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Towns, Cities Confront Stagnant Grand Lists

JESSE LEAVENWORTH

September 07, 2009

Economic blues will linger in many towns and cities during the upcoming budget season, with little or no growth expected in October 2009 tax bases.

"Ideally, we would like an increase. But realistically, we're treading water," Avon Assessor Harry DerAsadourian said of his town's grand list of taxable property.

"I think if we have any growth at all, I would be pleased," Manchester General Manager Scott Shanley said.

Real estate values are flattening, new construction has slowed and towns and cities must deal with a $44 million cut in state aid this fiscal year, said Kevin Maloney, a spokesman for the Connecticut Conference of Municipalities. As budget preparation begins for the 2010-11 fiscal year, Maloney said, municipal leaders and residents will face the old equation of raising taxes or cutting services.

"I don't think they have a choice; I think they have to cut their spending," said Peter Gioia, vice president and economist at the Connecticut Business and Industry Association.

One big problem, Gioia said, is that municipalities have been "incredibly greedy" in appraising commercial and industrial buildings. He said he knows of one building in New London County that was on the town books at $4 million and was actually worth about $1 million. On top of that, Gioia said, tenants in many leased buildings have the upper hand in demanding lower rents.

"You basically make the building uneconomical," Gioia said of the skewed taxation. "If someone wants to buy it — forget it; they can't do it with that tax burden."

"There are a lot of properties in that same boat," he said. "The amount of tax appeals that are going to go through in the next year is going to be mind-boggling."

When businesses close, towns lose personal property taxes on machinery, computers and other items. Between October 2007 and October 2008, Manchester suffered a net loss of 82 businesses, according to John Rainaldi, director of assessment and tax collection. The picture does not look much brighter for 2008-09, both Rainaldi and Shanley said.

In West Hartford, Assessor Joseph Dakers said it's likely that the grand list will be flat at best. It rose 1.5 percent last year to $5.36 billion, but early indicators make any increase unlikely.

In the 2008 calendar year, the town issued 4,750 building permits for $86.7 million of new construction, additions and remodeling. So far this year, the town has issued 2,047 permits for $30.6 million of work. That's a sizable drop, Dakers said, especially because the remaining months of the year are a time when building trails off because of cold weather.

Newington Assessor Steve Juda said that the recession is being felt in personal property and motor vehicles. The 2008 grand list took a $15 million hit, with personal property down 5 percent and motor vehicles down 4 percent. Although it's too early to tell the effect of the federal "Cash for Clunkers" program in town, Juda expects both categories to decrease again this year.

But that drop will be offset to some degree, he said, by an increase in real estate, which is more immune from year-to-year fluctuations because of the state's staggered revaluation system. Newington is not set for another revaluation until 2011.

Since October 2008, real estate has increased by about $12.5 million, with the opening this summer of a new Sam's Club on the Berlin Turnpike and the construction of 40 to 50 condominiums.

"It's likely to be a wash," Juda said.

Bristol could be in for relatively good news, but not because of any influx of businesses or surge in construction. Instead, a series of tax abatements for its biggest taxpayer — broadcasting giant ESPN — will expire. Comptroller Glenn Klocko estimated that the resulting income will be enough to offset any declines elsewhere and still produce some extra revenue.

"I'm predicting some growth — maybe 1 percent to 1.5 percent. It's not going to be negative," Klocko said.

ESPN's assessments total nearly a quarter-billion dollars and account for more than 7 percent of all assessed property in the city. The sports network's taxable property is worth more than Bristol's next nine biggest taxpayers, which range from Otis Elevator and Lake Compounce to the Covanta trash-burning plant.

Citywide, car values declined significantly last year, and officials expect that trend to continue with the new grand list. Some town assessors expressed hope that the Cash for Clunkers program would help with the motor vehicle tax base. The program offered consumers rebates of up to $4,500 for trading in their gas guzzlers for new, more fuel-efficient cars. Nationwide, the program spurred about 700,000 sales.

Still, more people in Connecticut and throughout the nation have been holding onto their older cars, and annual sales of new cars and light trucks have decreased by about 7 million units in the past several years.

The picture on housing in Connecticut is mixed. New home construction rose slightly in July compared with the same month a year ago — the first monthly year-to-year increase since November. But the state has mostly had deep monthly declines in new home construction this year. As recently as June, the number of permits fell by 45 percent compared with the same month in 2008.

Permits are still down significantly for the year. For the first seven months of this year, 1,880 permits were issued, off 39 percent from 3,096 for the same period last year.

Several town assessors said it's too early to forecast the shape of their grand lists, but even slight increases in such a climate are welcome.Cromwell officials, for example, are expecting an increase of more than 1 percent. Compared with the past two years, Assessor Shawna O'Neil said, a 1 percent increase is good. O'Neil attributed the expected increase to the town's new Lowe's home improvement store and the ongoing construction of about five residential subdivisions.