The mayor is asking lawmakers to stop granting new tax breaks for affordable housing, citing tough budget times and the need to draft a “consistent” policy.
The request came this week in a submission to the Board of Aldermen. (Click here to read it.)
The city currently gives up $4 million a year due to tax abatement deals with landlords of rental properties for low- to moderate-income and disabled tenants, according to a Nov. 11 letter from Mayor John DeStefano to the board.
The city has 30 agreements for tax breaks in this category, DeStefano said. The 30 agreements cover 2,400 units of affordable or supportive housing, which comprise one-fifth of New Haven’s affordable rental housing units.
Many of those deals “are beginning sunset soon,” said City Hall spokesman Adam Joseph. And the city just got several new requests for tax abatement deals on affordable housing projects.
Citing difficult budget times, DeStefano urged the board to hold off on approving the new requests while a new working group takes another look at the program.
“Rather than take a piecemeal approach, I think it is time to take a collective look at the overall picture,” DeStefano said.
Michael Smart, chair of the aldermanic Tax Abatement Committee, said he’s open to the mayor’s proposal. He suggested if the city institutes a moratorium on the tax breaks, it should come with a clear time frame. He welcomed the suggestion to take another look at the city’s policy: “I’m certainly for a change in the rules in making them equal for everyone.”
DeStefano called for aldermen to create an Affordable Housing Tax Abatement Working Group to take a look at the program and make sure it is being administered in a “consistent” way. The group would consist of aldermen, city staffers who work in finance, in economic development, for the Livable City Initiative the Office of the Corporation Counsel, and “business and community leaders in the finance and/or development industries.”
The tax breaks in question are granted to projects where housing is subject to regulation or supervision of rents, or when occupancy is restricted to low- or moderate-income tenants. Sect. 28 – 4 of the city charter gives the mayor, with approval from the Board of Aldermen, the right to abate landlords’ taxes “in whole or in part” at those housing projects.
Abatement can be extended for up to 39 years, according to the city charter. The city gets the authority to waive the taxes from the state, in Connecticut General Statutes 8 – 215.
In return for the abatement, landlords agree to turn over the money saved in tax revenues to one of the following purposes: “(1) to reduce rents below the levels which would be achieved in the absence of abatement; (2) to improve housing quality and design; (3) to effect occupancy by persons and families of varying income levels, within prescribed limits; or (4) to provide necessary related facilities or services.”
The amount of abatement is laid out in a contract between the landlord and city.
For example: Mutual Housing recently got lawmakers to OK an abatement by which the city waives $206,330 in annual taxes for its properties. Other examples of participating landlords are Bella Vista and Tower One/Tower East.
Those projects are part of the one third of the city’s rental housing, or 12,300 units, which is “subject to some form of affordable housing requirement,” according to DeStefano. Rental housing represents 72 percent of the 52,000 units of housing across the city.
The abatements to be discussed by the working group do not include “PILOT or tax abatement agreements with the New Haven Housing Authority, tax deferral agreements (which are permitted as a matter of right) or tax abatements offered to home owners for purchasing properties in certain empowerment zone or other targeted investment areas,” DeStefano wrote.
The working group would have six months to issue legislative and programmatic recommendations about how to assess and tax affordable and supportive housing developments.
Meanwhile, while that group is doing its work, DeStefano called for a moratorium in granting new tax abatements for affordable housing and in granting extensions for existing deals.
He said his call for a moratorium comes as the city plans for tough financial times.
“As municipal budgets become more difficult to balance, the maintenance and allocation of local tax revenues becomes an issue of increasing importance,” DeStefano wrote. “Therefore, it is necessary to periodically examine all of our policies to ensure that we are making fair and balanced decisions which help to achieve our shared vision for the City of New Haven.”
DeStefano said the city “should continue its support of affordable, supportive and workforce housing projects,” but also “such support should be consistent, transparent and based on an agreed set of standards.
He called for a “rigorous debate and discussion” on the topic, “particularly as regards the costs and benefits of continuing the current level of public investment.”
DeStefano said the city needs to take a look at its “long-term objectives concerning financial participation in such projects and, more specifically, the optimum level of investment of scarce public financing resources.”
I think that this is a good idea to take a serious look at these abatements. I have to thank the mayor as a taxpayer for being concerned about this issue.