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City Looks For New Way To Ease Revaluation Pain

June 8, 2007
By JEFFREY B. COHEN, Courant Staff Writer

With Plan A for a one-year tax revaluation delay derailed in the legislature, Hartford officials are scrambling to forge a Plan B that would ease the impact of potentially lethal property-tax increases on the city's small businesses.

The city council is scheduled to meet at noon today to discuss a plan that would phase in the property-tax pain on some of the city's business owners over five years.

But while the city says its legal interpretation says that such a phase-in would satisfy state law, others are less sure.

"It's illegal," state Sen. John Fonfara, D-Hartford, said Thursday.

R. Nelson "Oz" Griebel, head of the MetroHartford Alliance regional chamber of commerce, agrees.

"We've talked to [state budget officials] and others, and I don't think we're the only ones who think that" the phase-in isn't proper, Griebel said. "I understand the mayor has a different interpretation. We don't believe that's the correct interpretation."

The current tax problem stems from a 2006 revaluation of city property that saw values soar, particularly for residential property owners. Subsequent legislation last year to protect homeowners left small businesses taking the biggest hit. That hit, most agree, was unanticipated.

Last month, small-business owners, city political leaders, and some members of Hartford's state legislative delegation got behind a proposal to delay implementing the new revaluation. That was Plan A.

But not long afterward, it became clear that the moratorium would not gain legislative approval, as Democratic House leaders feared it could open a "Pandora's box" of towns seeking to delay revaluation. And on Wednesday, the legislative session ended with no resolution on the matter.

A plan the city council plans to weigh today wouldn't solve the problem that small-business owners face; instead, it would simply phase in property values for all commercial property over five years.

So, for instance, a property with an old assessment of $100,000 and a new assessment of $200,000 would see that assessment go up for tax purposes $20,000 a year for five years.

How would the city make up the difference to balance its budget? While many commercial properties increased in value, not all did. Some decreased significantly, and the corresponding tax bills went down, too.

As a result, the phase-in plan would mean that those owners whose property decreased in value would pay more than they anticipated in 2007, but still less than they had previously, said Matt Hennessy, chief of staff to Mayor Eddie A. Perez.

"There are some properties whose taxes would not go down as much," Hennessy said. "I'd characterize them as high-value office structures."

If the plan is approved, Perez would then convene a property-tax study group.

As opinions differ on whether the state legislature will want to discuss Hartford's tax dilemma in its upcoming special session, some in the Hartford delegation are still trying to work toward a solution.

Griebel and the alliance originally supported a bill introduced by state Rep. Art Feltman, D-Hartford, and others that would have capped the property-tax increase for roughly 400 affected commercial properties. That is the bill that stalled at the Capitol Wednesday; it is also the one Perez's staff vehemently opposed.

Meanwhile, Fonfara and others are behind a plan backed by the Hartford Small Business Alliance that proposes capping the taxes of all roughly 1,500 affected commercial structures for one year. It would also limit the city's ability to raise taxes. This plan didn't gain momentum in the legislature, but that doesn't mean that it can't in the special session, Fonfara said.

"I think in the next week, to be able to put all the data on the table and have us all look at it, I think we have a good chance of coming to consensus," Fonfara said. "We ran out of time."

But while consensus is key, Fonfara said, the city's cooperation isn't integral to success.

"I hope the city" will be part of that consensus, Fonfara said. But does he need the city? "We didn't last year."