Lt. Governor Wyman testimony on Governor Bill No. 794: An Act Assisting Homeowners with Crumbling Foundations
Committee Chairs, Co-Chairs, Ranking Members, and members of the Public Safety and Security, Insurance and Real Estate, Planning and Development, and Banking Committees, I appreciate the opportunity to testify today in support of Governor’s Bill 794, An Act Assisting Homeowners with Crumbling Foundations.
To the homeowners who came here today to share their experiences with the legislature, thank you. Your stories are a critical part of this discussion and they will help find better solutions as we move forward. Today is an opportunity for all of us to look forward and consider how we can meet this challenge together.
As many of you know, I live in Tolland. For more than two years now, I have seen firsthand the devastating effects of this disaster not only on my neighbors’ houses, but on my neighbors themselves.
This devastation is the reason why it has been so important to me to listen to the affected homeowners, and why we are working to build the private sector and government partnerships that could really help them. We continue to talk to insurers, bankers, realtors, representatives of the construction industry, homebuilders, and the federal government—they have been in and out of my office for months—and I am hopeful that we will find even more ways to help homeowners struggling with this problem.
I strongly support the Governor’s Bill (HB 794) because it addresses two key points. First, it creates a practical tool that encourages towns and the state to create a relief plan and a funding mechanism to pay for it. Second, the bill helps homeowners get below-market interest rates for their home loans. This will increase their access to capital and lower their monthly payments—and that makes it easier for them to repair their homes.
This bill allows affected towns to work together to develop response plans that will best meet the particular needs of their residents. Towns understand the needs of their residents better than anyone, so their plans will certainly directly address the situations in their towns. For one example, beyond simply providing funding to the homeowner for repairs, the towns could decide to subsidize the cost of construction equipment or materials. The state stands ready to assist the participating towns in developing these plans.
Once the plans are developed, the towns will be able to issue bonds as a group through CHEFA – the Connecticut Health and Educational Facilities Authority. That means the towns will get access to more funding at a lower cost. They can also now obtain a state guarantee against default for the bonds that will fund their response plan. Essentially, once the towns create an action plan to meet the needs of their residents, then the state can help them fund that plan.
The collapsing foundations interest rate reduction program established by section 11 of this bill will help homeowners obtain below market financing for loans they take out to repair their homes. This program will work in the same way that people buy “points” when they take out a mortgage to buy a home. When a homeowner applies for loan from a participating lender, the lender can then access the available funds in this program to purchase a lower interest rate for the loan. Lowering the interest rate will also lower the monthly payment, which will make it easier to get a loan.
At is most basic, this is a common sense bill that asks everyone—from the state to the private sector, to the affected homeowner—to come together and work in a collective effort to overcome what I believe is truly a natural disaster. I urge you to pass this bill without hesitation.
The other concrete related bills and concepts have clustered around four key concepts: establishing new construction and concrete standards, insurance coverage or surcharges, requiring studies, and state bonding. I offer brief testimony on construction standards and studies.
Pyrrhotite and other materials that could potentially cause crumbling are likely found in all concrete. So, limiting one particular material will raise production costs but it may not eliminate the problem of crumbling foundations.
The recipe for concrete production is best set by concrete experts. I strongly recommend that the legislature avoid the risk of establishing an arbitrary standard for acceptable pyrrhotite levels.
Also, requiring specific construction methods, or concrete composition standards are decisions best left to the experts who know the ground and soil conditions at the construction site. Many of these measures carry the risk of raising construction costs on the homeowner without any certainty of preventing foundation collapse.
I don’t think a study at this time would be helpful. By diverting state resources away from implementing practical solutions, we would lose precious time before solutions actually get to the affected homes.
The circumstances around this problem are unique. Unless your basement has started to crumble, you can’t tell whether you’ll ever have to fix it. We have challenges to address together, and now is the time to act. I commend this committee for undertaking such a daunting task and I am ready to assist you considering more deeply the bills before you today.
Office of Lieutenant Governor Nancy Wyman