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City Asks For Cash From Nonprofits

For Those Exempt From Property Taxes, Segarra Proposes 'Payment In Lieu Of Taxes'

By JESSE RIFKIN

July 23, 2012

HARTFORD – The city is asking its largest non-profit organizations to contribute what it says could be millions in extra revenue.

Earlier this month, Mayor Pedro Segarra and Chief Operating Officer David Panagore mailed out letters to 49 city institutions proposing a PILOT, or payment in lieu of taxes, program.

"I recognize the important role and positive impact these organizations have on our community," Segarra wrote in the July 9 letter.

"However," Segarra continued, "the mounting budgetary pressures, low compensating… payment from the State of Connecticut and the fact that over 50 percent of the taxable property [in Hartford] is tax exempt has forced a critical re-examination of how we can continue to provide essential and important services; services that each of your organizations benefit from."

In Hartford 1,476 institutions are exempt from property taxes, according to city Administrative Operations Manager Miguel Jose Matos. Hartford's letter was sent to only 49, mostly the largest. The largest institutions targeted were:

Hartford Hospital, which owns 17 city properties for $288,133,996 taxable total.

Saint Francis Hospital and Medical Center, which owns 25 city properties for $252,241,783 taxable total.

Trinity College, which owns 45 city properties for $156,752,048 taxable total.

University of Hartford, which owns 12 city properties for $150,709,368 for taxable total.

Other notable organizations included Wadworth Atheneum, Connecticut Science Center, Mark Twain Memorial, Connecticut Public Broadcasting, Hartford Seminary, Watkinson School, and Connecticut Historical Society.

Hartford's hands are tied in part because of its unique position as the capital city, said Chief Operating Officer David Panagore.

"We have all these state and federal buildings, but you cannot tax them because that would be like taxing yourself," Panagore explained in an interview. "We also do not collect property tax on municipal buildings like City Hall or the fire department, public schools, public parks, cemetaries, churches or religious buildings."

"On top of that," Panagore added, "the city's split mill rate taxes residential property upon only 29% of fair market value, significantly less than commercial property at 70%. The differential was instituted decades ago to increase home ownership among those working in Hartford, but the city's population decreased instead – so now we have less people and a lower rate."

Last fiscal year, $257,644,264 was collected in general property taxes, commercial and residential combined. Hartford's adopted budget that fiscal year equaled $545,944,221.

"On the 2010 Grand List, at about $3.644 billion, exempt property was 49.4 percent of the 7.383 billion total assessed value of property in the city," says City Assessor John Philip.

Adding to the city's fiscal woes, the state only reimbursed the city $37.8 million last year, less than half the $89 million payment if they had reimbursed according to the traditional statute formula.

While the details are still being worked out, Hartford's PILOT plan is modeled upon similar programs in Boston and Providence. Segarra met with both their mayors last year.

In Boston's system, created in January 2011 by Mayor Thomas Menino, incentives to make such voluntary payments included a real estate tax deduction and a community benefits deduction.

According to the Boston Assessing Department, last fiscal year 45 institutions were asked to contribute a total $21.5 million. $19.5 million was actually contributed, or 90.7% of the request.

In Providence's system, proposed in May 2011 by Mayor Angel Taveras, the seven largest tax-exempt institutions were asked for contributions.

Of those, six have agreed to contribute approximately $5.9 million total. Brown University, the city's largest nonprofit landowner, agreed in May to pay $31.5 million over the next 11 years.

Hartford has not yet suggested specific monetary targets for individual institutions. No organization has yet agreed to participate in the PILOT program.