WASHINGTON—Today, U.S. Senators Chris Murphy (D-Conn.) and Richard Blumenthal (D-Conn.) and U.S. Representatives John Larson (D-1), Joe Courtney (D-2), announced that the U.S. Government Accountability Office (GAO) had completed its report on the financial impact of crumbling foundations that the Members requested as part of the 2019 Consolidated Appropriations Act. The report—the first of its kind from a federal agency to explore multiple facets of this issue—provides a non-partisan and extensively researched analysis on how this issue has affected communities in Connecticut and Massachusetts.
“This report makes clear that our work is far from over,” said the members in a joint statement. “GAO’s report highlights a range of existing federal resources for homeowners that have had a material positive impact on their financial situation, many of which we’ve taken advantage of already, like testing through the CDBG Small Cities Program and the federal casualty loss tax deduction. But the scope of the crumbling foundations crisis is large, and these existing forms of federal assistance alone aren’t sufficient to meet the size of the problem. GAO’s report provides data and validity to the suffering that we know people are facing in Connecticut due to this problem.
“The State of Connecticut has provided much-needed resources to this problem through the creation of the Connecticut Foundations Solutions Indemnity Company, but more support is needed, especially as houses continue to show degradation in future years. We will continue to work to ensure that Congress provides resources towards crumbling foundations remediation, as well as research. Already, the National Institute of Standards and Technology is in the process of conducting pyrrhotite research to create a risk-rating scale for affected properties, and the U.S. Geological Survey completed the country’s first ever pyrrhotite map earlier this year. Our delegation has worked to secure the funds for those research priorities, which demonstrate that this issue is wide in scope and that more federal support is merited. This report provides valuable data that we will use to as we continue to push hard at the federal and state levels to maximize the response to this crisis.”
GAO’s research highlights the negative impact of crumbling foundations due to pyrrhotite on municipalities’ tax revenues, real estate values in the region, homeowners’ individual financial wellbeing, and psychological distress associated with this crisis. The report found that towns highly affected by crumbling foundations have lost more than $1.6 million in tax revenue due to lost assessed values of affected homes. In the real estate market, the report found that “[O]nce a home is confirmed to have pyrrhotite, it can lose significant value” and that of a subset of real estate listings evaluated, “homes saw decreases in their sales price of 25-73 percent since the last sale before pyrrhotite was discovered.” GAO found that impacts on the real estate market spread beyond homes that had tested positive for pyrrhotite, and found that “the presence of pyrrhotite-damaged houses reduced the average sales price of all houses in highly affected towns, especially for homes built in 1983-2015”.
The research highlights that some federal assistance is available, although none of the programs outlined in the report provide 100% of financial restitution to affected property owners. For more information, click here.