Thomas MacMIllan Photo
Frew in a soon-to-be-vacated State Street apartment for which she hasn’t found a new tenant.
Trying to keep up with newly increased property taxes, East Rock landlord Susan Frew finds herself facing a rare and unwelcome prospect — stuck with a dozen apartments that she can’t find anyone to rent.
Frew said she and her husband Bob last year paid about $125,000 in property taxes on the 70 rental units they own in East Rock. This year they will pay an additional $65,000, she said.
The increase is due to property revaluations that went into effect this year. East Rock saw the largest jumps in property values in New Haven, leading to corresponding hikes in property taxes under the new city budget that went into effect July 1.
In order to continue turning a profit on their rentals, some landlords, like the Frews, are raising their rents — and prospective tenants are looking elsewhere.
Others are holding the line and eating the loss in order to keep their tenants, or in a few cases even lowering rates to fill their empty apartments.
East Rock Alderman Justin Elicker said he’s hearing from East Rock landlords that, in general, they are reluctantly raising their rents to keep up with the recent tax increases. He and his girlfriend have even done it. He said they’ve found a “compromise” on their three-apartment house. They’ve passed only part of the increase on to their tenants in increased rent, “to try to be fair to the tenant and fair to us as well.”
Monday morning in her office on Bishop Street, Susan Frew pulled out two flyers. One, from almost exactly a year ago, advertising the two apartments that the Frews then had available for rental. The other, from this month, advertising the 12 apartments currently available or opening up in the next month.
Frew said she’s worried. “People are going to other neighborhoods.” More and more, people who would rent in East Rock are going to neighborhoods like Dwight, where they can get a one-bedroom place for $1,000.
However, counterintuitively, the Frews have already found tenants for new apartments that aren’t even built yet. They’re in the process of renovating the old Lovell School at 45 Nash St. into new one- and two-bedroom apartments. The fact that the building is currently characterized by dust and loose wiring has not deterred new tenants, who have committed to renting 15 of the 18 to-be-completed apartments.
Frew acknowledged that the addition of the new Lovell School apartments to the East Rock housing market may account for some of her difficulty renting her older apartments. “I’ve created my own competition.”
Frew said competition has also arrived in the form of new rental stock downtown, particularly at the 32-story 360 State apartment tower. Another East Rock landlord, who asked not to be identified, agreed. He said he’s having to keep his rates flat — or even reduce them and eat the property tax increase — just to get people to rent. He predicted this year will be a loss for him.
Prayer Power
Frew stepped out of her office Monday morning and strolled across the street to a three-bedroom apartment at 940 State St. Last year, she was asking $2,275 per month, and had no trouble renting it to three Yale students. This year, she’s upped the rent to $2,350 and can’t find any takers, despite the new stainless steel appliances in the kitchen and the large roof deck.
Frew’s particularly worried about two enormous one-bedroom apartments at the corner of Eld and State streets, in an old converted garment factory Those saw the largest jump in taxes. So Frew has had to raise the rents the most — from $1,600 to $1,750 per month, she said.
Those rent hikes don’t translate to profit increases, Frew said. “We’re in single-digit profits,” she said: less than 10 percent returns, before income taxes.
“I do a lot of praying,” Frew said, on the way to another one of her un-rented apartments. At 1010 State St., she showed off a place where she had to raise the monthly rent from $1,100 to $1,150. Finding no takers, she lowered it back to $1,100 and still hasn’t found a tenant.
After visiting a few more empty pads, Frew returned to her office with a promise to continue praying — and maybe lower the rates even lower and try to make it work somehow.
“Hang Tight”
Interviews with three other landlords revealed a mix of approaches to the tax increases, from raising rents to holding them flat or even lowering them.
Rocco Fiore, who owns three multi-family houses in East Rock, said he’s raised his rents, but only $25 to $50 a month. He said he’s taking a loss to protect his tenants.
“I haven’t really tried to pass on the [tax] increase because I have good relationships with these people,” he said. “I don’t want to jack somebody’s rent up a couple hundred dollars.”
Fiore said his property taxes went up 30 to 35 percent. “I’ve not been able to get back even half of the increase. The people who have tried have empty units.”
“You get in trouble if you try to get it all,” he said. “You’re not going to get it all. People will move to other neighborhoods.”
“I just hope we can get out of this in a few years,” he said.
“It’s been very tough,” said the East Rock landlord who asked not to be named. He said he’s trying to keep his rates flat, despite an increase of about $500 per month altogether on the several properties he owns. “I’m trying to hold my rents.”
“We’re competing with the big buildings downtown this year,” he said. He said he faced similar competition “seven or eight years ago” after the Smoothie building in Wooster Square was turned into apartments. People moving to New Haven end up in those buildings, but they move to East Rock eventually, after they get to know the city better and get tired of working with big property management companies, the landlord said.
He said he’s expecting that to happen again. “We just got to hang tight and see where things go,” he said. “You got to take the good with the bad.”
Fran DeMaio, a real estate broker who’s also a landlord, said she has a one-bedroom apartment that’s been vacant since the beginning of June. She’s lowered the asking rent from $895 to $865, and finally lowered it to $850 on Monday. “I still don’t have anybody yet.”
Lowering the rents won’t help her meet the property tax increase on her building she said. But the alternative is worse. “I’m not going to make it up with the apartment sitting empty.”
“You can’t raise the rents right now,” DeMaio said. Landlords who try to do that will end up with empty apartments, she said.
“Just because the property taxes go up doesn’t mean you can automatically assume you can pass it on to the tenants,” she said. “There’s a breaking point for the tenant.”
Frew School
Frew offered a tour of the Lovell School, which she said will be completed by mid-August. What were classrooms are now one- and two-bedroom apartments, some featuring sliding walls designed by Bob Frew.
All the apartments feature counter tops made from the old classroom blackboards.
One still has a trace of a classroom mural, with a glimpse of East Rock above some kitchen cabinets.
Boo Hoo
They are loaded.
Should we cry because the value of their property has risen so much.
Save your tears for those whose property value has declined. They suffer more.