Hartford Business Journal

24 Hartford Business Journal • October 31, 2016 www.HartfordBusiness.com OPINION & COMMENTARY EDITORIAL Land value taxation won't spur new development H artford city councilors last week released a trial balloon on a new policy pro- posal that would increase taxes on owners of vacant downtown land, in an effort to spur development. The proposal, according to the Hartford Courant, would allow the city to tap the state's lit- tle-known "land value taxation" pilot program, which was created in 2009 and refined in 2013. The program has never been used, but it allows the state Office of Policy and Management to grant three Connecticut municipalities the authority to levy higher taxes on owners of vacant or undeveloped parcels. The city would consider using it in a small section of downtown. We have concerns about the policy, which has an overall goal of growing the grand list by promoting private-sector development. While we support measures that would encourage conversion of parking lots and other underutilized land downtown into residential, retail or office development, using a stick rather than carrot approach won't make up for the various economic conditions that exist in Hartford that discourage new development. Ground-up development in the Capital City is nearly impossible without tax abate- ments and/or other government incentives because of Hartford's significant construc- tion costs, limited tenant demand — particu- larly for office and retail space — and high property taxes. Ask any broker or developer that does business in the city and they will tell you rents that landlords can charge tenants (office, retail or residential) in Hartford don't support the costs of new construction, which can range upwards of $300 per square foot. That is why the the Capital Region Development Authority has had to subsi- dize all the city's major apartment conver- sions in recent years, to help close funding gaps created by the gulf between what it costs to build new structures and what developers can profitability sell them for on the market. Simply assessing higher taxes on property owners of parking lots or other vacant land won't change those economic dynamics. In fact, it will likely make it even more difficult for businesses to operate in Hartford and potentially lower land values — cer- tainly not a way to grow the grand list. (It could also lead to higher parking rates as landowners pass on the added costs to their customers). Land value taxation, which has gotten little use in the United States outside Pennsyl- vania, may help the city raise some extra tax revenues in the short term, but it certainly won't create a strong enough stick to all of the sudden encourage new development. There would need to be a much more comprehensive policy that promises tax abate- ments and other incentives to make projects economically feasible. Hartford does use tax abatements to incentivize commercial development — particu- larly residential — but such deals are done on a case-by-case basis and aren't guaranteed. Hartford's bifurcated tax system, in which commercial property is assessed at double the rate of one- to three-family homes, has already stunted private commercial investment in Hartford. It's hard to imagine how creating another, even higher tax bracket for certain landowners would make things better. If the city truly wants to grow its grand list and encourage private-sector development, it must get its fiscal house in order, work to lower the mill rate and adopt a coherent economic development strategy that takes into account the true economic dynamics of the city. n OTHER VOICES Larson's regional transportation vision worthy of support By David MacDonald C onnecticut legislators and Hartford city representatives need to stand up, collabo- rate and support Congressman John Lar- son's $10 billion vision to redevelop stretches of I-84 and I-91 through Hartford into tunnels. The plan should be supported because it would encourage transit-oriented develop- ment and help reconnect the city, providing more development opportunities. I understand the concerns about the financial feasibility of Larson's vision and I am not one to support excessive government spending. While I served on the Hart- ford city council as a member of the plan- ning economic devel- opment and hous- ing committee, for example, I opposed the baseball stadium deal on the grounds that it was a luxury we couldn't afford, and that it would seri- ously wound the city's financial position. Everything I predicted would go wrong two years ago has come true. I warned my colleagues to reject the risky proposal to build a $60 million stadium in Downtown North and instead promote afford- able, feasible and sustainable mixed-use, transit-oriented development in that area. We needed to focus on protecting our residential and business communities that were already struggling within the current tax rate. Why should the city council, Connecti- cut legislators and transportation officials collaborate and support Larson's $10 billion plan immediately? And why should you care? The answer is simple: Larson's vision encour- ages transit-oriented development, which is eli- gible for federal funding under public-private partnership rules through the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA). Transit-oriented development has been used successfully in many major U.S. cit- ies and Larson wants to bring that track record of success to Hartford. The ISTEA of 1991 is a federal law that posed a major change to financing mixed- use transportation planning and policy. The ISTEA signed into law by President George H. W. Bush presented an overall inter-mod- al (multi-modal) approach to highway and transit-oriented development funding with "collaborative planning requirements," giving significant additional powers to metropolitan planning organizations to generate more pro- gram income. ISTEA defined 80 high priority corridors during the early 1990s to be part of the National Highway System. Connecticut's I-95 and I-91 corridors are listed. I-84 is not. Larson understands transit-oriented devel- opment is about "smart growth" and recon- necting cities and towns to increase "location efficiency density" so people can walk, bike and take transit. Transit-oriented development can also: • Boost transit ridership such as CTfastrak and minimize the impacts of daily commuter traffic; • Provide additional taxable property for the public and private sectors, and invest- ment for new and existing residents; • Create a greater sense of community and encourage tourists to come and visit the historic city of Hartford; • Provide a richer mix of housing owner- ship, jobs, shopping and recreational choices sorely needed in Hartford, clus- tering our major attractions not yet con- nected along the I-91 corridor including the Xfinity Music Theater, Riverside Park, Riverfront Recapture, Connecti- cut Science Center, Marriott Hotel, Con- necticut Convention Center, Front Street Entertainment District, etc.; • Increase desired taxable property and seamlessly connect Rentschler Stadium and eventually connect visitors to the former Showcase Cinema's site where a casino and other development is under consideration; • Expedite extending CTfastrak to UConn students, faculty and staff in Storrs. Most importantly, since the city and state cannot afford infrastructure financing options for transit-oriented development on their own dime, collaborating on Larson's plan — which is already market and design tested — can still be made financially feasi- ble using the private investment partnership design in the ISTEA process and by lever- aging the $5 billion Connecticut planners intend to spend redeveloping the I-84 viaduct in Hartford. The current I-84 replacement planning neglects this once in a lifetime transit-orient- ed development, private investment oppor- tunity that would reconnect Hartford to the Riverfront, South Meadows and Brainard Field and improve access and development along the entire I-91 high-traffic corridor. Lar- son's plan needs support from our state and city leaders. n David MacDonald is the former chair of the Hartford board of education and former member of Hartford city council. HARTFORDBUSINESS.COM POLL Has Obamacare been a success or failure? ● Success ● Failure ● Mix of both To vote, go online to HartfordBusiness.com. Last week's poll results: Can UConn men's/women's basketball maintain elite status outside a Power Five conference? 75% Yes 25% No David MacDonald Send Us Your Letters The Hartford Business Journal welcomes letters to the editor and guest commentaries for our opinion pages. Electronic submissions are preferred and welcome at: editor@HartfordBusiness.com. ▶ ▶ If the city truly wants to grow its grand list and encourage private- sector development, it must get its fiscal house in order, work to lower the mill rate and adopt a coherent economic development strategy.

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