Hartford Business Journal

26 HARTFORDBUSINESS.COM | MAY 29, 2023 FOCUS: Municipal Economic Development New Britain Mayor Erin Stewart has proposed a significant reduction to the city's property tax rate, which should provide some relief to commercial property holders. But homeowners will likely pay more in taxes due to higher recent increases in home values, spurred by the state's hot housing market. HBJ PHOTO | STEVE LASCHEVER Sticker Shock Shifting property tax burdens provide businesses, commercial landlords some relief, leave homeowners to pay more By Michael Puffer mpuffer@hartfordbusiness.com E ast Hartford Mayor Michael Walsh heard many concerns from businesses and residents during his town's state-mandated property tax revaluation in 2021. East Hartford's residential prop- erties increased in value far more than commercial and industrial buildings. As a result, the town's $136.1 million tax levy — which funds a majority of East Hart- ford's $211.1 million budget — shifted proportionately away from commer- cial and industrial owners to residen- tial property holders, who already comprise a greater percentage of the grand list. It meant owners of an East Hartford house valued at $198,000 would see a $416 increase in taxes during fiscal 2023. Conversely, one car dealer- ship saw its property tax bill drop $104,000 this year, Walsh noted in a recent interview. Businesses, Walsh said, aren't calling anymore to complain about their property tax bills. "I received none from businesses and received quite a few from angered people saying spending was out of control and, even though I dropped the mill rate, I should drop it more," Walsh said. Municipalities are required by state law to perform property revaluations at least once every five years, and do so on a staggered schedule. Across Connecticut, 37 municipali- ties performed tax revals in 2021, and another 39 in 2022. Many, if not all, saw residential values increase far more than commercial and industrial properties, due to the state's red-hot residential housing market in recent years and the pandemic's negative impacts on office and other commer- cial buildings. That's forcing residential home- owners, in many cases, to shoulder a greater tax burden. It's also providing some relief to businesses, which have long complained about Connecticut's high property taxes — the primary revenue source for municipal budgets. Property taxes make up 43.2% of the total tax burden for Connecticut residents, according to a December 2022 report published by the Property Tax Working Group, which has been pushing for property tax reforms. The situation has put pressure on local municipal leaders stuck between two constituent groups. On one hand, lower commercial property taxes could stimulate economic development opportunities. On the other, upset homeowners have more power at the ballot box. Mayors and town managers are weighing their options: apply the new values in the next fiscal year, which could lead to hefty property tax hikes for some homeowners; phase in the new values over a series of years to lessen some of the initial sticker shock; or petition the General Assembly to delay revaluation. At least three communities — Wethersfield, Middletown and Stam- ford — are currently seeking state approval to delay their revaluations by one year to October 2024. The city of Hartford's 2021 revalu- ation saw the overall value of single- family homes soar 30%, while the value of most large office buildings, hotels and some restaurant-depen- dent retail properties declined. Hartford homeowners are seeing higher property tax bills, but the overall increase in the city's grand list allowed Mayor Luke Bronin last year to lower the property tax rate by 7.2%, from 74.29 mills to 68.95 mills, the largest tax reduction in decades. That was cheered by the city's business community, which has long shouldered one of the highest prop- erty tax rates in Connecticut. (A mill represents $1 in taxes for every $1,000 in assessed property value.) Waterbury recently opted for a phase-in approach, meant to blunt the impact of shifting values that otherwise would have increased the average single-family homeowner's tax bill by about $750 for the fiscal year beginning July 1. Waterbury's 2022 reval saw home values rise by 75% or more, while commercial properties rose an average of 40%. Due to the phase-in, the average single-family homeown- er's tax bill will rise by just about $250 for the coming fiscal year, under Mayor Neil O'Leary's proposed budget. Under that scenario, the tax rate will slide from 60.21 mills now to 55.5 mills in the coming fiscal year. If Waterbury had ripped off the Band-Aid, the city would have been able to reduce its mill rate to 40. O'Leary said an "all-at-once" application of new property values would have increased taxes on his 2,489-square-foot, cape-style house by about $1,600. "I'd be happy to pay that to see the mill rate down to 40, but most people in the city aren't able to keep that pace," O'Leary said. Economic development opportunities In East Hartford, Walsh said he decided to institute the new property values without delay, which allowed the town last year to lower its mill rate from 49.35 to 41. He said the new state cap Mike Walsh Neil O'Leary

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