New Canaan developer asks state to revoke town's moratorium on 8-30g law about affordable housing

NEW CANAAN — A local developer and housing advocacy group claim the state should review and revoke New Canaan’s recently granted relief from a state law that allows developers to use affordable housing to circumvent town decisions on development.

After New Canaan earned a long-sought-after affordable housing moratorium in August, developer Arnold Karp filed a petition this fall with the state Department of Housing claiming the town did not prove it was continuously compliant with state law and should have had points deducted for housing complexes that were demolished and rebuilt.

On Dec. 23, Open Communities Alliance filed a brief in support of Karp's complaint, stating, among other things, that allowing New Canaan to not deduct demolished units from its affordable housing numbers "contravenes the very purpose of the law."

Under state statute 8-30g, towns that meet the threshold of 10 percent affordable housing inventory are exempt from a law that allows developers to challenge a town's decision to reject an affordable housing development. For those that don’t meet the threshold, like New Canaan, towns can apply for a moratorium if they earn enough points from building affordable housing, called HUE points.

“Since the town’s been so inflexible with us, when others pointed it out, we thought we should at least get an accountability on what should count as HUE points and what doesn’t,” Karp told Hearst Connecticut Media Group.

New Canaan, which has made achieving moratoria the cornerstone of its affordable housing strategy, just earned its second moratorium in August after its first moratorium lapsed in 2021. Town officials estimate New Canaan will be able to secure another moratorium in 2028 with its recent purchase of the former Avalon New Canaan for $75 million at the end of October. 

Karp filed the petition in September through the entities 751 Weed Street LLC, W.E. Partners LLC, 51 Main Street LLC and Hill Street-72 LLC.

A request for comment from the town was not returned. 

Karp is no stranger to criticizing or legally challenging New Canaan on affordable housing.

The developer is moving forward with three New Canaan 8-30g developments through the state process after the town rejected all three during the lapsed moratorium period. Karp is also opposing the town as an intervening party in its lawsuit against the Department of Housing for rejecting New Canaan’s 2022 moratorium application.

In the new petition, Karp claimed that the housing department “completely ignored” the requirement to prove continuing affordability or continued compliance with affordable housing requirements.

The petition also claims that the housing department should have deducted housing points from the town for demolishing the units at Millport and Canaan Parish to make way for new units that the town claimed on its latest moratorium application.

“It is simply beyond belief that the Connecticut Department of Housing is willing to approve moratorium points without proof from the applicant town of annual ongoing compliance with respect to affordability requirements,” the petition reads.

Civil rights group Open Communities Alliance submitted a brief on Dec. 23 in support of Karp’s bid, supporting claims that New Canaan should have proved its compliance and the housing department should have deducted points for prior demolitions.

“If New Canaan is allowed to obtain a moratorium without including necessary evidence in support, any town could follow its lead and make unsubstantiated claims, rendering the statute effectively toothless,” the brief alleges. “Likewise, allowing New Canaan to avoid deducting points for the demolition of affordable housing units contravenes the very purpose of the law.”

Under the state statute, moratorium points should be subtracted for any affordable units that are affected by any action that would mean it is no longer affordable, including demolition, Karp's petition argues.

In a memorandum submitted on Dec. 23 in response to Karp’s petition, the town argued that the units demolished at Millport and Canaan Parish would not need to be deducted because they were previously priced at 80 percent of area median income and did not meet the current state standard of state median income, which is lower.

“The units claimed for HUE points in this application are not only brand new and fully updated, but they are also drastically more affordable than the pre-existing units and cannot be considered comparable replacements to the deteriorated pre-existing units formerly at Canaan Parish and Millport Apartments,” the memo reads.

The petition has sparked some action from the Department of Housing. In November, department commissioner Sheila Mosquera-Bruno issued an order stating the department will issue a declaratory ruling whether New Canaan is required under 8-30g to provide evidence of continuous compliance. It will also rule on the legal basis for finding that demolished Canaan Parish and Millport apartments would not have received any points had they been rebuilt subject to the original affordability restrictions.

According to the order, the department will issue its declaratory ruling on compliance requirements no later than March 7, 2025.

“As we look at the numbers, they’re all important. But the most important part of all of the calculations is to do what is asked, which is to create more affordable housing,” Karp said. “You would hope that with all of the calculations people are doing that we are creating more, not less affordable housing in Connecticut.”

Karp also said he welcomed the addition of groups like Open Communities Alliance “who understand how important housing is,” saying, “We didn’t know anybody would be joining us, and we’re glad they did.”