Latest News…September 3, 2019

CFSIC Will Temporarily Suspend New Application Activity on Friday, September 6 at 5:00 PM

CFSIC will temporarily suspend the taking of new claim applications at 5:00 PM on September 6. What follows is a Q&A designed to help the public understand what this means.

Question: What does this really mean?

Answer: At 5:00 PM on September 6, the electronic application process on this website will be temporarily disabled for both Type 1 and Type 2 claims. The pdf version of the applications will be temporarily taken down. ESIS ProClaim will, after that time, return any new application sent by USPS or other means back to claimants, on a temporary basis.

Question: But aren’t you already in suspension?

Answer: Only for the signing of new Participation Agreements. We are going to suspend activity for new applications as well starting on September 6. CFSIC will come out of suspension for Participation Agreement signing most probably somewhere between the 2nd and 4th of October, based on what we know now with regard to the timing of our receipt of the next $20 million from the CT Bond Commission. The moment we come out of Participation Agreement suspension, CFSIC will spend down $12 million of the $20 million we will receive by the signing of more than 82 Participation Agreements for homeowners who have been in line since June.

Question: Why are you suspending new application activity as well?

Answer: Because by September 6th we estimate that the booked value of known and verifiable claim liabilities on CFSIC’s balance sheet for impaired foundations that have been severity coded, plus the total of all Type 2 reimbursement claims, will reach $121.6 million.

Question: Why does that number trigger a suspension of new application activity?

Answer: Because CFSIC has only been scheduled to receive approximately a total of $125.5 million in cash between now and June 30, 2022, which is its sunset date under the enabling legislation.

Question: So what’s the difference between these two numbers?

Answer: The cost of administration between now and the sunset date, plus the minimum capital that CFSIC must have on hand at all times in order to keep its license as an insurance company. Without a license, CFSIC stops its operations immediately.

Question: Didn’t this seem to happen all of a sudden?

Answer: Not really. Anyone reading this page would have realized that this was coming more than three months ago, because of our weekly updates on this page about the incremental growth of claim reserves.

Question: What’s the primary reason for the quick leap in identified claimants?

Answer: Condos.

Question: Is that pretty much the only reason?

Answer: Yes.

Question: I’ve heard that many condo owners don’t want their foundations replaced. If that’s the case, why aren’t you just ignoring applications received from condo associations until everything gets worked out?

Answer: Because we have applications in-house, signed by duly-authorized officers of condo associations seeking our help on behalf of the association as a whole. We have two choices: ignore a filed application approved by a condo board of directors requesting our help for that association, or pull the condo association’s application out of line because of the emails and phone calls we are getting from dissenting condo unit owners who don’t want it to happen and don’t think that their boards are empowered to speak for them. We’ve chosen to do what we feel is right… if an association’s board has approved an application, submitted it to us, provided all points of evidence, and has indicated to us that they can legally commit their members, it’s not CFSIC’s business to arbitrate disputes between a condo association and its members. Many people want us to do this. It’s simply not going to happen.

Question: Is CFSIC all through taking applications?

Answer: For the time being. Here’s what you can expect: once new construction contracts are signed on affected homes, or even affected condos, if the actual cost of CFSIC’s remediation reflected in those contracts comes in less than CFSIC’s current posted reserve on each foundation, we will take each reserve down to its exact construction value, before construction commences, thus freeing up space in the program over time, claimant by claimant. If dissenting condo owners manage to reverse the decision made by an association’s board of directors to apply to us…we’ll pull that association’s entire application immediately, take that association out of line, and free up space in the program for others. Of course, if we do that, then any hope of assisting the town in question with its recovery from significant property tax abatement problems will have failed. As an example, from a reserve perspective, if the decision to apply to CFSIC by our largest condo association is overturned by dissenting unit owners, we will pull that association’s application…and it will free up $9.8 million in reserves in our system for the benefit of other homeowners who want, need, and are asking for that help. If this happens, we start taking applications all over again to use the $9.8 million in space that was just freed up, and that condo association and its unit owners are left behind, given no additional substantive funding on the horizon from state or federal government.

Question: Isn’t it just simpler to ask elected officials to extend CFSIC’s sunset date to a point after June 30, 2022?

