Unpaid taxes in Hartford piling up
Property owners owe more than $40M in delinquent payments
In a city where exemptions already take a huge bite out of the tax base, property owners in Hartford owe more than a stunning $40 million in delinquent taxes, more than half of that on land, residences and commercial buildings.
Property owners are $22 million behind in paying real estate taxes — some of the delinquencies stretching back years — while separately, personal property taxes going unpaid on furniture, fixtures and equipment at businesses came in a close second at $19 million as of Jan. 24, according to city reports obtained by the Courant through a Freedom of Information request.
Topping a list of the properties with the 10 largest delinquent real estate tax bills as of that date are Immanuel Church Housing Corp., low-income housing for seniors, at 15 Woodland St., $2.9 million; Shelbourne Axela LLC, The Millennium apartments at 50 Morgan St., $1.1 million; and 200 CP Holdings LLC, the owner of 200 Constitution Plaza, where a plan to convert the structure to apartments fell apart last year, $893,000. Hundreds of assessments are being appealed.
Also on the list are two apartment properties — 249 Sisson Ave. and 16 Girard St. — owned by Paxe Hartford Portfolio LLC of Lakewood, New Jersey.
Paxe Hartford, which owed $286,000 for the two properties, was recently highlighted by Hartford Mayor Arunan Arulampalam for failing to maintain its properties as the mayor launched a multi-pronged initiative to crack down on landlords.
But Paxe Hartford’s overall real estate tax bill delinquency is more than $1 million spread out over 14 properties in the city and 270 units.
The delinquent bills can be equally as high on the personal property side.
According to the city reports,
the highest bill for personal property was Kessler Construction at 244 Prospect Ave., which owed $727,292.
‘Less willing to pay taxes’
The city’s troubles with delinquent taxpayers could intensify in the months ahead, as worries about the future of the office market, particularly downtown, persist. Downtown office vacancies are at a 35-year high, propelled by pandemic-era changes in the workplace, with many office employees working more — if not exclusively — at home.
The value of office buildings rests heavily on how much money they make through their leases. If that declines, the value of the building typically follows.
Downtown’s office landlords are a major contributor to real estate taxes and may come under pressure with fewer leases. On top of that, hundreds of property owners — including downtown’s largest commercial landlord Shelbourne Global Solutions — are appealing their current assessments.
Depending on the outcome of those appeals, real estate tax collections could take a separate hit.
The shifts in the real estate market — also seen elsewhere in Connecticut and across the country — are particularly troublesome for Hartford because nearly half of its commercial real estate is exempt from taxes, one of the largest groups being state-owned office buildings. The city does receive a payment in lieu of taxes, or PILOT, but it is far less than what would be paid in property taxes.
But Arulamapalam, who became mayor Jan. 1, is taking over at a time when city finances have improved significantly under the previous mayor, Luke Bronin.
Last fall, the oversight of city budgeting by a state review board eased substantially, six years after Hartford teetered on near bankruptcy. The improvement was aided mightily by a 20-year state bailout, sending Hartford $40 million a year during the agreement.
“We continue to be a city that has fiscal challenges,” Arulampalam said. “And so, I think shoring up our finances is always first and foremost in my mind.”
Arulampalam said tax deed auctions of properties with delinquent taxes — often favored by Bronin — are good way for the city to gain control of properties that have potential for future development and to expand the tax base.
In 2020, the city took ownership of seven, vacant overgrown properties just north of Dunkin’ Park in an auction for unpaid taxes where future redevelopment is envisioned at a crucial gateway connecting downtown with Hartford’s northside neighborhoods.
Arulampalam, the former head of the Hartford Land Bank, is more cautious about tax deed auctions to private owners.
“The folks who tend to purchase those properties very often — and there is national research on this — the properties that end up in tax sales, within 10 years are going to be back in tax sales,” Arulampalam said. “Very often the purchasers are folks who are less responsible and more speculative and less willing to pay taxes regularly.”
