Taft Apartments Sold For $52.5M

The property values were calculated before all of the downtown rents had skyrocketed by $500 or $1,000 per month, similar to NYC and Boston. Hopefully in 5 years the new downtown real estate values will get factored in and taxes can be reduced for everyone else.

The city should be doing everything it can to get more development downtown, since those properties will generate hefty taxes in the future. Everything within a mile of the Green should be re-zoned to allow for 50-story development as of right.

Like I said In 2017

THREEFIFTHS
Jan 20, 2017 7:45 pm

Hass: A new day looms.

A new day looms alright.As I keep saying get ready for stage two of gentrification in New Haven.The green will be made to look like Central Park West.You will start to see nannies pushing Baby Carriages.More dogs being walked.More Joggers.There will be no more hair cuts food for the homeless.The homeless will be gone.

Anonymous -- your 'rezoning proposal' would decimate so many historic neighborhoods... such great 'visioning'!
But I guess 'character' is less important to you than greed....

Will this stop the Board of Alders from giving tax abatements?

The question is not, “ why do real estate investors so frequently pay far more for a property than the city has appraised” but “why has the city so frequently appraised large scale residential rental properties so far less than their worth?” Corruption or incompetence? Take your pick.

Bill, which is more important: Your definition of "character," or ensuring that everyone in our city can have a dignified place to live?

The latter is only possible if we build sufficient housing for the millions of people who work in the New Haven area.

As the population ages and retires, hundreds of thousands of additional workers will be moving to this area and will need places to live.

Also, there are still hundreds of empty parking lots and small, nondescript buildings (such as old auto repair garages) all throughout New Haven that could be demolished or adaptively re-used without needing to destroy any of the main stretches of historic buildings.

The assessor has systematically undervalued large apartment buildings such as the Taft. I am suggesting a flawed policy choice, not misconduct. Assessors have several methods to determine property values, but can choose how much weight to give each method. The income method works well for apartment buildings when markets are normal. But the market has been far from normal, as seen in sales prices before and after revaluation.

The city should keep the discrepancy between appraisals and sales prices in mind in setting tax policy. In particular, the discrepancy suggests the city should be cautious in providing tax breaks for market rate housing developers. And much of the benefit of phasing in revaluation will flow to the large scale owners of multifamily housing.

Tom, I think it would be better to present appraised values rather than previous sales prices. For the properties in this table, the previous sale occurred as much as 22 years and as little as one year ago. Inflation in the meantime makes comparing the changes in value largely meaningless. (Adjusting previous sales for inflation would be more work for you 🤓).

3/5ths, there were homeless people in Manhattan when I was there 10 days ago. Not on Central Park West. But they are a common sight under scaffoldings.

Anonymous, according to a recent NY Times story, the median rent in Manhattan is about $3,400 a month. According to a recent story in the Boston Globe, the median rent for a one-bedroom apartment there is over $2,700. As unaffordable as NH rents can be, there is no comparison.

Lower State Street would basically have to become a row of high-rise towers in order for the city to be on the right track of meeting the demand of how much housing is actually needed Downtown.

Valuing these apartments at $125,000 unit, means taxing them roughly $3600/year.

If you want to value them at $250,000/unit, they would be taxed at $7200/unit/year, or about $600/month.

If taxes were that high, you would significantly depress profits and sales price, and it would kill new development, leaving us likely worse off.

fwiw

When this bubble bursts there's going to be plenty of cheap, so called "luxury" apartments going begging. Forget about affordable housing, it's coming your way soon without government intervention. Just be patient.

hmmm....the city's braintrust only mis-valued this building by 26 Million dollars. And we wonder why they can't balance a budget.

I am so glad I bought up my New Haven properties back in the mid 1990's. Great properties, good parking, and have avoided a lot of crime and poor tenants. I would sell but the gains tax would kill me so I just absorb the monthly cash flow and pray for New Haven. More big money coming into the city is a good thing.

Mr. Been and Mr. McCarthy continue their personal Jihad against commercial properties without actually understanding. the very basic method of valuation. Even in Manhattan commercial properties are always valued far below their sale price. But their taxes are still very high. In New Haven commercial properties are NOT UNDERVALUED. The fair market value -- unlike a private home -- does not reflect what they would necessarily fetch but what a building with a certain revenue should pay in tax. Why Mr Breen and McCarthy are quite misleading readers is that they suggest taxes for big buildings are low. WRONG taxes are actually quite high. Part of the reason for the discrepancy is that properties are sold on what they can borrow and bank appraisals are always over inflating property values by understating expenses such as vacancy, repairs, and management. Secondly, and this is the more complex part, is that because tax is an expense component, if it rises the value of the building falls. So the assessor takes it into account by going for an in between value and not the full value. As a rule of thumb commercial properties are fairly valued when appraised at around 60-65% of sales value. Otherwise their value fall below their sale price. it's obvious that the NHI lacks basic knowledge on the subject and has an agenda here. But if you look at how much taxes these buildings pay it's a lot compare to their income. For instance a 12 unit building that would sale for 1,5M and is valued at less say 1.1M would pay $33,000 in taxes. That's 2,750 per unit. This is a VERY high tax for such a small building. Regardless of the so called undervaluation. Add other expenses this building would have $70,000 in expenses against only 12 units worth of revenue. Educate yourself people before you make assertions that are unfounded.

