Hartford Business Journal

4 HARTFORDBUSINESS.COM | August 29, 2022 Shelbourne has sued the city of Hartford over the recent valuations of several of its properties, including the Metro Center at 350 Church St. PHOTO | COSTAR 'Grossly Excessive' Downtown Hartford's largest landlord sues city over property valuations By Greg Bordonaro gbordonaro@hartfordbusiness.com S helbourne Global Solutions, Hartford's largest downtown landlord, is appealing in state court the city's tax assessments on most of its center-city holdings, including the Stilts Building on Church Street, which has fallen into foreclosure. Shelbourne has filed at least 14 lawsuits in Superior Court, asking a judge for relief from what it calls "grossly excessive, disproportionate and unlawful" tax assessments that have inflated the values of nearly two dozen properties — including major Class A office buildings — and led to higher property tax bills. The legal actions come after the city recently completed a property reval- uation, required by all Connecticut municipalities every five years. The Hartford Business Journal reported in February that the citywide property revaluation increased the market value of three of Shelbourne's four Class A office towers downtown by more than $12 million combined, which could translate into a sizable tax increase. The higher city appraisals came even as other commercial property values dropped, on average, by about 10%, led by declines in office space. City officials attributed Shelbourne's increases to the expiration of a 2018 tax-fixing agreement. Hartford Assessor John Philip told HBJ in February that several Shelbourne properties had assess- ments set years ago in a legal settle- ment that has since expired. That's why some of its properties have now shown market value increases, despite the overall office market taking a hit. It's not unusual for landlords to protest their property valuations in the wake of a municipal-wide reval. What stands out in Shelbourne's case is the fact it owns so much real estate downtown. Shelbourne bought heavily in Hartford over the past eight years, acquiring — wholly or through a partial ownership stake —20 city properties with more than 2.5 million square feet and values totaling more than $250 million, according to Shelbourne Managing Member Ben Schlossberg. The real estate invest- ment group has spent more than $30 million renovating and marketing its Hartford properties, he said. Shelbourne has filed suit against the city protesting the assessed valuations of many of those buildings. The protested properties and their recent valuations include: • 3580 Main St. (the Fuller Brush manufacturing campus), $4.27 million fair market value, $2.9 million assessed value • 330 Main St., $2.2 million fair market value, $1.6 million assessed value • 350 Church St. (Metro Center), $30.8 million fair market value, $21.5 million assessed value • 100 Pearl St., $24.4 million fair market value, $17.1 million assessed value • 20 Church St. (Stilts Building), $33.1 million fair market value, $23.2 million assessed value Shelbourne is also challenging the valuations of 18 separate prop- erties on Allyn, Church, Trumbull, Ann Uccello, Pratt and High streets. Shelbourne is not protesting the valuation of its Gold Building office tower at 755 Main St., which it owns in partnership with LAZ Parking CEO Alan Lazowski. That property saw its assessed fair market value drop to $62.3 million, down 2.6%. Each complaint, filed by Farm- ington law firm Greene Law PC, reads similar, and seeks more than $15,000 in damages. The complaints say the lawsuits were filed after the city Board of Assessment Appeals rejected requested changes to the valuations. Tax disputes The lawsuits come as Shelbourne faces foreclosure on one of its major office buildings, 20 Church St., amid increased vacancy caused by the pandemic's impact on the office market. In February, Shelbourne's Schlossberg told HBJ the city "totally misunderstood the devastation of COVID and what's coming next, or has chosen to ignore it," and that the higher valuations were "threat- ening literally to the existence of the company and to the city." In a recent interview, Schlossberg said Shelbourne will try to work with the city to settle the tax assessment issues outside of court. "We are just asking for the taxes to be set at a sustainable level so we can run our buildings, and so our tenants don't have to be overtaxed, and then we can compete on the same level as other buildings in the city," Schlossberg said. Shelbourne ran into similar issues years ago, following the city's 2016 revaluation, which more than doubled the taxes on three of its Class A office towers: 20 and 350 Church St., and 100 Pearl St. The combined tax bill on all three properties at the time grew from $2.6 million to $5.4 million. Shelbourne sued the city over those new valuations, but eventually came to a settlement agreement in 2018. The deal provided Shelbourne property tax relief by fixing assess- ments for a set period on several of its downtown Hartford properties (100 Pearl St., 20 Church St., 1006 Main St., 30 Talcott St. and 36 Talcott St.). In return, Shelbourne dropped ongoing appeals of its 2016 assess- ments. It also agreed to make other investments in the city. The 2018 agreement set the market value of Shelbourne's 20 Church St. office building at $28.8 million. Without it, the tower would have been valued at $43 million, according to Philip. Under the 2018 tax-fixing agree- ment the city placed a $21.4 million market value on the 17-story tower at 100 Pearl St. Absent that deal, the building would have been taxed at $34 million, Philip said. Schlossberg argues the 2018 agreement didn't provide tax breaks, but was rather an agreement settling upon reasonable values. He also noted that 350 Church St. – which rose 25.8% in value under the recent revaluation – wasn't subject to the agreement. Hartford taxes differently than every other Connecticut municipality. Others apply their mill rates against 70% of a property's estimated fair market value. Hartford does that for commercial properties. But when it comes to resi- dential properties, Hartford's tax rate is applied against only about 36% of the fair market value. It means the tax rate is effectively halved for residential properties. The city did recently lower its property tax rate by 7.2% from 74.29 to 68.95 mills, the largest property tax reduction in decades. That move was championed by Mayor Luke Bronin.

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