Thomas MacMillan Photo
As some East Rockers look at tax bills leaping as much as $10,000, Mayor John DeStefano is pitching a “Homeowners Fairness Initiative” that would soften the blow for the hardest hit — assuming the state legislature cooperates.
The recent citywide property revaluation came as a boon to those who saw their property values drop, along with their prospective tax bills.
Others, particularly in East Rock, saw staggering increases in their assessments and thus their expected taxes. That has caused panic to set in among some East Rockers. And it has presented New Haven policymakers with a dilemma: how to ease the blow of a massive tax hike in that one neighborhood without cheating property owners almost everywhere else out of an overdue tax cut?
At a Monday afternoon press conference, DeStefano (pictured above) weighed in with a plan to address the abrupt hike, which he said would destabilize neighborhoods. The plan, dubbed the Homeowner Fairness Initiative, would phase in the new property values over five years. Unlike a citywide phase-in, this one would not apply to all city properties, but only to owner-occupied residential properties that saw an increase in value.
Although state law permits the city to implement a citywide phase-in, carving out a particular subset of properties to phase in — as the mayor hopes to do — requires special state legislation. DeStefano is calling on New Haven’s capital delegation to help make that happen.
The Homeowner Fairness Initiative would include a decrease in the mill rate from 43.9 to 40.56. The overall result would be tax decreases for 75 percent of owner-occupiers, DeStefano said. The lower mill rate means that all car owners would see lower taxes as well.
Even though the phase-in would affect only owner-occupied residential properties, the plan would mean marginally higher tax bills for some other property owners, versus what they would otherwise pay if the new property values were implemented fully. That’s because the mill rate, although lowered from its current level, would still be higher than the 38.96 it would be without the mayor’s new initiative. It amounts to some property owners — particularly commercial property owners — “essentially subsidizing” the residential owners hardest hit, said city spokeswoman Elizabeth Benton.
The mayor’s Monday press announcement, in a conference room in City Hall, came three days in advance of Thursday’s unveiling of his proposed budget for the coming fiscal year.
The 2011 property assessments amount to an increase of $792 million in the city’s grand list, the list of all taxable property, the mayor began. The list increased from $5.19 billion to $5.9 billion. Of that increase, $173 million came from new construction; the rest reflected increases in value.
This property revaluation differed from past ones, which have seen a shift in value from residential to commercial properties, DeStefano said. While commercial values went up this time, residential values split sharply, with some going down and others going steeply up.
The new initiative is designed to allow homeowners to benefit, tax-wise, from the deflation in their property value while mitigating the blow to those who saw a huge jump, DeStefano said.
With the use of a PowerPoint presentation projected on a nearby screen, DeStefano ran through some examples of how the plan would affect specific properties in the city.
Using two homes in Ward 19, which covers both East Rock and Newhallville, DeStefano showed that the plan would affect properties with lower assessments little, relative to an unmitigated implementation of the new values or a citywide phase-in. There would be some change, because of the associated mill rate difference between full implementation and the proposed phase-in. But not much, the mayor said.
For instance, a small 1,003-square-foot two-bedroom house on Sheldon Terrace in Newhallville was assessed in 2006 at $86,500. Due to the frozen phase-in over the following years, it was still valued for tax purposes at only $61,264 in 2010. The 2011 revaluation lowered its assessment to $51,030. The homeowner’s taxes would therefore go from $2,689 in the current year to $1,998 if the new values were fully implemented. Under a citywide phase-in, the figure would be $2,081. Under the mayor’s plan, it would be $2,070.
In the same ward, a larger, 3,348-square-foot 2‑bedroom house on Prospect Hill would see a big benefit from the proposal. Instead of jumping from $13,341 to $18,799 in annual taxes under full implementation, or to $15,683 under a citywide phase-in, the bill would be $13,775 in the coming year.
That bill would eventually go up to the full $18,799, but the homeowner would have five years to ease into it.
The plan comes down to a question of what’s fair, DeStefano said. “Fairness will largely depend where you sit.”
“Band-Aid”?
Mona Berman, a Wooster Square homeowner who turned up at the press conference, offered the mayor some immediate public feedback on his plan. “It’s just another Band-Aid,” she said.
She said her taxes have increased 300 percent since she bought her home in the ‘80s.
What’s needed is a fundamental change to the tax structure, said Cordalie Benoit, another Wooster Square homeowner.
“I can’t think of a better solution that’s achievable than this,” DeStefano said. “This is the fairest I can think of.”
“Is it a Band-Aid? I think it’s a fair description,” he said. But “the patient is bleeding.”
He agreed that statewide changes to taxes are needed, including the full funding of Payment In Lieu Of Taxes from the state to the city.
Berman later said she’s not opposed to the new phase-in plan. But more needs to be done, like turning down the heat in City Hall. “This place is too hot,” she said. If she kept her house that warm, she’d be bankrupt, she said.
“It’s a metaphor,” Berman said. “I think we’re very inefficient.”
Tough Slog
The mayor’s plan would have to win state approval by the end of the legislative session in May, in order to affect the tax bills that will be sent out in June.
That’s a difficult, but not impossible prospect, said New Haven state Sen. Martin Looney, the chamber’s majority leader. It’s a short session, and legislation is generally required to be submitted in advance of the session, he said. But the idea is “worth exploring,” especially if it has the support of the Board of Aldermen, Looney said.
East Rock Alderman Justin Elicker said he supports the mayor’s proposal. “It’s a very positive envelope,” he said. “In an ideal world we could push the envelope further.”
The initiative doesn’t help, for example, a landlord who might own a three-family rental house in East Rock, and can’t realistically hike rents in one year as much as his tax bill will jump, Elicker said. Nor does it help the tenant who will inevitably see an increase in her monthly rent.
He said some of his constituents would see as much as a $10,000 increase in their tax bills if the new valuations were implemented fully.
Jessica Holmes, another East Rock alderman, said she also supports the plan. There’s a conception in the city that most people in East Rock can afford to pay a lot of taxes. The reality is “most people already do,” Holmes said. The new initiative “requires a lot of people throughout the city to contribute a little more,” she said.