Kevin McCarthy
Apr 21, 2022 6:56 pm
3/5ths, there were homeless people in Manhattan when I was there 10 days ago. Not on Central Park West. But they are a common sight under scaffoldings.

Since coming into office in January, Mayor Adams has launched two major initiatives aimed at removing hundreds of homeless people — and their encampments — from New York City’s streets and subways.

The city has removed more than 200 homeless encampments from city streets as part of the above-ground initiative over the past 10 days. Last month, Adams rolled out a plan to get homeless men and women out of the subway system.

https://www.nydailynews.com/news/politics/new-york-elections-government/ny-pol-homeless-encampments-adams-eliminate-20220331-dgyt72ggjnautaxdkgn3pnaxny-story.html

NB, I have friends who are landlords and developers- my comments are not a jihad against them. And I have consistently referred to large apartment buildings and complexes. The appraisals of small buildings, including those mentioned in this article, has generally been in line with the market. The undervaluation of larger buildings shifts taxes to the owners of small buildings.

Tax law varies by state. Many states permit or require classification, with different valuation rules for different types of property. Except for the 490 program, CT does not do this. And contrary to your assertion, CT law requires assessors to consider sales as well as income in valuing larger multi-family buildings.

NelsonBenson, the Taft is appraised at $132,930 per unit. A typical 3-family in East Rock is appraised at $600,000 or $200k per unit. On average the units rent for about the same. Why does the owner of the large apartment building get that advantage?

Your argument that "apartment buildings are never valued on sales", I think is part of the problem. Why is a different valuation formula used for an apartment building than a 3-family? at the end of the day both should be taxed on what they are worth.

Your argument: "keep in mind that higher taxes to these buildings, will eventually translate to higher rents, and less affordability.".. not really, the overall affordability of New Haven would remain the same, it would just shift the tax burden slightly from people who live in single and multi-families to people who live in these large apartment buildings. I feel the single and multi-family owners are overpaying now compared to the large developers.

Anonymous,
There are appropriate places for such developments, but your 1-mile radius rezone proposal is simple minded, at best.

The real estate market has become outrageously hot in the city since the pandemic. We did see the beginnings of these buyers paying way more than what buildings were appraised at pre pandemic, but the pandemic has created a much crazier market. The city tax assessors did not have an inkling of what was to come at the time of the last assessment. I would guess that either the market will cool off or the developers/investors will move to the next hot market they can exploit. I do not think the high over asking sales prices will continue forever.

Check this out.
Rents are rising everywhere. See
how much prices are up in your area.
How rent has changed in 1,500 counties across
the United States since the start of the pandemic
By Abha Bhattarai
,
Chris Alcantara
and
Andrew Van Dam

April 21, 2022
Look up a U.S. county

https://www.washingtonpost.com/business/interactive/2022/rising-rent-prices/?itid=hp-top-table-main

Now look up New Haven

3/5ths, I’m sure Mayor Adams takes homelessness seriously. But it is huge, complicated set of problems. Clearing homeless encampments is only part of the process of addressing these problems. One sad realty is that rising rents, both in NYC and here, will almost certainly increase homelessness.

AT, it’s a bit more complicated than you indicate. An increase in property taxes would decrease net operating income, which would decrease the owner’s state and federal income taxes. But as you say, a net increase in taxes would result in higher rents. This cuts two ways. If large buildings are undervalued, property taxes are shifted to other buildings including smaller apartment buildings. The owners of these buildings will pass the added cost to their tenants in higher rents.

quinnchionn, I have no problem with towers going up on lower State Street, a 10-15 minute walk from my house. And we need to build more housing to prevent the affordability problem from getting worse. But demand for housing in the city is actually quite modest. From 2010 to 2020, the city averaged about 250 additional housing units per year. The pace picked up last year, but rising interest rates are likely to slow future development. In any case, there are about 50,000 units in the city. Even if development doubled, you’re talking about a 1% annual growth rate.

Will someone please tell MM that their property has their tenants parking on the lawn? The building is at 133 Davenport.

The rage against business people and landlords in NH is very disturbing. What other money-making enterprise does the left wish to destroy? As RussiaExitCrimea says--- tenants are people who can't even park in the right place, yet they are invested with all this nobility by our tender-hearted lefties.
NelsonBenson--- you are wasting your typing arguing with these folks-- they wish to destroy all the perceived inequity that they see by destroying those who create wealth. They side with the idle poor. Let's see where it gets them in a city full of poor losers---- who will support them with taxes???

NB, you may think it is a bad idea to tax apartment and other commercial buildings based on their fair market value. But in Connecticut, that is the law (CGS § 12-63). The undervaluation of large apartment buildings necessarily means higher taxes for owners of buildings whose appraisals were in line with market values, including small apartment buildings.