TOP STORY: Lyme Targets Home Repairs and Rentals in Bid to Preserve Affordable Housing

LYME, CT – The town’s Affordable Housing Commission earlier this week agreed to send two proposals to the Board of Selectpeople as members focus on modest, near-term initiatives to make it easier for lower-income households to remain in town. 

One proposal would offer no-interest loans to lower-income homeowners for repairs or accessibility upgrades in exchange for a deed restriction to keep the home affordable. The other would provide tax incentives for landlords to rent to lower-income households. 

Commission members acknowledged the programs would likely fall short of the type of growth envisioned by state leaders who last month secured passage of a comprehensive housing bill aimed at expanding affordable housing across Connecticut. 

Commission Chairman Jim Miller said the state’s goal is to encourage the construction of new homes that come with covenants to ensure they remain affordable for at least 40 years. 

Under state guidelines, a home is considered affordable when the people living there don’t spend more than 30% of their income on housing-related expenses. For a family of four earning $101,280 in the Lower Connecticut River Valley Council of Governments, data from the state Department of Housing shows rent for a three-bedroom home must be $2,236 a month or less to be considered affordable. 

But Miller said building new homes isn’t a simple proposition in Lyme, where more than half the land is conserved as open space and the rest is marked by extensive bedrock and a lack of sewer options. That’s why the commission has shifted its focus to preserving affordability within the existing housing stock. 

He said there are homes in Lyme now that people earning lower incomes can afford. The important thing is ensuring prices remain modest, according to the chairman.

“The issue is, with the pressure of higher prices, any time one of those houses comes up for sale, we’re at risk that a developer buys it, bulldozes it, and puts a giant house there, and then that house will never again be affordable in the town of Lyme,” he said. 

The proposed Endowment for Affordable Housing Rehabilitation would provide qualifying homeowners with no-interest loans of up to $40,000 in exchange for deed restrictions that would qualify the homes as affordable under state rules.

During that period, the homes could only be sold or rented to eligible households earning 80% or less of the area median income. The loans would be repaid as the property is sold in order to replenish the fund. 

“This is, I think, a very simple way to do things,” Miller said. 

He said the program is modeled after a program in Stonington established in 2022 with $150,000 in American Rescue Plan funds. Stonington this year received an additional $400,000 from the state Department of Housing to serve more households. 

Miller suggested $200,000 as a reasonable “working number” for the fund and said the commission must act this month or next to be considered in the 2025–26 budget, which voters will approve in May.

Several members questioned whether the incentive would be enough to persuade homeowners to accept a decades-long restriction on how much they can profit from the sale of their homes. Former co-chairwoman Carol House said past efforts calling for short-term deed restrictions failed to attract interest.

“The negative part of me is saying that I’m not sure whether we will get any takers if you have the 40 years on there,” she said. 

Former co-chairwoman Carleen Gerber said she would be unlikely to accept such terms herself and suggested the town consider a shorter restriction, even if it means the units would not qualify under the state’s definition of affordable housing.

The debate comes as the new, 107-page state housing law has left it up to nine regional planning organizations to take the lead in determining how many affordable housing units each city and town in Connecticut should add to their housing stock. Municipalities have until June 2028 to join the regional affordable housing plan or come up with their own. 

A 40-year deed restriction would allow Lyme’s units to count toward its eventual housing target. Without it, the units would not count – even if they are rented or sold at income-restricted levels.

Miller and commission member Andrew Gibson argued the 40-year deed restriction is worth trying through a pilot program. 

“My thought on that is, if the state is asking – very specifically – every town to make a contribution to the amount of affordable housing in the state, shouldn’t we give it a try and see? And at least then we’re making an effort to comply with the state’s requirements,” Miller said. 

Gibson said a family that needs a wheelchair ramp or a new roof installed might agree to the terms of the loan if it will keep them from having to leave town or move into an assisted living facility. 

“That’s how you learn,” he said. “We can guess all day long about what people in town might or might not choose. But so far, we’ve been trying to perfect everything, and we haven’t really moved forward at all.” 

The commission’s last four years have been dominated by unsuccessful efforts to acquire property so the town could renovate or build small, multifamily units or clusters of single-family homes. 

The commission voted 6-0 to send the housing rehabilitation endowment to the Board of Selectpeople. They emphasized it’s up to First Selectwoman Christy Zelek and Selectmen John Kiker and Tom St. Louis to approve, deny or change the proposal. 

Tax Credit

The commission also voted 6-0 to send the selectpeople a proposal to establish a $100 per month tax credit for landlords who rent to tenants in lower income brackets. 

Members said there are more than 100 accessory dwelling units in town that could be ideal homes for young people embarking on careers, volunteers in the Lyme’s fire and ambulance services and older adults. The term refers to small attached or detached apartments that are secondary to the main residence. 

Several years ago, the commission contacted owners of those units to gauge interest in renting at affordable rates in exchange for a tax credit and a one-year deed restriction. Miller said nobody was interested.

“So we know that a deed restriction is a complete deal killer in the context of rental properties,” he said. 

State law now mandates a 10-year deed restriction in order for an accessory dwelling unit to be counted as affordable housing. A draft program description argues that insisting on a deed restriction solely to meet state demands is counterproductive if nobody signs on. 

“Lyme intends to achieve increased supply and improved access to affordable housing, whether or not this program meets state requirements as ‘Affordable,’” the draft said. 

House suggested creating a “marketplace” to connect qualifying renters with landlords to make the program more accessible.

Members also called for the creation of a subcommittee at a future meeting to analyze the new housing law and determine whether Lyme should join a regional housing plan or pursue its own approach.

Gibson reiterated the town’s unique status among the cities and towns in the region, which extends from Middletown to Old Lyme. 

“We really are an outlier,” he said, citing the amount of land protected from growth through conservation easements. “I mean, no one has 25 square miles devoted to recreation.”