Emily Hays photo
Patricia Wallace: Seniors, renters feeling the squeeze.
Even if the city phases in higher property values over the next five years, landlords will likely pass along higher rents next year — if the mill rate doesn’t drop further.
New York-based developer Nitsan Ben-Horin offered those words of caution during a virtual “town hall” about the mayor’s proposed Fiscal Year 2022 – 23 (FY23) budget. And he wasn’t alone, as landlords sounded an alarm.
Ben-Horin was one of roughly a dozen people to speak up during the Zoom-assisted public meeting hosted Wednesday night by Mayor Justin Elicker.
The mayor convened the online meeting to talk about and field questions on his proposed $633 million general fund budget for the fiscal year that starts July 1. The document, which can be read in full here, now heads to the Board of Alders for three months of hearings and public review before a final vote in late May. The Board of Alders Finance Committee is slated to host its first public workshop on the proposed budget on Monday.
During the Q & A portion of Wednesday night’s meeting, Ben-Horin — who owns and is in the process of developing rental properties in Westville, East Rock, Cedar Hill, and elsewhere — pressed Elicker on one of the more controversial and complicated plans at the center of his budget proposal.
That is, the mayor has proposed slightly lowering the mill rate from 43.88 to 42.75. In tandem with that mill-rate-shave, the mayor has proposed phasing in over the next five fiscal years the 32.6 percent jump in property values resulting from the city’s latest full revaluation.
Elicker has pitched this reval phase-in plan as a way to protect local homeowners who live in neighborhoods where property values rose the most sharply — such as Newhallville, Fair Haven, the Hill, and Chapel West — from getting hit with new much-higher tax bills all at once. A recent Independent analysis of this plan, meanwhile, points towards luxury developers and megalandlords being two of the biggest winners of such a plan.
Mayor Elicker at March 1 budget presser.
In his comments Wednesday night, Ben-Horin focused on the biggest potential losers of such a plan.
“Why won’t you opt to do like Bridgeport and simply drop the mill rate by 10 points, and just let it stay there?” Ben-Horin asked.
Ben-Horin said his concern with the reval phase-in is that multi-family rental properties, including several that he owns, have skyrocketed in value thanks to reval.
He said they’ve risen at a much steeper rate than smaller residential properties that are more likely to be owned by owner-occupants.
“A commercial landlord is not going to look at the phase-in in the way a private person would,” he said. “He or she is going to say: ‘Four or five years [from now], this is where I’m going to be. And let me start raising the rents now before I fall behind.’ ”
That is: Even if the city phases in the full reval over five years, commercial landlords — investors who own multi-family rental properties as a business, and not just as a place to live — are going to start raising rents sooner rather than later. That’s because they’ll be anticipating the much higher property values to come, and a mill rate that might not budge.
“Because let’s face it,” Ben-Horin continued, “if your taxes went up 60 percent, there’s no other way to pay besides raising rents.”
He added that “most of the landlords” in New Haven “keep the rents really low. Now you’re giving them a disincentive to keep the rents low.”
So, he asked the mayor: “Aren’t you concerned that this approach is going to push the panic button for landlords, and they’re going to start raising rents? … Aren’t you concerned that by taking this approach, instead of just dropping the mill rate, that it’s going to be passed on to the renters?”
“Yes, I’m concerned that landlords will raise the rent on people,” Elicker replied. “That’s one of the reasons I’m proposing a phase-in.”
He repeated that, in certain neighborhoods like Fair Haven and the Hill, “we saw a dramatic increase in property values.” That was true with single- and multi-family properties alike.
If a multi-family property increased in value by 70 percent thanks to reval, the mayor said, the combined phase-in and slightly lower mill rate should mitigate the increase to the owner’s tax bill.
That way, “the landlord is not going to pass as much of an increase in their taxes” to renters, the mayor posited. “They would pass on less, if they chose to pass on [less], to their renters.”
That’s exactly why he’s proposing the reval phase-in, Elicker concluded.
“I don’t want people to see some dramatic change to their costs, whether it be renters or a lot of the homeowners.”
Remember The Renters, Seniors, "Little Landlords"
Thomas Breen file photo
Patricia Wallace in the pocket park next to her Dwight home.,
Ben-Horin wasn’t the only landlord to speak up Wednesday night with concerns that rents will rise under the mayor’s budget plan.
Dwight resident Patricia Wallace said the same. Wallace said she has lived in the neighborhood for decades.
She has long-term tenants in the property she owns, lives in, and rents out part of.
And she tries “to charge modest rents and to treat people the way I would like to be treated.
“And the people that live here are not people who are going to be able to stay here if I have to jack up the rents.”
Wallace said she’s retired and on a fixed income. She also recently got hit with a lead paint abatement order from the city that could cost her tens of thousands of dollars to comply with.
“I do think that people who are renters and people who are retired, people living on a fixed income and who own a one- or two- or three- or four-family house,” she continued, “my hope is that between now and when the Board of Alders [budget] process is over, there will be a special effort to really look at:
“What’s going to happen to the renters that live in the affordable housing that already is here? Because many landlords try to keep rents affordable to people.
“And what’s going to happen to older adults living on fixed incomes.
“I hope you’ll be especially curious about those two groups.”
The big landlords are going to be fine, Wallace concluded. “But the little landlords, this is where a lot is going to be going on. Are we just going to gentrify the heck out of these neighborhoods with this kind of tax approach?”
Elicker and City Assessor Alex Pullen said that there are already two different elderly benefits programs open to city residents that freeze taxes for eligible homeowners. There’s also a renter rebate program open for low-income seniors who rent.
Pullen recommended that anyone interested in participating in any of those programs call the assessor’s office or visit the office directly at City Hall.
“You’re right, we don’t want to live in a city where the cost of homeownership and the cost of rent keep going up, so that only a certain type of person can afford it,” Elicker added. “That’s not the kind of city we are.”
He repeated that part of the goal of the reval phase-in is to “make it a little bit easier” for exactly these groups.
He said his administration is “very open to other ideas as to how we can help out small property owners.”
“If there are ideas that folks have, feel free to shoot me an email or reach out.”
Luxury Development Impact? "Kind Of A Loaded Question"
Thomas Breen photo
City Assessor Alex Pullen.
A number of attendees at Wednesday night’s meeting also asked Elicker and Pullen about how the decade-long boom in market-rate and luxury apartment development has affected the city’s taxable grand list.
And they asked how the investor-owners of these properties, which increased significantly in value during reval, would benefit from the phase-in.
“In terms of what or how much is being added to the grand list as a result of these new properties that are coming online, that is something that we’re in the process of determining,” Pullen said.
That’s because, “with this [reval] phase-in, we also have to now adjust the numbers of the citywide assessment deferral program, which most of the larger and newer apartment complexes and commercial buildings are subject to.”
That separate program seeks to incentivize new development in town by phasing in higher tax assessments over five to seven years.
For the properties in that assessment deferral program, “each one would have to be calculated by hand because there are different rules for when it was started and when finished.”
So, Pullen concluded, “it’s kind of a loaded question” as to how these properties will affect the grand list. He said his office is working now on figuring that out.
Click here and enter code !t1xUx5% to watch a video recording of Wednesday night’s budget town hall, and click here to read a copy of the mayor’s presentation at the meeting.
Little landlords will be screwed. If they attempt to raise rents, they can be delayed and blocked by the fair rent commission in New HAven. Better sell now to Mandy while you still can, NH homeowners. It's time to move, as Tweed said to Morris Cove...