Shifting home values could change tax outlook

GREENWICH — Chances are that every two years, a candidate for local office or a campaign volunteer will knock on your front door, hoping to engage you in conversation and perhaps leave you with a lapel pin, bumper sticker or the muchdreaded lawn sign.

This year, though, there is a third party that may be knocking on your door. They are not members of a minor political party, but they may have a bigger impact on your property tax bill than any single candidate. Meet the property evaluators, census takers of a sort, only they are interested in the size and condition of your home, not in how many people live there, what they do or how much money they make.

These inspectors are charged by the town with gathering data about the buildings, outbuildings fences and other built structures on your property. When reviewed and compiled by the town’s tax assessor, the data become part the sum total of all taxable real estate in Greenwich, the socalled Grand List.

This year, the property inspectors are generating more worry and conversation than any single candidate for public office. That may be a comment on the lackluster campaign season so far, but it is more likely a result of the changes in Greenwich real estate since the housing collapse in 2008 and the subsequent Grand Recession.

Greenwich is a real estate-obsessed town, and has been for decades. Idle chatter about home prices has kept cocktail parties going since I was a kid (I started attending such parties at a young age). And that chatter was infused with enthusiasm if not outright glee as Greenwich prices moved reliably upward year to year, and sometimes month by month.

But that all changed in 2008. Prices not only stopped rising, but they also declined significantly, something many people thought would never happen. It has been a bumpy ride in Greenwich real estate for the last decade.

But it is not the stagnant market that has people worried about property valuations. The worry is over the change of values between neighborhoods, and the resulting shift in the tax burden. Cocktail chatter now starts with the woes of backcountry, the land of big houses and bigger lots where overpriced properties sit on the market for months. The worry is that backcountry prices have seen larger percentage reductions than other parts of Greenwich, so more of the town’s tax bill will flow to other neighborhoods.

Depending on which Realtor you speak with, prices in the backcountry have either “cratered” or are “struggling.” Others say they are stagnant, while a few diehard agents insist all is well, as if saying that will make it so.

My lifelong friend Christopher Fountain writes a blog called “For What It’s Worth.” It is part real estate blog (very Worth it) and part political commentary (Worth much less). He seemingly follows every transaction in town, so I asked him to choose a property that illustrates the tax dilemma facing town property owners and politicians.

He and I settled on 65 Upper Cross Road. It sold in 2011 for $16 million (original asking price was $28 million). It sold again this July for $10.5 million. On the town’s tax roll, the appraised value is $15,851,000, and the property owner pays taxes on 70 percent of that, or $11,095,840. The tax bill at 65 Upper Cross this year was $129,599.

Let’s assume that the town this year appraises the property at the selling price of $10,500,000. That means the property tax will be calculated at 70 percent of that, or $7,350,000. And let’s assume the tax rate stays the same this year as last year, 11.682 mills (that is $11,682 per every $1,000 of taxed value). The new property tax on 65 Upper Cross Road would be $85,862, or $43,737 less than the previous year. Unless the town cuts spending or other properties increase in value, that missing $43,737 will have to come from other properties.

That is what has people in other parts of town worried. Residents are worried that their tax bills will increase to pick up the lost value of the backcountry. And, that is why both first selectman candidates, Democrat Jill Oberlander and Republican Fred Camillo, were asked to describe their “vision” for the backcountry at their debate. There is no simple answer, particularly in the short term. And a local political campaign is not the place to expect a serious conversation about longterm demographic trends, economic development drivers or a new approach to municipal finance. That’s why both candidates gave forgettable, generic answers to that question.

Greenwich has always benefited from having the largest Grand List in the state. And that growing Grand List has allowed the Board of Estimate and Taxation to keep annual tax increases between 2 percent and 3 percent, even though spending increased much more than that. Last fiscal year, under the first full year of Democratic leadership, there was no tax increase. But those days may be over for Greenwich. It is time for some real planning, no matter who is first selectman or which party wins control of the BET.