SB 449 — AN ACT CONCERNING THE RECOMMENDATIONS OF THE INTERGOVERNMENTAL POLICY AND PLANNING DIVISION WITHIN THE OFFICE OF POLICY AND MANAGEMENT.

3Approved OctoberJune 1,4, 2026 10-265u(d)Public sSB449Act / File No.

28426-137 54 sSB449of File4 No.

284 Sec.

4 from passage and New section applicable to assessment years commencing on or after October 1, 2026 Sec.

5 October 1, 2026 8-3j Sec.

6 October 1, 2026 4-124s(b) Sec.

7 October 1, 2026 Repealer section Statement of Legislative Commissioners:

Section 7 was deleted to remove the conforming change for the repealer in the raised bill that is no longer being repealed.

PD Joint Favorable Subst.

sSB449 / File No.

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284 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 27 $ FY 28 $ Resources of the General Fund GF - Potential See Below See Below Revenue Gain Treasurer, Debt Serv.

GF - Potential See Below See Below Savings Note:

GF=General Fund Municipal Impact:

Municipalities Effect FY 27 $ FY 28 $ All Municipalities Potential Minimal Minimal Savings Various Municipalities STATE See Below See Below MANDATE 1 - Revenue Loss Various Municipalities STATE See Below See Below MANDATE - Cost Explanation The bill, which includes changes to Local Capital Improvement Program (LoCIP) that limits municipal access to allotments under the program, results in revenue loss to municipalities, costs to municipalities, as well as potential debt service savings and potential revenue gain to the General Fund, as described below.

1State mandate is defined in Sec.

2-32b(2) of the Connecticut General Statutes, "state mandate" means any state initiated constitutional, statutory or executive action that requires a local government to establish, expand or modify its activities in such a way as to necessitate additional expenditures from local revenues.

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284 Section 1 makes several changes to the Local Capital Improvement Program (LoCIP), including:

1) limiting grant payments to municipalities to instances where the secretary of the Office and Policy Management (OPM) "determines such municipality has expended or intends to expend all funds previously issued as a grant" under the program, 2) requiring reports surrounding prior use of LoCIP funds to be "certified by the chief financial officer of such municipality," and 3) requiring any municipality that "neglects to submit a true and correct report" to forfeit $100.

LoCIP is funded using General Obligation (GO) bonds.

The proposed requirement to limit future grants to municipalities that have not spent, or shown intent to spend, previous grants under LoCIP is expected to prevent most municipalities from receiving the revenuefromtheirportionoftheannualformulagrantduetothetiming of the grant distribution and reporting requirements.

Under current law and unchanged by the bill, municipalities receive a grant for LoCIP funds after March 1 and no later than June 30 each fiscal year.

Since the program was changed from providing reimbursements to grants in FY 24, these payments have been sent in May or June.

Municipalities must then report on expenditures from LoCIP grants for the prior fiscal year by September first annually.

It seems unlikely municipalities would be able to spend funds received in the final months of that same fiscal year, leading to future grants being withheld.

As the program allows spending of municipal allotment over several years, current practice for some municipalities is to wait to spend, or plan spending, until enough funds have accumulated for a substantial project.

These municipalities are unlikely to either spend or demonstrate intent to spend over multiple years, much less in a period within March to September each year.

The bill does not specify how a municipality can demonstrate its intention to spend past grant funds, nor what criteria the secretary of OPM will use for determining whether there is an intent to spend.

Likewise, the bill does not specify how and whether a municipality can sSB449 / File No.

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284 access funds withheld under this provision when or if it has spent, or shown intent to spend, prior grant funds.

This provision results in revenue loss for municipalities, and savings to the General Fund for debt service from a lower amount of GO bonds being issued.

Requiring that reports must be certified by a Chief Financial Officer (CFO) results in a cost to municipalities in multiple ways.

To the extent municipalitiescurrently employ aCFO,or contract for aCFO asneeded, some municipalities may incur additional costs to certify the reports in addition to current arrangements to prepare them.

Additionally, not all LoCIP recipients, which include towns, cities, andboroughs, currently employ or have accessto someonewiththetitle of CFO.

