Homeowners prep for revaluations
In the thick of the pandemic last year, the big increase in Bridgeport’s grand list valuation did not go unnoticed by Ben Blake amid everything else he was handling in his role as mayor of Milford.
But neither did Westport’s decline — and as his city nears its completion of a property revaluation, he believes homeowners and businesses can rest easy that no surprise tax bills will be in the offing next year.
Bridgeport led Connecticut for the biggest increase in its grand list in 2020, according to the Connecticut Office of Policy and Management which oversees the municipal assessment process. The city’s grand list spiked 23 percent to roughly $8 billion reflecting the combined value of all real estate and personal property for tax purposes.
After Westport surprised some in reporting a 5.4 percent decline last February in its grand list, the town ended up with the largest drop of just nine towns to see their grand list totals ebb.
But only 20 towns saw their grand list totals escalate more than 5 percent, according to OPM, the large majority of which completed formal revaluations last year pending any appeals. Less than 10 recorded declines, and only three at 2 percent or more including Westport.
“We’ve had six consecutive tax [collection] increases in a row — some of that is attributable to the fact that we are attracting a lot of new businesses that are coming into town and developing their properties,” said Mayor Ben Blake of Milford. “The more businesses we are bringing in and the more development that we have — that’s a good thing, and that trend will continue.”
‘An amazing increase’
Connecticut cities and towns revalue the real estate within their borders every five years, while setting annual changes to the value of personal property like vehicles. Property taxes are calculated through varying “mill rates” town to town that assign tax liability, with a mill equal to a dollar of tax liability for every $1,000 of assessed value.
Cities on deck for this October include New Haven, Hartford, Milford and Shelton, with towns undergoing revaluations including Brookfield, Groton, Manchester and West Hartford.
Stamford, Danbury and Waterbury are next up in 2022 as part of a larger group that includes Ridgefield, Wilton and Middletown.
Any number of factors can sway aggregate town grand list values, from major new commercial buildCatalog ings and apartments to people tacking on additions to their homes; and property values as reflected in real estate cycles.
The COVID-19 pandemic created significant uncertainties last year for tax collections and future assessments, as businesses laid off workers and New York City residents high-tailed for the suburbs, bidding up the prices of homes significantly.
Through May, the price of the average home sold in Connecticut was up 34 percent from the same period in 2020, on the eve of a boom in closings that swelled the numbers last summer.
Westport saw as big a boom market as any, but taxes were held in check for many though some absorbed increases, according to Jim Marpe, first selectman. In a February statement, Westport’s town assessor’s office indicate the pandemic had an impact on the value of personal property — and by extension the grand list — in part due to business closures and a temporary reduction in new ones opening.
Marpe acknowledged that will likely be a short-term phenomenon given the bidding wars for homes and new construction, drawing businesses to town like Sundance
which opened a storefront this spring on Main Street.
“Keep in mind that most of the analysis of [Westport] housing values was done in 2019 and going into 2020,” Marpe said. “We are seeing an amazing increase in the price points houses are selling for. ... What might have been a $750,000 house at the next reval, maybe its $1.5 million.”
Connecticut municipalities can petition OPM to move push back revaluation years, if they have legitimate reasons to do so such as major disruptions to their real estate market in the target year for
revaluation. Blake said he does not expect any stampede on that front, suggesting the real estate markets are settling back into more normal deal flow, albeit at higher values.
“There has to be a real basis for it,” Blake said. “The reval takes almost three years to do — you almost start when the last one finishes up, to some degree.”
But a commercial real estate expert with Cushman & Wakefield argued that at least a few cities could see pressure this year or next to push back the process, given what they expect to be a sustained period of flex working that will reduce their needs for office space, and by extension, the amount of rent buildings can generate.
New York City officials reported last month they expect property tax collections to drop 5 percent this year, according to Bloomberg, with offices and hotels expected to be down 15 percent to 20 percent on average.
Stamford and Danbury are up for revaluation in 2022, with Hartford and New Haven wrapping up their own resets this year. Greenwich completed its revaluation last year with just a 0.8 percent increase in its grand list as reported by OPM.
“It’s not really fair if there’s a short-term downturn in commercial [values],” said Jim Fagan, executive managing director in the Stamford office of Cushman & Wakefield. “I think retail and office values might be very difficult to appraise — there’s a sense that this residential dispersion that is coming out of the city into the suburbs will drive up those prices as well . ... If I was in charge of assessing, I think you would have a good reason to push it off for a year or two.”