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Megna: “Concerned.”
Time’s running out on New Haven’s proposal to cushion East Rock homeowners from tax sticker shock, as hometown legislators hold out for key changes and the mayor accuses them of “myopia.”
Mayor John DeStefano made that charge Wednesday afternoon as he visited the Capitol for an annual New Haven lobbying day. He was defending his plan to ask state legislators for special permission on how to roll out the recent revaluation of all city property.
His plan, dubbed the “Homeowners Fairness Initiative,” calls on the state to soften the blow of a property tax revaluation by phasing in the new values over five years. In an unusual twist, the phase-in would kick in not for every property, but only for owner-occupied homes that saw an increase in value.
Interviews with New Haven’s state legislators Wednesday found three with serious concerns, three (who represent East Rock) in favor of the initiative, and another two on the fence.
All property owners would see full implementation of their revaluations under DeStefano’s plan. The idea is to protect owner-occupant homeowners, primarily in East Rock, who would otherwise see tax bills rise as much as much as $10,000 this year. East Rock saw its values zoom while most of the city’s stayed flat or fell. People on fixed incomes in other neighborhoods who would otherwise see their taxes go down would be subsidizing a slower increase for East Rockers.
Under the plan, the city would have to raise the new tax rate by 2 mills (or find commensurate budget cuts) to compensate for the tax break for the homeowners. The plan would result in a smaller decrease in tax bills — or in some cases, a bigger increase — compared to fully implementing the revaluation without DeStefano’s plan.
Some legislators, most prominently state Rep. Bob Megna, have raised concerns about the people who’d be subsidizing those homeowners’ tax breaks — renters and commercial property owners.
The proposal would shift up to $9 million in tax burden from owner-occupied homes to the rest of property owners, according to Becky Bombero, the mayor’s deputy chief of staff. She said that that’s based on a rough estimate of 16,235 owner-occupied homes, which likely overcounts the true number. The tax plan would benefit the 28 percent of those homes that saw an increase from 2010 values to 2011 values at full implementation.
On Wednesday, Megna said he still has reservations about the proposal, including its impact on owner-occupied homes whose values didn’t go up. In his district, 80 percent of homeowners would see a tax hike under DeStefano’s plan compared to a full implementation of the revaluation, he calculated. The hike comes because the city would have to raise the tax rate from 38.96 mills (that’s $38.96 per $1,000 in assessed value) to 40.56 mills to compensate for the tax breaks for the minority of owner-occupied homes whose values are going up.
“That concerns me,” Megna said.
“There’s winners and losers in all of this,” added state Rep. Toni Walker. “I feel like we’re being rushed to judgment on what side of the fence we’re supposed to end up on.”
DeStefano seethed Wednesday upon hearing of Megna’s critique.
“If Bob doesn’t want the bill, he can kill it.”
“I think the Board [of Aldermen] and I and most residents are pretty clear that there’s an opportunity to absorb sticker shock for New Haven homeowners,” DeStefano argued. “I don’t know why folks wouldn’t want to do that.”
For people whose home values would go up, the values would “go up sharply,” he said, while “folks who go down through a small cost over five years could subsidize their neighbors.”
To object to that subsidy, DeStefano said, “is like people in other parts of the city saying we shouldn’t do the senior tax freeze because it subsidizes people in the East Shore.”
“It’s a kind of myopic, narrow way to view things,” DeStefano said.
Meanwhile, New Haven’s eight-person delegation at the Capitol remained divided.
“There’s no consensus yet,” reported state Senate Majority Leader Martin Looney.
Because the proposal missed a deadline to be raised as its own bill, Looney and company will have to persuade other legislatures to tack it onto another piece of legislation.
New Haven state Rep. Roland Lemar, who represents East Rock, said the group has identified Senate Bill 399, which concerns revaluations in Hartford, as a likely vehicle. But before New Haven’s request can go anywhere, “we need consensus in the delegation.”
Megna said he’s willing to discuss the topic, but “I haven’t been approached with an alternative” to DeStefano’s plan.
