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Hartford 2012 Tax Bills: Big Hikes For Apartments, Wide Swings For Some Homeowners

Jenna Carlesso

December 14, 2011

Richard Allen worries about what will happen when he receives the July property tax bill for his four-family house in the North End.

The 2012 tax bills, based on values the city assigned as of Oct. 1, will bring an unpleasant surprise to many owners of houses and apartments even as they bring relief to commercial building owners. That's partly because office and industrial buildings generally lost more value than residential property since 2006, the last time new values were assigned.

But beyond the shift in values, Hartford — which taxes different classes of real estate at different levels — is sharply pushing up the levy on apartment buildings, which were already taxed higher than houses.

And as a four-unit owner, Allen is part of a group that will be hit especially hard. That group's properties, 161 in all, are being reclassified from houses to apartments. That means Allen's tax will roughly double for every dollar of market value.

"I can't pay that," said Allen, 64, who owns a property at 36 Lenox St. "I don't know what the tax bill is going to be, but with that assessment, it's got to be ridiculous."

Making matters worse, Allen installed new windows, among other improvements, which pushed up the assessor's ranking of the condition of the house. The result: His market value actually increased by 17.5 percent from 2006 to this year, when most houses lost about that much value.

Allen lives in one of his four units, rents out another and has been working to fix up the two others. But he's been living on a fixed income since his retirement last year from Pratt & Whitney — where he worked as a machinist — and said he can't afford to make the renovations needed to rent out the other units.

The city has not calculated tax rates for 2012 or set a budget, so it's still too early to tell exactly how much any property owner will pay, even though the new valuations are done. An analysis by The Courant shows that Allen could see an increase of 140 percent — from $3,224 to $7,744 — if the city budget remains level and state and federal grants stay where they are.

"I'm very surprised," he said when he saw his higher valuation. "I didn't expect anything like this, especially on a property where I have two vacant apartments that I can't afford to renovate right now."

'Complex Balancing Act'

Allen is likely to have one of the biggest increases in the city, but the higher payments will be significant for many property owners.

Currently, apartment properties — including many with stores on the first floor — are assessed at 37.6 percent of their 2006 fair market values. But next year, that will rise to 50 percent and over the next several years, it will increase to 70 percent, in line with commercial properties and vehicles.

Houses, including single-family and two- and three-unit buildings, along with condominiums, could see decreases or increases in their taxes. There is a cap setting the overall increase in taxes to all dwellings in those categories to 3.5 percent, but because the cap does not apply to individual houses or condos, some of them could see increases of more than 3.5 percent. And for houses or condominiums that had improvements in the past five years, the increases could be large.

Changes in the way the city taxes apartments and houses are set in state law — and this year, the law that allowed the increases also reclassified fou-family houses as apartments, with the higher tax rates.

"Are we expecting people to be pleased with the increase? No. No one is ever pleased with that," said David Panagore, the city's chief operating officer. "We are doing everything we can to increase homeownership in the city, improve services and ensure the tax base."

The bright side of the picture is that commercial properties, including industrial buildings and especially large office towers, could see decreases ranging from a few percent to 35 percent or more — raising hopes among city leaders of a resurgence of business activity. The city is phasing out the surcharge on businesses, which was as high as 15 percent and is 7.5 percent this year.

"If we head in the direction where the small businesses in neighborhoods and office towers downtown both left the city, you'd find a lot worse of a situation," Panagore said. "You wind up having to cut critical services. It's a complex balancing act."

Property owners have received their letters from the city with new market values, and have until the end of this week to request meetings to discuss the calculations. Concern is already starting to grow among apartment owners.

The owners of the Capitol View apartments are enjoying nearly full occupancy, almost three years after purchasing the Asylum Avenue property. Their assessment will go up from 37.6 percent to 50 percent of market value. With a decline in the property value, they could see a tax increase of 7.5 percent, based on The Courant's analysis.

Stephen Schacter, managing member of Capitol View owner MATP in Greenwich, said the weak area economy has left little room for rent increases, beyond keeping up with expenses that are rising at 2 or 3 percent a year.

"What the market will bear is not a function of taxes," Schacter said. "It doesn't necessarily follow that I can raise rents."

Schacter said MATP was able to raise the occupancy at the building, which was at 75 percent when the company purchased it, by investing $1 million in maintenance and other improvements.

Nonprofit groups on a shoestring budget, which offer below-market rentals to city residents, are also alarmed by the potential impact of the increase. The Mutual Housing Association of Greater Hartford Inc. owns and operates 155 units of below-market rental units in a dozen buildings across the city, housing about 500 people.

"We're running right on the edge," said Greg Secord, the association's director of resource development. We're just making enough money to run the buildings with a little left over for improvements."

Higher taxes could force the association to raise rents — now $200 to $300 a month below market rate — affecting tenants who can hardly afford an increase.

"They don't have any more wiggle room than we do," Secord said.

Secord also worries that some for-profit landlords may be forced into foreclosure as a result of higher taxes.

Wide Swings For Residents

For nearly 20 years, the heaviest tax burden in the capital city has landed on commercial properties, whose real estate and equipment taxes have been calculated based on the 70-percent figure — with a surcharge on top of that.

By contrast, condominiums and houses with four or fewer units have been assessed at 26 percent of market value this year. That assessment percentage is likely to rise, but the level has not yet been set.

City Assessor John Philip said the level probably won't be much higher than 30 or 31 percent of market value, based on a preliminary estimate. "Some individual properties will experience a significantly greater increase and some will experience a decrease."

The tiered system in Hartford, along with the business surcharges, was intended to keep taxes on residential and apartment properties lower, thus encouraging homeownership in a city where the median income is less than half that of the Metro Hartford region as a whole.

State Rep. Matthew Ritter, D-Hartford, a co-sponsor of the state bill, said the measure purposely protected city homeowners, who will see an overall increase no more than 3.5 percent even though some will have larger tax hikes.

"The revaluation has been blunted toward the residential class because of the bill that we passed," Ritter said. "We can't crush our homeowners. … The full weight of the revaluation won't be felt on the residential class."

Alex Rodriguez, who owns a single-family house on Cromwell Street, said the city's tax system has been fair to homeowners, but likely won't stay that way long-term.

"Having a small amount of homeownership in the city creates a big burden in terms of what homeowners need to pay to maintain services, schools and so on," he said. "But I don't think the solution is to ask for more money from big corporations. We need to take a look at how cities and towns are collecting money to maintain services and we need to rethink that process."

Sean Arena, who owns two condominiums on Morris Street, said he's glad the city is giving businesses a break.

"Now they're trying to level the playing field," Arena said. "I believe we're on the track to being a business-friendly city."