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Larson, Courtney Amendments to Support Residents with Crumbling Foundations Pass in House Infrastructure Bill

July 1, 2020
Press Release

WASHINGTON, DC – Today, Congressman John B. Larson (CT-01) and Congressman Joe Courtney (CT-02) announced that two provisions they authored in support of Connecticut residents impacted by crumbling foundations passed in the House of Representatives. The provisions were included as part of the Moving Forward Act (H.R. 2), the sweeping infrastructure investment bill that would invest more than $1.5 trillion in proposals to modernize and rebuild communities in eastern Connecticut and across the country. A third provision authored by Rep. Courtney to aid schools impacted by the crumbling foundations crisis was also included in H.R. 2, which the House of Representatives passed this evening.

The first provision, offered in an amendment authored by Rep. Courtney and co-sponsored by Rep. John Larson and Rep. Stephen Lynch (MA-08), clarifies that states may use federal Community Development Block Grant (CDBG) funds through the U.S. Department of Housing and Urban Development specifically to remediate damage to concrete caused by the presence of pyrrhotite. H.R. 2 would provide an additional $10 Billion to the CDBG program, and this amendment clarifies specifically that housing repairs due to pyrrhotite and crumbling foundations is one of the four qualified uses for this new funding.

The second provision would help homeowners experiencing crumbling foundations due to pyrrhotite by ensuring that they can take the federal “casualty loss tax deduction” after making repairs to their homes for years into the future. Reps. Courtney and Larson worked together to ensure that this language was included in the underlying bill text of the Moving Forward Act.

“The Moving Forward Act is the first infrastructure package in history to address the crumbling foundations crisis,” said Rep. Courtney. “Rep. Larson and I have worked for years to get homeowners and others in central and eastern Connecticut the help they need and deserve, and today the House passed a bill that gets us a lot closer. The Moving Forward Act includes a $10 Billion plus-up to the federal CDBG program, and it includes our provision that would ensure homeowners with pyrrhotite damage are finally prioritized for that funding. It also includes our amendment to keep the clock from running out on homeowners who deserve to take advantage of the casualty loss tax deduction, and it includes my proposal to help schools like Birch Grove Primary School in Tolland get the financial help they need to make repairs for pyrrhotite-related damage. The Moving Forward Act would make historic and long-overdue investments in our entire country’s infrastructure, and it would be a huge step in the right direction for eastern Connecticut homeowners impacted by crumbling foundations.”

“In 2017 I was proud to work with Rep. Joe Courtney to secure the casualty loss tax deduction for repairs made by homeowners to address their crumbling foundations. Unfortunately, the 2017 Republican Tax Bill temporarily limited its applicability. The Move Forward Act restores the casualty loss deduction to ensure there is no gap in coverage and that all eligible homeowners can take advantage of this deduction. Through no fault of their own, homeowners throughout Central and Eastern Connecticut are contending with this crisis. This provision if enacted will be a big step forward in providing financial relief to them,” said Larson.

Background on the crumbling foundations provisions included in the Moving Forward Act:

Community Development Block Grant – In 2016, the U.S. Department of Housing and Urban Development notified Rep. Courtney’s office that that CDBG funds could be used for crumbling foundations remediation. Since that time, however, due to both uncertainty over the allowable uses for CDBG funding and to the limited program funds available in Connecticut, the Connecticut Department of Housing has only made CDBG funds available for pyrrhotite testing purposes.

H.R. 2 would provide an additional $10 billion to the CDBG program, and Rep. Courtney and Larson’s amendment clarifies specifically that housing repairs due to pyrrhotite and crumbling foundations is one of the four qualified uses for this new funding.

Casualty Loss Tax Deduction – Rep. Courtney worked with Rep. Larson and the House Ways and Means Committee to ensure that the underlying text of the Moving Forward Act included a provision to ensure that homeowners experiencing crumbling foundations due to pyrrhotite are able to take the federal “casualty loss” for years into the future—beyond the existing April 2021 filing deadline.

The “casualty loss” deduction allows homeowners to deduct the cost of home repairs made due to crumbling concrete foundations from their taxable income. At the end of 2017, Courtney and Larson secured guidance from the IRS allowing homeowners to take this important tax deduction. Unfortunately, weeks after Courtney and Larson received the guidance, the Tax Cuts and Jobs Act became law, restricting casualty loss deduction to Presidentially declared disasters, only. After more pressure from Courtney and Larson, the IRS issued a second clarification allowing this provision to continue as a legacy provision. However, because it was a legacy provision, the IRS restricted homeowners to amending their 2017 tax returns in order to take the deduction. The deadline for homeowners to amend is April 2021. The provision that Courtney and Larson worked to have included in the Moving Forward Act would ensure that homeowners will still be able to take advantage of this tax deduction in the future.

Rebuilding Schools Impacted by Crumbling Foundations – In 2017, it was reported that Birch Grove Primary School in Tolland, CT, exhibited signs of concrete damage caused by the presence of pyrrhotite. Since then, Rep. Courtney has toured the Birch Grove Primary School, has hosted experts from the federal National Institute of Standards and Technology (NIST) and from Laval University in Quebec to inspect the school, and has worked with the House Education and Labor Committee to advance legislation to provide assistance to schools with pyrrhotite-related damage.

In February 2019, the House Education and Labor Committee voted to authorize the Rebuild America’s Schools Act (H.R. 865). The bill included Rep. Courtney’s amendment to add repairs to crumbling foundations due to pyrrhotite as an allowable use of funds that can be dispersed to eradicate “severe health and safety threats” to schools. The bill also contained an important new title authored by Courtney to create a new grant program for schools to repair or replace their foundation or any affected structures deteriorating due to pyrrhotite. These funds would also be available on a retroactive basis to schools who have already had to fix their concrete.

H.R. 2, the Moving Forward Act, includes both of these important provisions.