Such municipalities will incur additional costs to certify the report, or risk incurring the $100 fee required by the bill and loss of future grant funds.

Similarly, any municipality deemed to have submitted a report that was not "true and correct" may incur the $100 fee and loss of future grant funds.

These provisions result in additional cost and potential revenue loss to some municipalities, as well as potential debt service savings to the General Fund from lower amounts of bonds being issued and potential revenue gain to the General Fund for any monies forfeited by municipalities as required by the bill.

Section 2 changes eligibility requirements under the Small Town Economic Assistance Program (STEAP) by barring eligibility for future grants until the secretary of OPM "determines such municipality or group of municipalities has expended or intends to expend all funds previously received" under the program.

The bill does not specify how a municipality or group of municipalities can demonstrate its intention to spend past grant funds, nor what criteria the secretary of OPM will use for determining whether there is an intent to spend.

To the extent future grants are limited because fewer recipients are eligible, this results in a potential revenue loss to municipalities that would have otherwise received STEAP awards.

The STEAP program is funded by GO bonds.

If the limited eligibility results in lower overall amounts of STEAP awards, this results in sSB449 / File No.

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284 potential debt service savings.

As of March 1, 2026, there is an unallocated bond balance of $53 million for STEAP.

The bill does not change overall GO bond authorization levels.

Section 4 results in potential future revenue loss to municipalities and corresponding savings to OPM in the out years associated with the Tiered PILOT grant.

Any impact is dependent on if certain land is identified and reclassified as PA 490 land.

A decrease in the assessed value of qualifying land corresponds to a decrease in the Tiered PILOT grant holding all other variables of the formula constant.

Section 5 results in a potential minimal savings to municipalities beginning in FY 27 associated with the elimination of a requirement to certify certain zoning regulations with OPM.

It is expected any savings will be minimal.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the determinations of the OPM secretary, any grants withheld, any fees incurred, future land classification, and the terms of any bonds issued.

2Due to a year lag in the Tiered PILOT formula, the earliest an impact would occur would be FY 29.

3PA 490 land allows certain land to be assessed and the current use value instead of the fair market value.

This analysis assumes the current use value will be less than the fair market value.

sSB449 / File No.

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284 OLR Bill Analysis sSB 449 AN ACT CONCERNING THE RECOMMENDATIONS OF THE INTERGOVERNMENTAL POLICY AND PLANNING DIVISION WITHIN THE OFFICE OF POLICY AND MANAGEMENT.

SUMMARY This bill requires the Office of Policy and Management (OPM) to collaborate with state agencies to identify state property that qualifies as PA 490 land and have local assessors classify and value it that way for purposes of making the grand list.

(Because the state does not pay property taxes, it makes annual payment in lieu of taxes (PILOT) grants to municipalities for state-owned property, based in part on its assessed value.) The bill also:

1.

makes several unrelated changes to municipal grant programs, including limiting certain grant awards when previously awarded funds are unspent;

2.

eliminates a municipal reporting requirement related to zoning regulations on family and group child care homes;

3.

repeals the law on the obsolete Intertown Capital Equipment Purchase Incentive Program (§ 7);

and 4.

makes technical and conforming changes (§ 6).

EFFECTIVE DATE:

October 1, 2026, unless noted otherwise below.

§ 1 — LOCAL CAPITAL IMPROVEMENT PROJECT (LOCIP) GRANTS By law, LoCIP grants may be used by municipalities for eligible capital improvement projects such as road repairs, public building construction, and park improvements.

Currently, OPM must annually sSB449 / File No.

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284 distribute LoCIP grants to municipalities, based on a formula, by June 30.

Under the bill, OPM must do so only if the OPM secretary determines that the municipality spent, or plans to spend, all previous LoCIP grants.

(It is unclear whether funds will be released once the previously distributed grant is spent or committed.) Under the bill, municipalities that fail to comply with a LoCIP grant reporting requirement in existing law are subject to a $100 penalty.

Under this existing law, municipalities must annually, by September 1, submit a report to OPM describing the grant funds it spent on each eligible project in the prior fiscal year.

The bill also requires that the municipality’s chief executive officer certify the report.

