A five-story, 82-unit mixed-income housing project for the long-blighted site of the former Campbell Grain building in Pawcatuck

Housing Formula Changes Calculus for Building Affordable Housing in the Region

Despite concerns that a new funding formula would limit investment in affordable housing in the eastern portion of the state, the Connecticut Housing Finance Authority approved a plan to change how the agency scores applications for a highly sought after tax credit program.

The new formula, based on census tract data rather than town borders, scores areas where lower-income housing is most needed, based on criteria like the availability of jobs and school outcomes.

Stonington, for example, was listed as a very high opportunity town under the old “opportunity map” — a designation that gave affordable housing projects a high priority for funding whether they were planned for Pawcatuck or Mystic. 

Under the new map, only the western part of town, including Mystic, is considered a high opportunity area, while Pawcatuck is marked low opportunity.


Winn Development, which is planning a five-story, 82 unit mixed-income housing project at the site of the former Campbell Grain building along the Pawcatuck River, raised concerns about how the new map would affect its ability to secure Low Income Housing Tax credits.

Last year, even under the old map, Winn did not receive a high enough score on its application to secure $1.95 million in tax credits, despite a relatively high opportunity score of 12/15 – accounting for 15 out of 100 possible points. With Pawcatuck now labeled a low opportunity area, the project’s score would be lower when Winn applies again for the financing.

“The change to the [map] appears to make it more difficult for the Campbell Grain project to receive competitive resources from [the authority],” Winn said to CT Examiner in an email. “Hopefully, it won’t endanger the financing needed to move this important project forward.”

A hundred point scale

Winn’s concerns, and concerns that the change could disrupt funding for projects in other towns split up by the map – including East Lyme, Groton and Waterford – drew the attention of eastern Connecticut lawmakers, who unsuccessfully urged the authority to consider keeping the town-level map.

Nandini Natarajan, the CEO of Connecticut Housing Finance Authority said the authority doesn’t believe that the change to the map will be an impediment to receiving Low Income Housing Tax Credit [LIHTC] deals in areas of eastern Connecticut capable of supporting these developments. 

Natarajan said the authority approves deals “all the time” in areas with low opportunity scores if they can maximize their points in other areas of the 100-point rubric. Between 2019 and 2021, of the 25 LIHTC projects approved for financing, 14 had opportunity scores of 5 or less. But 10 of those approved projects with low opportunity scores were in Hartford or New Haven, and the others were in Bridgeport, Waterbury, Torrington and East Hartford.

“Developers go into the town, talk to the municipality, they’ll try to acquire a site, and for a variety of reasons they come up with a site that doesn’t score high on the opportunity index,” Natarajan said. “But they can maximize the other points that are available to them under the 100 point scale.”

There are other impediments to developing housing in eastern Connecticut, and in other rural areas of the state, Natarajan said. Projects funded with LIHTC need to have the size and scale to attract investors – and rural areas around the country struggle to have the local resources and infrastructure to support projects of that size.

Since 2014, the authority has approved the credits for 56 projects, and 11 have been in towns with a population of fewer than 20,000 residents, including developments in East Lyme, Waterford, Montville, Stonington, Griswold and Killingly. The five largest cities in Connecticut accounted for 26 of the projects.

“Parts of Connecticut that don’t have significant infrastructure – whether its water, sewer, or even people – Low Income Housing Tax Credit deals don’t work that well in rural areas,” she said.

Chicken or the egg

State Sen. Cathy Osten, D-Sprague, was one of the lawmakers who raised the issue to the authority, and later met with agency officials to discuss the change. Osten said lawmakers received the same explanation – that rural parts of eastern Connecticut aren’t suited for LIHTC developments because they lack the necessary infrastructure.

“They say we don’t have the water and sewer infrastructure, or the public transportation,” Osten said. “To me, it’s the chicken and the egg. We don’t have the resources to do that. How do we put in the infrastructure like water and sewer if we don’t have the population to support that? These projects, when they come in, they support those changes.”

State Rep. Christine Conley, D-Groton, said the lack of access to public transportation and the small town populations in southeastern Connecticut are key parts of the area’s low opportunity scores in the updated map.

“But without more affordable housing, it’s difficult to get people to move here. This is continuing the cycle — there are not enough people for public transportation, which leads to low access for CHFA loans, which leads to less affordable housing,” she said.

Natarajan said the financing programs are very technical, especially the LIHTC program that relies on private funding and needs credits worth a certain price to work. 

The program has worked in eastern Connecticut, she said, it just may not work everywhere the lawmakers want it to work. Those areas may need more economic development, she said, before the program can work.

But part of the reason so many more projects in larger cities are awarded tax credits, Natarajan said, is that there are more applications for those cities. Of the 50 applications received since 2019, 25 have been from four of the five largest cities – but no applications from Stamford.

“What we’re doing here is trying to say, we’ll give you a few points extra if you’re in an area of opportunity, because we’re trying to balance where development happens,” Natarajan said. “But ultimately we know it’s only a few points.”

But there are still ways for developers to tweak their applications so that they are more competitive for the LIHTC program, even in areas with low opportunity scores, said Natarajan.

State Sen. Heather Somers, R-Groton, said even if a project is in a low opportunity zone, developers can increase their score by shifting project designs from studio and 1-bedroom units to 2- and 3-bedrooom units – which Osten said is what’s happening with Campbell Grain.

“A lot of it was families, like if you're a single mom with two children and you're trying to get into [a development], you're not going to do a studio or a 1-bedroom, it's just too small,” Somers said. “So, although it's probably not as profitable for the developer to have those kinds of units, that's where you maximize your point score because that's what's really needed,” she said.

Not the only option

According to Natarajan, the LIHTC program isn’t right for every project, but there are other resources available. One option subsidizes a smaller portion of the project. 

The 9 percent LIHTC offers a 70 percent subsidy, and is highly competitive, but there is also a 4 percent LIHTC with a 30 percent subsidy that is not competitive, Natarajan said. Ponemah Mills in Norwich was funded by 4 percent credits, she said.

“Developers know how to make their deals economically viable,” Natarajan said. “Money doesn’t grow in trees, so it’s how you make the deals economically viable for the long-term. We can make deals work, we do them all the time.”


And aside from multi-family housing subsidies, there are other programs that could work better to secure affordable housing in eastern Connecticut, she suggested, like the authority’s home ownership programs, she said.

“We’re talking about rental, but there are parts of Connecticut, including eastern Connecticut, where it may be more economical for someone to actually buy a home than rent.”

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