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Tax-Cap Matter Vexes Council

Vote Will Affect Some Buildings

By JEFFREY B. COHEN, Courant Staff Writer

February 16, 2008

A 3.5 percent tax cap on some city apartment buildings has emerged as a sticking point between the city council and leaders of a task force trying to figure a way out of Hartford's property tax tangle.

At issue is whether to keep the cap or let it go.

Proponents of lifting the cap say that move would bring in more revenue for the city and ease the pain for the city's small business owners.

Opponents say it would lead to higher rents and increased blight.

On Wednesday, the city council decided to hold off on voting to lift or keep the cap. Instead, it passed some of the other recommendations of the task force, asked the city's number crunchers for more information, and said it will reconsider the matter of the cap at its next meeting.

Whatever the council ultimately decides to do, the office of Mayor Eddie A. Perez hopes it does it quickly because the state legislature's clock is ticking. Any recommendation by the city for property tax relief needs to get before the Legislature for action, and the session is a short one, ending in early May.

"It would be nice if there was unanimity and real clear direction from city government on this issue," said Matt Hennessy, Perez's chief of staff.

The city created the property tax task force after it discovered last year that small businesses in Hartford would be disproportionately hit with large tax bills because of a 2006 revaluation.

The value of small business properties had climbed proportionately much faster than larger businesses. Many small businesses complained, saying the bills — in some cases twice the previous year's — could force them to close or move out of the city.

Under that 2006 revaluation, tax increases on residential properties not occupied by owners are capped at 3.5 percent, and the task force plan would eliminate that cap. In turn, the city's commercial property tax owners would see a significant drop in their tax burden, shifting more of the tax burden upon some apartment owners.

Richard Wareing, the task force's chairman, doesn't believe that lifting the cap would cause rents to rise in a city with 13.7 percent vacancy that is part of a regional rental market.

"Landlords in Hartford might want to raise their rents, but if competing units in East Hartford or Elmwood or Wethersfield or Windsor or Bloomfield — if they're not raising their rents, then that's going to have a downward pressure on Hartford landlords," Wareing said.

Instead, Wareing said, the net result of the rising taxes on apartments would simply be lower profit margins for their owners.

Councilman Matthew Ritter said it's unlikely he'll vote for lifting the 3.5 percent cap because he believes it would hurt renters.

"I understand the task force's argument, and I just have a disagreement," Ritter said. "This is why [this] is so difficult. You have to make some assumptions and you have to make some guesses."

Meanwhile, Perez has some "procedural concerns" and "issues with content" with the resolution the council passed Wednesday, Hennessy said.

He wouldn't describe them, saying that the mayor hadn't yet had a chance to speak with the council's leadership about them.

The council will again consider its recommendation to the legislature at its next meeting later this month.