Answer: Not really. Extending the sunset date from June 30, 2022 without CFSIC having access to at least another $100 million just means that CFSIC’s life would be extended solely to take advantage of access to the only remaining source of funding past that date, which is the Healthy Homes surcharge funding CFSIC would receive each June after the extension, beginning in June 2023. What that means is that you would be extending CFSIC’s life in 12-month increments for the sole purpose of fixing sixty homes, which is what $8.5 million will pay for.

Question: So when do you think CFSIC will start taking applications again?

Answer: This will be in the hands of the new Superintendent. My best advice to that person is to wait until reserves are adjusted downward for the reality of actual construction costs by at least $3 million, so that application activity can quickly resume until that $3 million in reduction can be used up.

Question: Is there any good news?

Answer: More than we have space for here…including significant actual improvements, through CFSIC’s efforts, in reducing the tax abatement burden on the towns within the affected area. CFSIC’s Annual Report, which will be published on September 9, will provide detail about our successes and our challenges. CFSIC is now returning homes to their original assessed values. 89% of our statutory claim reserves come from the ten towns hardest hit by property tax reductions. Each time a foundation is remediated in one of those towns, that family’s equity in that home is restored, the town collects the appropriate property tax, real estate values recover, homes become more saleable, jobs are created in the construction industry, other taxes are paid including sizable sales taxes on the purchase of new construction equipment…and the list goes on.

Question: What’s the real solution here?

Answer: Another $100 million in funding from one or multiple sources.

Question: But how can that be enough?

Answer: It isn’t…but it’s enough to get us through 2024 (if the sunset date is extended) and to fix enough foundations by that time to essentially erase the more than $81 million in tax abatements in the towns in question in the Northeast Corner. At CFSIC, we are focused on short-term victories and the real data needed to make those victories happen.

Preview of CFSIC’s Annual Report

Before September 10, CFSIC will be publishing an annual report (not to be confused with CFSIC’s audit). Among other things, this report will include milestones in the development of CFSIC during the period May 1, 2018 through August 31, 2019. This report will also include data collected by CFSIC showing the extent of the crisis to date and detailing CFSIC’s remediation efforts.

As a preview to what CFSIC will be publishing before September 10, click here for a general infographic showing clearly that 76% of CFSIC’s current registered claimants live in the top ten towns most affected by property tax abatements, and that those top ten towns represent 89% of the value of all claims held in reserve by CFSIC.

Click here for a Tolland-specific infographic example (data verified as of 8/16/19) showing how CFSIC has already begun to make a difference in one of the communities at the epicenter of this crisis.

Update on 1099s

When we announced last week that our position was that CFSIC would need to issue 1099s to affected homeowners receiving assistance, it was because we had received the advice of tax counsel on this matter, in which he urged caution.

The fines and penalties for a failure to issue 1099s, if there is a reasonable likelihood that they should have been issued, are severe. CFSIC carries no insurance for federal fines and penalties. If CFSIC received a fine, it would come directly out of funds needed to remediate foundations.

We decided to announce what we did, when we did, because of the information we had at hand. CFSIC continues to operate with as much transparency as we can.

The tax counsel who advised us on this precautionary step is very experienced in such matters. This is the same counsel who helped us successfully apply to the IRS for our tax-exempt status.

CFSIC will be seeking a “Private Letter Ruling” from the Internal Revenue Service on the 1099 matter. A Private Letter Ruling is, in our view, the only way to proceed with definitively answering this question. Under a Private Letter Ruling, the IRS looks at all aspects of our program and determines, based on our structure, whether 1099s are applicable or not.

Insurance companies are licensed and regulated at the state level, not at the federal level. We’ve read a great deal of conjecture on social media about what we should and should not have done on this subject. We continue to pursue this issue vigorously with the help of the Connecticut delegation. The only definitive answer will come from the IRS.

CFSIC Is In Suspension

CFSIC went into suspension on August 5. We do not know the exact date on which we will be out of suspension. We believe it will be before the end of the first week in October.


If you have any questions about the operation of the program, ESIS is your best source of information on your claim, and their phone number and email are shown below.

Phone: 844-763-1207


As you work through the information and application process, here’s how you can get help:

– Call ESIS (the claim adjuster) at: 844-763-1207

– Email ESIS at:

– Email CFSIC at:

To view a video of how to complete an electronic application, go here.

To apply for a Type 1 claim, go here.

To apply for a Type 2 claim, go here.

To learn more about the program, if you are a homeowner, including application help, go here.

To learn more about the program, if you are a contractor, go here.

Michael Maglaras, Principal
Michael Maglaras & Company
Superintendent, CFSIC