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Taxes Gone Wild

Hartford's Small Businesses Are Facing Ruinous Tax Increases Of Up To 90 Percent, But A Fix May Be In The Works

June 7, 2007
By DANIEL D'AMBROSIO, Hartford Advocate Staff Writer

Late last week, Kelly D’Aprile surveyed his Franklin Avenue property, home to the family’s D&D Market, and wondered if it could all end up a bittersweet memory.

Standing outside the market with his son Dan, who now manages the business, D’Aprile reminisced about how he and his father, Vito, an Italian immigrant, had planned their move to the site in 1961. At the time it was a small, scruffy lot with a broken-down building the city at first refused to zone for a market.

Vito had started D&D on Windsor Street in 1932, serving residents of the thriving Italian-American community along Front Street until he was kicked out along with his customers to make way for Constitution Plaza.

After making the move to Franklin Avenue, Vito and son remodeled the original building and got their market up and running. They consolidated their holdings over the ensuing years with 11 separate purchases of surrounding property, forming the impeccably maintained plaza that D’Aprile and his son oversee today.

Then came the 2006 tax assessment, in which small Hartford businesses have found that their city taxes have been raised as much 90 percent.

For the roughly three-acre property, which includes the market, a package liquor store and tenants Dunkin’ Donuts and People’s Bank, D’Aprile estimated his taxes would go from $85,000 to $160,000, an increase of nearly 90 percent.

As he contemplated what to do, D’Aprile couldn’t rule out layoffs, or moving out of Hartford, something he and his son could never have imagined until this year. D’Aprile even thought of more ominous possibilities.

“Seventy-five years, three generations and it won’t go to a fourth,” he said.

Just down Franklin Avenue, John Tornatore, owner of Gordon Bonnetti Florist, stood in the humid back room of his business, the floor covered with cuttings from flower arrangements, and wondered how he was going to cover the $760 per month increase in property taxes he estimated the 2006 revaluation meant to him.

Tornatore’s taxes were going from $9,600 last year to $18,400 this year, an increase of nearly 92 percent.

Noting that Bonnetti’s was listed in an 1898 directory of Hartford businesses as a farm selling flowers, Tornatore said he would have to “seriously consider moving out of the city after 100 years” if his tax bill wasn’t reduced.

To cover the bill, Tornatore estimated he would need to increase sales by $5,000 per month. With an average sale of $50, that meant 100 new orders every month.

“That’s a lot of sales,” he said.

Tornatore, who bought the flower shop in 1987 from the Bonnetti family, has 14 employees, including both of his daughters. He said he and his family “make a paycheck” out of the business, and the building itself, a mixed-use three-family house with two tenants upstairs and the flower shop downstairs, is their retirement.

“Either this building makes money or I have to invest elsewhere,” Tornatore said. “The city says my building is worth $370,000, but what is my building worth with a tax bill of $18,000? You can buy a three-family house and pay $5,000 in taxes.”

The 2006 revaluation that created such a huge increase in taxes left hundreds of small businesses in circumstances similar to Tornatore’s and D’Aprile’s. It was a crippling blow that could trigger an exodus of businesses from the city, and an unraveling of neighborhoods in every part of Hartford. The crisis has galvanized small business owners into action.

Several weeks ago, the newly formed Hartford Small Business Alliance held a blistering meeting at the capitol with Mayor Eddie Perez and Hartford legislators, demanding a year-long moratorium on the revaluation to give city and state officials time to fix the problem threatening the survival of so many small businesses.

But the moratorium, opposed by the legislature’s Finance Committee, never had a chance to pass.

“A moratorium is not something I could support, nor do I think it’s in anybody’s best interest,” said Rep. Cameron Staples, D-New Haven, co-chairman of the committee. “That said, if all parties agreed to a legislative change that addresses the issue, I would certainly be open to it.”

As the Advocate went to press on Tuesday, the situation concerning a fix for Hartford’s small businesses was chaotic and no solution had been reached at press time.

Rep. Art Feltman and several other — but not all — Hartford legislators were pushing for a plan that would limit the increase in taxes for D&D Market, Gordon Bonnetti Florists, and about 400 other small businesses, to 25 percent.

To make up the $2 million in revenue lost to the cap, the city would increase the tax rate by sixth-tenths of a mill for everyone, from the 58.55 mills recently adopted by the city council to 59.15 mills, according to Feltman.

The change would require state legislation, which ideally would pass Wednesday of this current week. The businesses that will benefit from the change include retail stores, nursing homes, hardware stores, convenience stores, supermarkets, restaurants, and mixed-use properties like Tornatore’s.

“These are the 400 businesses that are the hardest pressed and least able to afford (the tax increase) and most important to the neighborhoods,” Feltman said Tuesday.

As of Tuesday, Feltman still didn’t have a sign-off on the plan from the Chamber of Commerce, representing the interests of big business in Hartford, but was confident he would have their agreement by the middle of this week.

But small business leaders aren’t impressed. They rejected the plan at a meeting Monday night.

