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Time to Grow Hartford's Grand List

Oct 07, 2013
Hartford Business Journal
Time to Grow Hartford's Grand List
October 7, 2013

By Oz Griebel and Julio Concepcion

Hartford must grow its grand list and reduce its mill rate to generate the tax revenues needed to fund the breadth and quality of services expected by its residents, businesses, and visitors.

Between 1995 and 2010, the city's grand list fell over 35 percent, from just under $5.8 billion to just over $3.8 billion, while the grand lists grew in Bloomfield (42 percent), East Hartford (100 percent), Newington (70 percent), West Hartford (32 percent), Wethersfield (30 percent), and Windsor (44 percent). Over the same period, the mill rate in Hartford accelerated horrifically from 33.4 to 72.79, while the mill rates in five of the six abutting towns grew by no more than 10 mills with East Hartford's rate declining by over eight mills.

These unacceptable trends have occurred when over a billion dollars in state taxpayer money has been invested in an extraordinary array of new city assets: the Riverfront Recapture parks, Convention Center, Marriott Hotel, Science Center, Front Street complex, renovated G. Fox Building, and 1,200 new housing units. That total will be augmented by the Malloy Administration's commitment of $60 million to the Capital Region Development Authority (CRDA) for over 1,000 more housing units and the relocation of UConn's West Hartford campus to downtown.

We must now take the steps to leverage those state investments to attract the private capital that drives grand list growth and lowers mill rates.

These steps start with eliminating the aberration in the city's tax system, established over 20 years ago, that enables the city to assess residential property at less than 70 percent; the current residential assessment ratio (the RAR) is 29.2 percent.

Public and private sector leaders supported this aberration — along with a 15 percent surcharge on commercial property — as a temporary measure to alleviate a significant shift of the property tax burden to residential owners, due partially to delayed property revaluations. Both actions remained on the books long beyond their intended tenure and have been major impediments, along with an increase in city spending during the last decade, to meaningful private investment in real estate development and new equipment. The exorbitant mill rate also unfairly burdens those whose primary asset is an automobile.

Legislative and business leaders worked together in 2007 to phase out the commercial surcharge by 2011, but the RAR differential remains. The MetroHartford Alliance firmly believes that we must pass in 2014 a method to phase in an easily understood and readily implementable formula that will increase the residential assessment rate over time to 70 percent — the same ratio every other Connecticut municipality uses to assess both commercial and residential properties.

The Alliance has proposed a formula that ties the rate of that increase to the rate of increase in city spending (i.e. the adjusted tax levy) so that the more the city controls spending (as it has with recent budgets) the longer it will take for the residential assessment ratio to reach 70 percent.

The importance of this action is clearly illustrated by CRDA's successful effort to secure legislation this year that allows CRDA-funded properties, currently assessed at the 70 percent commercial rate, to be assessed at the current residential assessment of 29.2 percent. Without that legislation, the additional housing units funded by CRDA — units that are critical to sustaining Hartford as the dynamic urban core of the region — would not be financially viable for the developers or their lenders.

The MetroHartford Alliance enthusiastically supports CRDA's initiatives but recognizes that no city can build its way to greatness solely on the backs of taxpayer subsidies. Private investors must be attracted, and will be, when it's clear that commercial property owners will bear their fair share of taxes and not a disproportionate one that favors another property class. More importantly, such private investment will grow the grand list, drive down the mill rate, and increase total tax revenue to enable the city to provide the breadth and quality of services that will make Hartford more attractive to homeowners, renters, small businesses, and visitors.

During the past three legislative sessions, the Alliance and a coalition of some of the city's leading commercial property owners and small business owners have worked with our elected officials to address the RAR issue. We look forward to building on those efforts and to working with the city's recently established property tax task force.

Oz Griebel is president and CEO of the MetroHartford Alliance. Julio Concepcion is the Alliance's vice president of Hartford Partnerships.

http://www.hartfordbusiness.com/article/20131007/PRINTEDITION/310049962/1002