With Change at State Level, Officials Now ‘Scrambling’ To Figure Out Funding for Planned Redevelopment of Canaan Parish


Most recently updated design for Canaan Parish that's been made public. Image courtesy of New Canaan Neighborhoods and New Canaan Housing Authority

Officials said Tuesday that they’re “scrambling” in the wake of a change from the state to figure out just how to finance a widely anticipated rebuilding project on the corner of Route 123 and Lakeview Avenue.

Plans call for rebuilding Canaan Parish, a 60-unit Section 8 housing complex, in a single five-story structure and construction of a new, 40-unit structure of the same height that would count toward the state’s affordable housing requirement. 

Yet the project “is a little bit slowed down because right now the state has no idea as to whether or not there is actually any funding available for affordable housing,” New Canaan Housing Authority Chairman Scott Hobbs told members of the Board of Selectmen at their regular meeting.

“We are also in the process of scrambling add finding out alternatives to how we can go ahead without the state funding, and there are some out there,” he said at the meeting, held in Town Hall. “We would rather follow this course and hopefully get our grant. But at the same time we started to lose faith that they are actually going to be able to come through with what we need them to do.”

Approved by the Planning & Zoning Commission last summer following weeks of discussion about early-stage renderings of the proposed new buildings, the project is a joint effort of the Housing Authority and New Canaan Neighborhoods, which owns the buildings. Its creators hoped to secure $2.5 million in state funding, according to David McCarthy, president of Heritage Housing Inc., a consulting firm assisting on the project. 

The redevelopment is expected to achieve one major goal of the town—namely, to ensure that New Canaan doesn’t open itself up to a loophole in a state law that allows developers to ignore local planning decisions in places that do not meet strict affordable housing requirements. New Canaan is never expected to reach a guideline whereby 10 percent of its housing stock qualifies as “affordable” under the state’s rigid definition, though the town by creating additional qualifying units at Mill Pond has earned four years of relief from the developer loophole. The Canaan Parish project would help attain a second four-year moratorium, and lay the groundwork for a possible third. 

Selectman Nick Williams asked during the meeting whether the Canaan Parish development “is going to be dependent upon on state dollars.”

McCarthy said, “That is one of the things we are working through now. As you may know, the governor has proposed ‘debt diet’ that substantially reduces the state’s borrowing. What that means, though, is that he has cut housing funding essentially from $250 million a year to zero, and we are still trying to understand if any of that is coming back in the final budget that gets through the legislature, but at this point we don’t know.”

Williams noted that the “impetus to do Section 8 housing under threat of sanction is still there.”

“So it will become an unfunded mandate like everything else in the state, because we are a disaster,” Williams said.

Hobbs said, “You summarized it very well.”

The discussion arose as the Housing Authority requested $125,000 to help “close out” financials for an earlier affordable housing project at Millport Avenue. Under the Housing Authority’s agreement with its contractor on that project, the local agency set a limit to price that the contractor could not exceed, and any savings when the work was completed would be split with the contractor. Ultimately, the project came in at $240,000 under that price, meaning the contractor received a check for $120,000, but when state officials reviewed the closeout for tax purposes, it determined that the shared savings doesn’t qualify for tax credits.

That determination “puts a hole inside of our closeout,” Hobbs said.

Williams asked why the state denied the tax credits.

“That’s a very good question,” McCarthy said. “They seem to have changed policies. So as [Hobbs] explained, this exact contract format was allowed for [an earlier phase of the project at Millport] and there were no issues whatsoever in closing out that project, the same exact contacts this time around Connecticut Housing Finance Authority said they no longer allowed shared savings with a contractor.”

Ultimately, the Board—First Selectman Kevin Moynihan, Selectman Kit Devereaux and Williams—voted 3-0 to approve the authorization of funds to close out the Millport project. Hobbs specifically asked that funds be transferred from Canaan Parish to Millport.

Devereaux asked how, if the money comes from Canaan Parish, the Section 8 housing complex will get that funding back.

Hobbs said, “As the affordable housing fund gets more funds into it, that is where the money would come from. So this becomes almost a timing issue where for Millport it becomes important to close out the construction financing and get on to the better long-term financing and then, over time, as the affordable housing fund continues grow, that is where the money would come from.”

Devereaux asked for clarification that the Canaan Parish project would not be “shorted” in any way.

Hobbs said it would not be shorted. 

“There will be timing issues and we will go through a scramble to figure out how to do this stuff, but just as we had with Millport—there was some stuff that we put off originally that sure enough once we figure out the true financing we have—we are going to put it all back in,” he said. “So we can do some of that but the intention is that we do not want to short the Canaan Parish development at all.”

In approving the redevelopment plan, P&Z offered praised a revised site plan, which provides a circular driveway running through the complex, a dedicated play area, spots for residents to gather outside and far more open space than it has now.

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