The auctions can be a good strategy to “encourage compliance, by those that may be more inclined to comply,” Arulampalam said.
Foreclosures for unpaid taxes are another option, the mayor said.
Arulampalam said the prime consideration before moving ahead would be the impact on the neighborhood where the property is located and the quality of life for residents that would result.
Simmering dispute
The debate over what the the top delinquent taxpayer, Immanuel Church Housing, owes is still simmering, a year after it was pulled by Bronin from a tax deed auction.
Immanuel House — a nine-story apartment building across from the Mark Twain House that houses low-income tenants 62 and older — has been locked in a dispute with city over the unpaid taxes for years. At issue is whether the affordable housing complex owes any of the tax the city claims is unpaid.
Jeanne Murphy, the executive director of Immanuel Church Housing Corp., did not return two calls and an email seeking comment. A note requesting an interview dropped off at the housing complex Thursday did not elicit a response.
But in 2022, Murphy told the Courant that her organization has been in discussions with the city, the state and the U.S. Department of Housing and Urban Development to resolve the matter, which has been ongoing since 2016.
“Immanuel House is a nonprofit organization offering housing to low-income seniors since 1971,” Murphy said in a statement to the Courant in September 2022. “Immanuel House has paid more than $200,000 in taxes every year.”
Jonathan Harding, Hartford’s corporation counsel, said: “The new administration is getting up to speed on the previous contractual issues that were raised by the taxpayer, and it is under review by my office.”
The second-highest unpaid tax bill is for a former hotel on Morgan Street just south of Dunkin’ Park that is being converted into a high-rise apartment building. The structure is recognizable to motorists on I-84 for its mural of a boy opening a mason jar and releasing fireflies.
This property also was pulled last year from the same tax deed sale as Immanuel House.
The former Red Lion hotel is owned by Brooklyn-based Shelbourne Global and Axela Group of New Britain.
“We have an agreement with the City to bring the taxes current when we take out a new construction loan,” Michael Seidenfeld, Shelbourne’s chief operating officer said, in a text. “We are currently working on that and expect it to happen sometime in Q2 2024.”
Here is a look at the top 10 owed real estate taxpayers, per the city as of Jan. 24:
1. Owner: Immanuel Church Housing Corp, Hartford
Address: 15 Woodland St. Property type: Low-income senior apartments Owed taxes: $2.9 million
2. Owner: Shelbourne Axela LLC, Waterbury Address: 50 Morgan St.
Property type: High-rise apartments
Owed taxes: $1.1 million
3. Owner: 200 CP Holdings LLC, Monsey, N.Y. Address: 200 Constitution Plaza
Property type: Educational/office
Owed taxes: $892,475
4. Owner: Austin Organs Inc., Hartford
Address: 156 Woodland St. Property type: Manufacturing
Owed taxes: $440,575
5. Owner: Park Squire Associates, Hartford
Address: 481 Park St. Property type: Mixed-use with storefront retail
Owed taxes: $374,457
6. Owner: A7 LLC, East Hartford
Address: 296 Homestead Ave.
Property type: Manufacturing
Owed taxes: $269,488
7. Owner: Asylum Hartford
LLC, New Haven Address: 273 Asylum St. Property type: Office with storefront retail
Owed taxes: $262,306
8. Owner: TravisLacy LLC, Bloomfield
Address: 664 Windsor St. Property type: vacant industrial land
Owed taxes: $232,816
9. Owner: Paxe Hartford Portfolio, New Jersey Address: 249 Sisson Ave. Property type: Apartments Owed taxes: $158,401
10. Owner: Paxe Hartford Portfolio, New Jersey Address: 16 Girard Ave. Property type: Apartments Owed taxes: $128,064
SOURCES: City of Hartford, Courant reporting Courant Editor Helen I. Bennett contributed to this story.
Kenneth R. Gosselin can be reached at kgosselin@ courant.com.