Town of West Hartford

Suspension of
Revaluation Phase-In

Robert Sisk
June 9, 2009

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 Revaluation Suspension
• Periodic revaluations are performed to ensure that property owners are taxed
based on the fair market value of their property as required under CGS §12-
63
• “The purpose of the revaluation is to eliminate inequities that have developed
since the last revaluation, conducted in 1999, due to a shift in market values
within neighborhoods and/or property types.”
Letter from Town Manager, 2006

Grand
List
Deviation
5 Years 5 Years
Revaluation Revaluation Revaluation
Normal Revaluation Cycle

• CGS §12-62 allows for a gradual increase in assessed values (phase-in) over
a period not to exceed 5 years. This provision was adopted by the TOWH in
2007 leading to the current 5 year phase-in of the 2006 revaluation
• Under S.B. 997, signed into law on May 15, 2009, TOWH can suspend the 5-
year phase-in of the 2006 revaluation after the second year and freeze the
phase-in at the 2007 Grand List level until the next revaluation (for the 2011
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Grand List).
 What does it mean?
• The 2006 revaluation indicated that significant shifts had taken place in
the relative values of properties in TOWH since the 1999 revaluation:
– Value of personal property and motor vehicles had grown relatively little
– Value of commercial properties had not grown as much as residential
– Within the residential segment, some properties had grown in value
significantly more than others
• The magnitude of these shifts was due, in large part, to the 7-year
hiatus since the previous revaluation – due to a similar deferral
enacted by the State of CT in 2003.
• The 2007 decisions to 1) uniformly increase the assessed value of all
real estate by 25% and 2) phase in the revaluation over 4 additional
years prolongs the inequities identified by the 2006 revaluation –
extending the period in which property owners pay more - or less - than
the amount they should under CT statutes.
• WH property values have dropped marginally since the 2006
revaluation but the decrease has been evident in both the residential
and commercial segments - meaning the 2006 Grand List is still the
most accurate reflection of property values available.
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 Grand List Deviation
1999 2003 2007 2007 2009
Physical Decision to Decision to Decision to proposal to
inspection defer increase real phase-in freeze
revaluation revaluation estate remaining phase-in at
aligns Grand to 2006 assessments revaluation over 2007 GL
List to actual 25% 4 years level
property values uniformly

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
100% 100% 100% 100% 100% 100% 100% 100% 125% 138% 138% 138% Residential
100% 100% 100% 100% 100% 100% 100% 100% 125% 130% 130% 130% Commercial

Based on 1999 Grand List for 12 Years

Residential -13% *
Residential +77% Commercial -10% **
Commercial +45%

Grand List
Deviation
* Source: MLS CT 4
** Source: Collier, Dow & Condon
 Property Taxes Owed 2007-2012
Average Average Average
Vehicle and Pers. Prop. Commercial Residential
Increase Increase Increase
150.00%
140.00%
Property Taxes Owed (%)

The more your property increased in value, the less you pay
130.00%
120.00%
110.00%
100.00%
90.00%
80.00%
70.00% The less your property increased
60.00% in value, the more you pay

50.00%
%

0%

0%

0%

0%

0%

0%
0. 00%

20 .00

40 .00

60 .00

80 .00

10 0.0

12 0.0

14 0.0

16 0.0

18 0.0

20 0.0
2006 Revaluation Assessed Value Increase

No Phase In 5 Year Phase In Suspended Phase In

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 Winners and Losers
Property taxes are a zero-sum game – if some underpay, others must overpay to compensate
Current
5-Year Phase-in Suspended Phase-In

$50,000,000 $50,000,000
Overpaid

$40,000,000 $40,000,000

$30,000,000 $30,000,000
$17M
$20,000,000 $20,000,000
$9M
$12M
$10,000,000 $7M $10,000,000

$6M $10M
$0 $0

-$10,000,000 -$10,000,000
$22M
Underpaid

-$20,000,000 -$20,000,000 $39M

-$30,000,000 -$30,000,000

-$40,000,000 -$40,000,000

-$50,000,000 -$50,000,000

Over-paying Residential Commercial Vehicles & Personal Prop Under-paying Residential

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 Conclusion
• Under the current 5-year phase-in, the owners of residential properties who
enjoyed market value increases between 1999 and 2006 of more than 67%
are under-paying property taxes by some $22 million.
• Under this proposal, the under-payment will grow 74% to $39 million.
• In both cases, the shortfall is offset by property owners who are over-paying
their property taxes:
– Residential properties with less than average market value increases (26%)
– Commercial properties (32%)
– Motor vehicles and personal property (42%)
• The proposed suspension further distorts the objective relationship between
assessed value and property taxes, replacing it with a subjective system in
which political decisions determine the winners and losers.
• In addition to being grossly unfair - favoring some taxpayers over others - this
redistribution places an added burden on West Hartford’s business
community at a time when it is already under significant stress.
• Particularly hard-hit are taxpayers who lease in West Hartford as their rents
are increased to cover overpayment of commercial property taxes and they
are paying 37% too much for their motor vehicles and personal property.
• The lessons of the 2003 deferral should be:
– Revaluations should not be less frequent, they should be more frequent
– Phase-ins should not be extended, they should be eliminated.
• I respectfully suggest the proposal to suspend the phase-in not be adopted.7