House Bill No. 5977 seeks to provide a sales and use tax exemption for certain tangible personal property and services associated with mixed-income developments. The bill amends subdivision (29) of section 12-412 of the general statutes, replacing the existing language with new provisions that will take effect on October 1, 2025. The new provisions stipulate that sales and consumption of tangible personal property and services used in the development, construction, rehabilitation, renovation, repair, or operation of housing facilities for low and moderate-income families will be exempt from taxes, provided these facilities are owned or operated by nonprofit housing organizations or housing authorities. Additionally, a new subparagraph (C) is introduced, which extends the exemption to properties certified as part of mixed-income developments, specifying that at least 40% of the units must be deed-restricted for low- to moderate-income households for a minimum of 40 years.

The bill also outlines the process for obtaining a letter of determination from the commissioner for tax exemption eligibility, requiring purchasers to present this letter along with a certification at the time of sale. It clarifies definitions related to "nonprofit housing organization," "housing facilities," and "low and moderate income families," while establishing criteria for mixed-income developments, including income thresholds and the proportion of affordable units. The fiscal impact of the bill is projected to result in a revenue loss of $2.25 million in FY 26 and $3 million annually thereafter, primarily affecting the General Fund. Additionally, there will be a one-time cost of up to $100,000 for the Department of Revenue Services to update its tax administration systems, with potential ongoing costs for staffing if a significant number of units require certification.