“We had a unanimous decision that nobody is in favor of that plan,” said Paul Mozzicato, owner of Mozzicato de Pasquale Bakery & Pastry Shop on Franklin Avenue.

Mozzicato, who is a key spokesman for an alliance of small businesses who are up in arms about this, said on Tuesday that Hartford’s small businesses have their own plan, which provides relief to all 1,472 businesses affected by the tax increases at a cost of $6.5 million, rather than the $2 million provided by Feltman’s plan.

To cover the cost of the Small Business Alliance plan, all business properties would pay an additional mill, providing $3.25 million. The remaining $3.25 million would be covered from state aid received by the city of Hartford. Tax increases on all businesses would be limited to 6 percent.

Under the current revaluation, Hartford’s big businesses are actually seeing their tax bills go down by at least 1 ½ percent.

“We’re asking (big business) to give up some of their decreases to help little brother get this done,” said Mozzicato. “I feel like the city is willing to help if big business would help us make it palatable for everyone.”

Mozzicato said Tuesday he had not yet officially heard from the mayor’s office or the chamber concerning the small business plan.

Hartford last completed a revaluation in 1999, and under state law, was supposed to complete another one in 2004. Revaluations are mandated every five years. When it became clear, however, that revaluation would result in a 70 percent increase in taxes for homeowners, the city struggled to find a fix.

Perez floated two plans, one based on homeowners’ incomes and one utilizing a homestead exemption, that were rejected by the Chamber of Commerce and the legislature, putting a chill into the mayor’s relationship with the Hartford legislative delegation.

The compromise that was worked out in May 2006, essentially without Perez’s involvement according to Feltman, capped residential property increases at 3 ½ percent over five years and phased out a 15 percent surcharge on commercial properties by reducing it 1 ½ percent yearly for five years, then eliminating the remaining 7 ½ percent.

Feltman said when the legislation was passed last year, he anticipated an average increase in commercial property values of 50 percent, but didn’t realize how that average would play out between small and large businesses.

“What happened was there were a few winners, the large property owners, and lots of losers, small businesses,” Feltman said. “I wasn’t anticipating that.”

When the tax debacle first came to light earlier this year, everyone involved made a point of not laying blame.

“This really happened as a domino effect, it’s not the city, city council or assessor’s fault,” said Paul Mozzicato. “I think this happened in a vacuum quite honestly. I know deep down nobody said ‘This is what we’re going to do to these small business guys.’”

But as pressure mounted in the run-up to the adjournment of the legislature this week, the finger-pointing began.

Mozzicato took the city council to task last week for approving the grand list and locking the city into the revaluation. Mozzicato, whose own assessment went from $300,000 to $700,000, attended the council meeting even though there was no accommodation for public comment. He made his position known over the sound of President John Bazzano’s gavel, urging the council not to pass the budget with the new grand list, but to use the 2005 grand list instead.

Feltman points out the city council had little choice but to pass the budget and move revaluation forward by accepting the new grand list, as they would have faced a $7 million penalty from the state if they hadn’t.

“They did what they had to do, but at this point it doesn’t give us as a city an option to fix the problem,” Mozzicato said.

Last Wednesday, Perez sent a letter to the Hartford legislative delegation saying he was writing to urge them to come together and “support a plan to prevent 583 Hartford businesses and other property owners from experiencing a 50% or more increase in property taxes due to state legislation passed last year.”

“Now more than ever, small businesses need our legislative delegation to speak with one voice and act with a clarity of purpose to prevent the harmful impact of legislation passed last year from driving some of our small business out of Hartford,” wrote Perez in his letter.

While the mayor didn’t offer a specific plan in the letter, the unmistakable message was that the Hartford delegation, not the city, screwed up.

It’s a message rejected by Tim Sullivan, a Perez critic and local stockbroker who was involved in the property tax compromise reached last year.

“That letter is outrageous,” Sullivan said. “Number one (Perez) suggests the problem with the Hartford small business owners is tied to the legislation passed last year. That is not true. The real problem is not the legislation but the tremendous increase in assessments that came out of the assessor’s office.”

Unlike many Connecticut towns, which use outside companies to complete revaluations, Hartford Assessor Lawrence G. LaBarbera did the city’s revaluation in-house.

Tornatore also questioned some of the values used by LaBarbera, citing for example the rental rates used to assess the buildings housing Brooks Pharmacy on Franklin Avenue, and CVS Pharmacy, which was in D&D Plaza before moving to Wethersfield Avenue.

“Those two cases use $35 per square foot rental when in fact both were renting for $15 per square foot,” Tornatore said.

Ultimately, Mozzicato, who has emerged as a leader in Hartford small business community, doesn’t want to point fingers of blame. He wants to believe a solution will be found.

“At the end of the day, we’re trying to save the community here,” Mozzicato said. “If we destroy our small businesses we’re going to erode our city. A lot of guys have said, ‘We bent and bent and bent. Now is the time to break.’”