Westport recently allocated $150,000 of its ARPA money for the soft costs of a future affordable housing development, although that spending was not included in the most recent federal data release. The money will cover pre-construction expenses such as environmental or drainage studies.

The affordable housing development is set to be on a portion of state-owned land in the West Parish area, although there’s no developer yet, said Danielle Dobin, a planning and zoning commissioner and chair of the town’s affordable housing subcommittee.

“This seemed like a great opportunity to do something really different,” Dobin said in an interview. “And to create an entirely affordable community, you know, specifically to attract families with children to the community who wouldn't otherwise have the opportunity to necessarily rent or buy something here because of the price.”

Westport's human services director, Elaine Daignault, said she hopes that the town's leaders will direct even more of the federal funding toward housing.

Meanwhile, in eastern Connecticut, Norwich and New London agreed with the community foundation’s request that they spend at least 30% of their funding on affordable housing, mental wellness and early childhood care and education.

New London officials view the influx of federal money as a way to address several systemic issues in the city, Mayor Michael Passero said.

“We see the ARPA money as being an opportunity to make some headway into some long-standing goals for improving our housing stock and for giving more people opportunities,” Passero said.

The city has already budgeted for a few projects, including $250,000 to fund a loan program to help with residents’ down payments and closing costs on a house. They’ve also set aside $150,000 for housing revitalization projects that aren’t covered by other programs, such as roof repair.

They’re also targeting revitalization funds at housing in the Hempstead Freedom Trail neighborhood.

And more than half a million dollars went to the early stages of a program that aims to identify the descendants of people whose houses were razed in an imminent domain move. The city next hopes to establish a program that “corrects that injustice from generations ago,” Passero said.

Municipalities still have an opportunity to direct more of the federal funding toward housing. The data collected by the federal government in April suggested that nearly 58% of the stimulus money had yet to be budgeted or obligated by the towns and cities, and the municipalities have until the end of 2024 to decide how to spend that money.

Elahi said she is not giving up on her goal of convincing more municipalities to spend the federal money on affordable housing. Her group plans to continue what they’ve coined the “30-plus campaign” to encourage more ARPA funds to go to the issues they consider critical.

“I think this was a once-in-a-lifetime chance to address some of the systemic issues that cause poverty,” she said. “And if people in this very small wealthy state fail to do that, it is shame on everyone who holds elected office.”

Launched in 2010, The Connecticut Mirror specializes in in-depth news and reporting on public policy, government and politics. CT Mirror is nonprofit, non-partisan, and digital only.