Pandemic Property Tax Relief A Click Away

New Haven property owners who have lost at least 20 percent of their income due to Covid-19 can pay their taxes three months late this coming fiscal year without incurring any penalties.

Before receiving such a benefit, they first must apply to the city by June 30, and they must promise — if not necessarily prove — that they really have suffered such a pandemic-induced economic hardship.

City Budget Director and Acting Controller Michael Gormany shared those details during a Board of Alders Tax Abatement Committee public hearing.

The hearing focused on the two pandemic-related property tax relief programs that local legislators passed into law on April 20.

One program allows eligible city taxpayers to receive an extra 90 days to pay their next set of property taxes, which would normally come due on July 1. The second program allows all city taxpayers to benefit from a lower-than-usual interest rate on overdue tax payments.

Click here to learn more about the program. And click here to go to the city’s online application form.

The governor mandated earlier this spring by executive order that all cities and towns in Connecticut adopt at least one of these tax relief programs. The alders decided to adopt both.

Gormany explained that the low-interest program requires no application, and is automatically available to all city taxpayers.

The city usually charges a 1.5 percent monthly penalty on delinquent taxes. This new program reduces that monthly penalty to 0.25 percent for three months starting in July.

The tax deferral program, however, does require an application and is limited to taxpayers who meet certain criteria.

Gormany said eligible taxpayers will be able to defer paying their July taxes until Oct. 1.

Those taxpayers must first submit an application to the city assessor’s office by June 30 in which they attest that they have suffered a reduction in income of at least 20 percent due to Covid-19.

Gormany said that the property tax deferral program applies to all three categories of property taxes: real estate, motor vehicle, and personal property.

He said applicants must submit proof of residency or ownership, such as a copy of a driver’s license or utility bill or, for businesses, a business license or Secretary of State listing.

They do not, however, have to submit proof that they have suffered a 20 percent hit to their income because of the pandemic. They simply have to attest that. Which, Gormany said, does carry legal ramifications.

“They’re attesting that all the information that they’re providing is true and accurate and legal,” he said. ​“We can do random audits. That is what OPM said. But we cannot require additional documentation.”

If a random audit reveals that someone had been lying about their eligibility for the deferral program, Gormany said, ​“we have legal recourse to go after them to the fullest extent of the law.”

He said that banks and lienholders are explicitly excluded from this program per state Office of Policy and Management (OPM) guidelines. That means they will not be able to withhold escrow tax payments, and will have to pay their taxes by the regular July 1 deadline.

Landlords are eligible to participate, so long as they have suffered such an economic hardship due to the pandemic and so long as they show that they have passed along comparable rent forbearance to tenants.

Gormany said his office is still figuring out how to confirm that eligible landlords have passed along such relief to their tenants. He said that OPM did provide municipalities with a bit more discretion in regards to how to enforce landlord eligibility by requiring that they submit some kind of proof.

“Not all landlords have to have the same type of situation,” he said. ​“I think we’re going to have to take it on a case by case basis.”

He said that eligible taxpayers will be able to apply online through the city assessor page on the city’s website. They will also be able to call a dedicated phone number in the city assessor’s office to talk through the application. And they can download a PDF of a form, fill it out by hand, and mail it to City Hall.

Gormany said that, as of right now, residents will not able to apply in person because City Hall remains indefinitely closed to the public due to the pandemic state of emergency.

Fair Haven Alders Jose Crespo and Ernie Santiago, East Rock Alder Anna Festa, Prospect Hill/Newhallville Alder Steve Winter, Downtown Alder Abby Roth, and Newhallville Alder Kim Edwards all urged the acting city budget director and his staff to figure out some way to make applications easily available to taxpayers who do not have reliable Internet access or are not comfortable filling out such a form online.

Crespo and Santiago asked Gormany to distribute paper application forms from neighorhood police substations. Winter asked him to find some way to mail out print applications to residents.

Gormany said he’ll be working with the city economic development department and with the Livable City Initiative (LCI) to get the word out to landlords about the tax deferral program and criteria for participation.

$40 – 60 Million Expected To Be Deferred

Roth asked Gormany how many people he expects will participate in the local tax deferral program, and how much money the city anticipates receiving in October in deferred tax payments.

Gormany said that, from July to September 2019, the city collected around $140 million in property tax revenue. He said his office is using that number as a basis for this upcoming fiscal year.

“I’m projecting that two-thirds will come in July and one-third in October,” he said.

Therefore, he said, he expects that roughly $40 million to $60 million in property taxes will be deferred from July to October.

Gormany said the city will almost certainly make up for the resulting cash flow crunch in the first three months of the next fiscal year by issuing tax anticipation notes (TANs), allowing the city to borrow cash up front at a low interest rate in exchange for property taxes it should collect in the near future.

Gormany said the city typically issues TANs in October or November to help with cash flow before the second wave of property tax collection takes place in January. ​“We’re looking at borrowing that money earlier” this year, he said, because of the tax deferral program.

That means the city will likely issue TANs at the end of June or beginning of July.

The Board of Alders voted Tuesday night to allow the city to issue up to $100 million in TANs next fiscal year, bumping up the previous annual limit of $50 million.