House Bill No. 5977 aims to provide a sales and use tax exemption for certain tangible personal property and services associated with mixed-income developments, effective October 1, 2025. The bill repeals and replaces subdivision (29) of section 12-412 of the general statutes, introducing new language that specifies the exemption applies to housing facilities targeting low and moderate-income families. This exemption is applicable to properties owned or operated by nonprofit housing organizations or housing authorities, which must secure a determination letter from the commissioner to confirm compliance with the exemption criteria. Additionally, the bill includes a new subparagraph (C) that extends the tax exemption to tangible personal property used in the development of dwelling units certified as part of a mixed-income development, with specific affordability requirements for at least 40% of the units.

The bill outlines that to qualify for the exemption, the Department of Revenue Services (DRS) commissioner must certify that at least 40% of the units are deed-restricted for a minimum of 40 years, ensuring affordability for households earning no more than 80% of the median income, with at least 15% reserved for those earning 60% or less. The anticipated fiscal impact includes a revenue loss of approximately $2.25 million in FY 26 and $3 million annually thereafter, affecting various funds. There will also be a one-time cost of up to $100,000 for the DRS to update tax administration systems, along with potential ongoing staffing costs if the number of qualifying units is significant. The bill broadens the criteria for tax exemptions, previously limited to nonprofit organizations and housing authorities, thereby expanding the scope of eligible mixed-income developments.