Christine Stuart / ctnewsjunkie

HARTFORD, CT — The Senate gave final passage to a bill Wednesday that would add a $12 annual surcharge to every homeowner insurance policy in the state to help homeowners with crumbling foundations in about 40 north central Connecticut towns and others whose homes are sinking in New Haven.

The bill passed 19-17.

The surcharge is expected to raise about $10 million a year through December 2029 and would be deposited in a Healthy Homes fund. An estimated 85 percent would be dedicated to the homeowners with crumbling foundations. The money would be transferred to the captive insurance fund, which controls and distributes the funds to homeowners.

Funding of not more than $1 million would be remitted to the Department of Economic and Community Development for homeowners with homes near the West River in the Westville section of New Haven and Woodbridge where structural damage has been caused by water infiltration.

The crumbling foundation problem is thought to be caused by a chemical called pyrrhotite that was found in a quarry that has since been closed. More than 635 homeowners have reported the problem to the state Department of Consumer Protection, but the problem is thought to be much bigger and some say it could impact as many as 30,000 homes.

Homeowners have been hesitant to come forward because the problem could mean their home is worthless and many don’t have the $150,000 to $200,000 it would take to replace the foundation. Repair is not an option.

Sen. Beth Bye, D-West Hartford, asked why insurance companies won’t cover the damage.

“This became an exclusion in a policy and it was never added back,” Sen. Tim Larson, D-East Hartford, said.

There are an estimated 30,000 homes that might be uninsurable, and the banks that hold those mortgages are also on the line, Larson said.

Larson said Gov. Dannel P. Malloy has sent three letters to the Federal Emergency Management Agency and has been denied help for these homeowners. Malloy was trying to get FEMA to declare it a natural disaster.

“I’ve been here 26 years and it’s the most important bill in my two decades,” Sen. Anthony Guglielmo, R-Stafford Springs, said.

“If we don’t take this action right now it’s going to result in people walking away from their homes,” Guglielmo said.

“It’s really a question of pay now or pay later,” Guglielmo said. “Connecticut is already one of the 12 states in the nation with 21 percent increase in foreclosures, some of that 21 percent is undoubtedly people in our district.”

Sen. Cathy Osten, D-Sprague, said this is one of those things that’s happened not just here in Connecticut, but it’s happened in Canada, Spain, and Scotland.

“I think we need to do more with testing, but that is not the case for today,” Osten said. “The case for today is to do what we have done for those people who have been involved in actions relating to unforeseen circumstances.”

Several Senators opposed the legislation, believing that it was a natural disaster and the federal government should step in to help homeowners.

“If we keep just scratching the surface we’re really not helping eastern Connecticut,” Sen. Michael McLachlan, R-Danbury, said.

He said a fee on every mortgage in the state of Connecticut is not fixing the problem at all.

“We need to be looking at the bigger picture and hammering away at our federal delegation, hammering away at the White House, hammering away at trying to get a similar response that happened in Quebec,” McLachlan said.

The amended bill passed the House 97-42 Saturday and after Wednesday’s 19-17 vote in the Senate it now goes to Malloy for his signature.