City of New Haven
To grasp the impact of the notices being mailed Friday to New Haven homeowners, just stand on the corner of Hillside Place and Prospect Street. To the east, single-family homes on Prospect Hill rose 56 percent in value. To the west, those in Newhallville sank 15 percent.
Mayor John DeStefano offered that comparison Thursday afternoon in a meeting with reporters, as he offered the first analysis of the latest revaluation of all city properties. Property revaluation notices were set to be mailed Thursday and Friday, arriving in homes and businesses on Monday or Tuesday, DeStefano said. (The new assessments are already available online at VisionAppraisal.com. Note that the 2010 value cited is the figure for the 2006 revaluation, which was never fully phased in.)
The results affirm East Rockers’ fears that the revaluation will hit hardest in that neighborhood. The neighborhood was divided into three sections for assessment purposes. Single-family home values showed an average increase of 32 to 56 percent across the three parts of East Rock, compared to only 9 percent citywide.
Those numbers may sound counter-intuitive, DeStefano cautioned: Most homeowners will recall that their values have sunk since 2006, when the last revaluation take place. However, he’s comparing current home values not with 2006, but with the basis for the current tax bills — a partial phase-in of the 2006 revaluation.
Here’s the back story: The 2006 revaluation rocked the city because home values rose so high since the previous revaluation in 2001. Instead of implementing the full whack, the city decided to phase in the increase over five years. The city ended up freezing the phase-in at year two, or 40 percent of the increase, because raising homeowners’ tax bills was not politically viable.
That tax policy — designed to soften the tax blow to homeowners — ended up “distorting” the market, DeStefano said, resulting in some major movement in revaluations this year. That’s because the revaluation in effect is comparing 2011 with a phase-in that’s closer to the baseline of 2001. A lot happened in those 10 years, including a global recession.
Melissa Bailey Photo
“Because of past attempts to cushion the impacts of revaluation, we have a convoluted baseline that goes back years and years,” DeStefano explained.
The image at the top of the story shows the average change in single-family home values across neighborhoods, from the two-year phase-in of the 2006 revaluation to the new 2011 figures. Dark red represents a big drop in value; dark blue represents a large increase.
The image gives a rough prediction of how homeowners’ taxes will be affected: If your home value rose more than 9.2 percent (the average increase), you should see the tax burden shift toward you. If your home value rose less than that, you should see the burden shift away from you.
The revaluations were based in part on physical inspections, and in part on sales from Oct. 1, 2009 to Sept. 30, 2011 (excluding foreclosure sales). During that time period, there were 325 multi-family home sales, 246 residential condo sales and 445 single-family home sales. Multi-family homes dropped in value compared to the 2006 phase-in; single-family homes and condos rose in value.
Commercial properties are often valued through an income analysis, based on how much rent they’re bringing in. Across the city, commercial properties rose an average of 1 percent, according to mayoral staff.
DeStefano offered three examples to show how the revaluations affect homes around the city — and the challenge the city now faces in figuring out how to be fair and equitable in levying taxes next year. The examples are part of a draft of a Power-Point presentation he’s set to give at a public meeting next Thursday at 7 p.m. at Hillhouse High School. (Click here to view the presentation, which is still in draft form.)
The priciest house that sold in the past two years was a single-family home on Livingston Street, DeStefano said. The home sold for $1,745,250 on Sept. 15, 2010. The full value (not the assessed value) of that house jumped from $610,190 in 2001 to $1,177,700 in 2006.
Because the 2006 revaluation was never fully phased in, that homeowner would see a huge leap in taxes due to the new revaluation. The homeowner’s current taxes are based the 40 percent phase-in that pegs the home’s full value of $994,100. Next week, the homeowner will get a notice in the mail saying the value jumped to $1,724,000.
Is it fair to immediately charge that homeowner with the full whack of the value increase? DeStefano asked aloud. He said that sale will also cause nearby homes to appreciate in value, even if those homeowners saw no increase in ability to pay.
On the flip side, DeStefano pointed to Sherman Parkway, where a multi-family home sold for a mere $80,000 on July 30, 2010. That home had been valued at $244,300 in 2006. The phase-in value was $179,680. The preliminary assessment, due in the mail any day now, will peg the value at $67,600, DeStefano said.
If the city delays implementing the revaluation, it would help the person on Livingston Street — but deny the Sherman Parkway landlord the chance for a huge reduction in taxes.
DeStefano said the city has several options going forward: It can implement the full revaluation. It can phase in the revaluation, which would require approval from the Board of Aldermen. Or it can ask the state legislature for permission to freeze the grand list at its current level.
DeStefano said he isn’t advocating any one solution at this point.
His focus, for the time being, will be on getting out the word about the revaluations and answering the question: “Is your value fair?”
It will be months before the burning question — “Will my taxes go up?” — will be settled, DeStefano pointed out.
That question depends on many factors, including how much other revenue the city gets and how much expenditures go up. Property taxes make up 47 percent of the city’s revenue, DeStefano said.
The city doesn’t yet have new values for motor vehicles and personal property, which are revalued every year. DeStefano said he expects those values to remain flat. “All thing being equal” — which is a big if, DeStefano cautioned, the city should see an increase in the grand list and a decrease in the tax rate, which stands at 43.9 mills ($43.90 per $1,000 of assessed property).
“I get really nervous about projecting taxes right now,” DeStefano said.
He said this year’s budget season will likely open a broad discussion on the city’s priorities, including whether to continue giving tax breaks for affordable housing.
DeStefano plans to address this topic at six special public hearings:
● 7 p.m., Thursday, Dec. 8 at Hillhouse High School, 480 Sherman Pky
● 2 p.m., Saturday, Dec. 10 at St. Bernadette’s Hall, 385 Townsend Ave.
● 7:30 p.m., Monday, Dec. 12 at Edgewood School, 737 Edgewood Ave.
● 7 p.m., Tuesday, Dec. 13 at Bishop Woods School, 1481 Quinnipiac Ave.
● 7 p.m., Wednesday, Dec. 14 at Celentano School, 400 Canner St.
● 7 p.m., Thursday, Dec. 15 at Career High School, 140 Legion Ave.
Previous coverage of the revaluation:
What surprises me is that New Haven residents haven't partnered with our strong Union movement to insist on statewide property tax reform. Why should any of us be paying two, three, four, or even five times more for our home and car taxes, than those families lucky enough to live in the more prosperous suburbs? Heck, if anything there should be incentives for middle class families who tackle city living!
City by city mill rates:
http://ct.gov/opm/cwp/view.asp?A=2987&Q=385976
Interestingly the state of Vermont has two property taxes. One is a statewide tax to cover the entire state's public education bill. The other is a municipal property tax for local services. Connecticut would prosper by having a similarly equitable system.
Explanation of Vermont property taxes:
http://www.vermontrealestatetoday.com/newsletter/2011-Special-Report-on-Vermont-real estate-taxes.pdf
PS -- it ticks me off that even though I drive less than 5,000 miles/year, and walk to work, I somehow pay almost double in car insurance compared to commuters who live in Madison or Cheshire, many of whom drive much more in and about New Haven than I do.
PPS -- A converse argument to this story could be that because of the Mayor's phase-in and subsequent freeze, poorer neighborhoods have been paying more than their fair share over the last 3-4 years.... Also renters have been getting screwed on their car taxes, because without the phase-in and freeze, the mill rate would have been reduced quitesubstantially. (Business owner got screwed in the same way as well!)