EFFECTIVE DATE:

July 1, 2026 § 2 — SMALL TOWN ECONOMIC ASSISTANCE PROGRAM (STEAP) By law, STEAP grants reimburse municipalities for up to $1 million per fiscal year for their economic development, community conservation, and quality-of-life capital projects.

Under the bill, a municipality cannot receive a STEAP grant until OPM determines the municipality has spent, or plans to spend, all STEAP funds it previously received.

(It is unclear what this means, as STEAP is a reimbursement grant.) § 3 — DISTRICT REPAIR AND IMPROVEMENT PROJECT (DRIP) PROGRAM By law, DRIP grants are formula grants awarded to public school operators(suchasschoolboards)tohelpconstruct,renovate,repair,and enlarge public school buildings, grounds, and infrastructure.

The bill delays, from March 1 to April 1,the annual deadline for OPM to (1) notify school operators of their DRIP allocation and (2) post these amounts, and the calculations used to determine them, on its website.

Unchangedbythebill,OPMmustissuethegrantstoschooloperators by June 30 each year.

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284 § 4 — CLASSIFICATION OF STATE PROPERTY AS PA 490 LAND Broadly, the bill requires OPM to collaborate with state agencies to identify state property that qualifies as PA 490 land and have local assessorsclassify andvalue it that way for purposesofmaking thegrand list.

Unchanged by the bill,thestate isnot subject to localpropertytaxes.

But under existing law, the state must fully or partially reimburse municipalitiesfortheir forgonerevenueonstate-ownedproperty,based on the property’s assessed value, as part of the PILOT program (see BACKGROUND).

The bill’s provisions apply regardless of conflicting state laws on the PA 490 program, special acts, and municipal charters and ordinances.

The PA 490 law allows four classifications of land – farm, forest, open space, and maritime heritage – to be assessed at their current use value, rather than their fair market value.

“Current use value” refers to what the land is worthas it is actually used;

“fair market value” refersto what the land may be worth on the open market (at its highest and best use).

EFFECTIVEDATE:Uponpassageandapplicabletoassessmentyears beginning on or after October 1, 2026.

Identifying Land and Notifying Assessor Under the bill, OPM must work with state agencies to identify land that can be classified as PA 490 land.

Specifically, agencies must identify eligible real property that (1) a state agency has custody or control of or (2) belongs to or is held in trust for the state (“state land”).

When eligible state land is identified, OPM must inform the local assessor that the land should be classified as farm, forest, open space, or maritime heritage land, as applicable.

The bill requires assessors to classify the land accordingly and value it using the recommended land values the state sets every five years.

The bill requires OPM to notify assessors about state land that qualifies as PA 490 land within the same timeframes as other property owners must under the PA 490 program (meaning no earlier than 30 sSB449 / File No.

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284 days before and no later than 30 days after the assessment date, except OPM can inform assessors as late as 90 days after the assessment date in a revaluation year).

As is the case for other PA 490 land, the classification of state land as open space, farm, forest, or maritime heritage land ends if (1) its use changes or (2) it is sold or transferred.

§ 5 — ELIMINATION OF THE CHILD CARE HOME ZONING COMPLIANCE CERTIFICATION The bill ends the requirement that municipalities annually certify to OPM by December 1:

1.

that their zoning regulations do not restrict family and group child care homes in a way the law prohibits (such as by banning them in residential zones or requiring a special permit to operate one) or 2.

the timeframe within which they will bring their zoning ordinances into compliance.

BACKGROUND PILOT Program (CGS § 12-18b) The PILOT program generally provides annual grants to municipalities and fire districts for (1) state-owned property, municipally owned airports, and tribal reservation land and (2) private nonprofit college and hospital property.

PILOT grant amounts are generally determined by multiplying the assessed value of the PILOT- eligible property by the statutory reimbursement rate for the given property type.

The rate is generally 45% for state-owned property.

The actual grant amounts municipalities and districts receive, however, depend on the amount appropriated for the grants.

COMMITTEE ACTION Planning and Development Committee Joint Favorable Substitute Yea 21 Nay 0 (03/13/2026) sSB449 / File No.

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