Megna has a personal stake in the outcome: He owns four condos, a three-family house on Lyon Street and a commercial property on State Street. Like all other owners of non-owner-occupied homes, Megna would be paying an extra $1.60 per $1,000 in assessed value on each of those properties under DeStefano’s proposal, compared to the full revaluation.
Megna said he’s not worried about his own properties, but about the renters, businesses and homeowners who’d be footing the bill for a few thousand owner-occupied homes that were lucky enough to see their values rise.
State Rep. Pat Dillon shared some of his views.
“I’m concerned about the way it would affect” small businesses, west-side homeowners whose values didn’t go up, and senior citizens renting in for-profit senior housing, who might feel the brunt of a tax hike.
Some commercial buildings, including large apartment buildings, would see a higher property bill under the mayor’s proposal.
For example, take developer Carter Winstanley’s biotech building at 300 George St. Winstanley Enterprises currently pays $1,668,400 in taxes there. With full implementation of the revaluation, the bill would climb to $2,102,728.
Dillon said she hasn’t “made a commitment one way or the other,” but she has reservations about the process and the substance of the proposal.
She said it’s unfortunate the mayor missed a deadline to introduce a stand-alone bill earlier in the session. “If a bill had been filed, you would all have the right to testify — we’d all have the same set of facts.”
She said some people may not know that they’d lose out under DeStefano’s proposal. For example, a couple in her district bought a house under two paychecks. After one person got laid off, they’re struggling to make mortgage payments under one paycheck. That couple would see a lesser drop in their tax bill under DeStefano’s proposal, she said.
“If somebody’s subsidizing someone, shouldn’t they know?”
State Rep. Juan Candelaria shared those concerns.
“I’m concerned about the business owners — they’re the ones that are going to feel the weight of the plan,” he said.
“Is it fair to every other neighborhood” to subsidize owner-occupied homes in East Rock? Candelaria asked. (The bill doesn’t technically treat East Rock any differently, but that happens to be the neighborhood hit with the most sticker shock in the last revaluation.)
Candelaria said he’s still debating that question. He sees the other side, too: “if we don’t do it, you’re going to see a lot of homeowners losing their property” in East Rock.
State Rep. Gary Holder-Winfield and Lemar gave the strongest commitment to DeStefano’s proposal.
Property owners in the wealthier part of his district, near Prospect Street, have been among the most vocal in calling on legislators to pass the bill.
“I will vote for it when it gets here,” Holder-Winfield said.
Sen. Looney said he’s committed to finding a solution.
“I’m certainly in favor of doing something,” he said.
As Senate majority leader, Looney often plays the role of consensus-maker. He said biggest concern he has heard from the delegation is that it’s going to pass the tax burden on to renters. One change that’s been floated would be to phase in revaluations for all residential property, not just owner-occupied homes, he said.
State Sen. Toni Harp and state Rep. Walker remained on the fence.
“I still haven’t made up my mind about it,” Harp said. “We’ve really got to delve into the numbers to ensure that we’re not shifting the cost onto renters and commercial property owners.”
“I really am on the fence on this whole thing,” said Walker, “because I have not gotten a solid answer on why our revals are so inflated in some neighborhoods and not in others.”
Mayoral spokeswoman Elizabeth Benton later responded that rental rates usually reflect what the market can bear at that point in time, and don’t tend to fluctuate with tax increases.
Rep. Lemar, whose district includes East Rock, said he’s all for DeStefano’s plan, which he called a creative way to keep people from losing their homes. When homeowners in one neighborhood get hit with an effective tax hike of 25 to 75 percent, the whole city stands to suffer, he argued.
“It’s truly damaging to the entire city if owners in any neighborhood are placed in that kind of distress.”
City spokeswoman Benton agreed: “There is a benefit to all residents when you stabilize neighborhoods,” she said. She added that those who stand to get tax relief under the mayor’s proposal aren’t all the wealthiest people in town. Some are moderate-income folks who bought into the SoHu or Goatville neighborhoods in East Rock a few decades ago. As the values of their homes shoot up, they may find themselves “house-rich but cash-poor,” she said, which is a difficult situation when it comes to paying the tax bill.
Lemar said the focus right now is to get New Haven legislators to settle on a solution that would be “equitable” to all property owners.
“We’re just trying to find consensus,” he said.