In his latest commentary, city fiscal scrutineer John Marshall Lee challenges the logic of a tax break proposal on the City Council agenda for Monday night. From Lee:
Residents of Bridgeport who are property owners are clamoring for economic development independent of housing that will remove from them the primary responsibility for paying City property taxes. The public sees activities at the Bridgeport waterfront developing, but much slower than anticipated and they understand that the majority of this district’s taxes will be used to repay State funds. And the vacant land and buildings on Main St. north of the Holiday Inn cause many to wonder when will real current taxpaying development show up.
In the meantime, OPED has been preparing resolutions for the Bridgeport City Council so that they can approve “tax incentive” or “tax abatement” agreements with real estate developers or buyers. There has been no major review of historical City policy on such agreements by the City Council. Nor have there been specific comments in each case as to whether such a project will produce jobs, even for a construction phase, represent additional housing units, or represent what type of gain for the City in exchange for irrevocable agreements that tie the hands of City leaders into the future.
One deal on the City Council Calendar on Monday evening has to do with Laurelwood Place Apartments at 585 Norman Street, Bridgeport.
The 100 one-bedroom units were conceived and developed by the Bridgeport Rotary Club more than 30 years ago and deed-restricted exclusively for low- and moderate-income persons, many of them elderly. Rotary has operated this project under the name of Bridgeport Rotary Club Housing Corporation.
A most unusual aspect of this OPED proposal is that Bridgeport Rotary with members who favor “service above self” has been a 100% taxpayer for at least the past 15 years, just the same as you and me. They have paid full tax, with no abatements or recorded deals, just the mil rate times the assessment that since October 1, 2008 stands at $3,250,020. With the mil rate at 42.198, Rotary Housing is paying $137,144.34 in taxes this year. (See the chart showing the tax revenues for the past 15 years.)
To look at the Resolution in context, remember that we have paid for a revaluation of City properties but the Mayor petitioned the State to waive revaluation results (from an additional appraisal in the coming year) until just after the 2015 Mayoral election. For some reason the revaluation results have not been available to the taxpaying public. Former Mayor John Fabrizi formally requested FOI treatment to release his own property record. No transparent response. He had to appeal to the State and awaits a hearing.
Many in the City believe that appraisal results showed significantly lower values that would necessarily raise the applicable mil rate even if the operating budget were exactly the same in the year after the revaluation. With this train of thought, Laurelwood valued at $3,250,020 might reasonably be expected to sell for that amount or less at this time. However, an out-of-state LLC investment group is under contract to purchase the property from the Original Owner for $6,600,000 and proposes to invest $3,600,000 in property renovation.
Doesn’t all of this sound great? As the resolution says, “it is in the City’s interest to encourage the development of high quality affordable housing with services for its senior residents;” and I have no objection to that. However, there is a Tax Incentive Development agreement that moves the property from a 100% taxpayer annually, to a schedule for 40 years into the future. It is likely that the current tenants will all have passed away by then.
Regarding tax payments: “the base annual tax payment due to the City at the greater of the amount that would be due per the normal assessment and levy practices of the City applicable to the tax payment due on July 1, 2015 or the amount of $135,000, with such greater amount to escalate annually at 3% per year for a period of 40 years.” Will the July 1, 2015 bill look at the $6,600,000 purchase price as a comparable with the mil rate to be applied to a 70% assessment rate? Will it include at any time the $3,600,000 of renovations to the units? It does not seem that way. Rather it looks like a private investor will lock in a stable tax pattern, lower than what other owners can do and the rest of City taxpayers will subsidize the pattern for four decades. Why is this necessary? Does it make sense? See the chart.
If the parties went back to the drawing board, and the property were purchased from the owner at values closer to the October 1, 2008 figures from the Tax Assessor’s office, how necessary would the 40-year period be? Would the renovations and services for 100 seniors still be available? Would that serve the Rotary International second question of their Four Way Test: “Is it fair to all concerned?” Rotary should get a fair price. The tenants get upgraded services and renovations. CHAFA lenders get protections they need. But what happens to Bridgeport taxpayers? And the public gets to see an actual chart of how much subsidy and for how long? Is that reasonable? So a moratorium to look at each deal on the books today and review each one presented may also be reasonable? Time will tell.
Rotary Club Housing, 585 Norman Street, Bridgeport, CT 06605
15-year tax payment history.Year Assessed Mil Total Value Rate Tax 2013 $3,250,020 42.198 $137,144.34 2012 " 41.855 136,029.60 2011 " 41.11 133,608.32 2010 " 39.64 128,830.80 2009 " 39.64 128,830.80 2008 3,109,050 38.74 124,944.60 2007 3,596,949 44.58 160,352.00 2006 " 41.2 148,482.10 2005 3,956,645 42.8 167,286.96* 2004 " 40.32 159,531.94 2003 3,596,950 38.99 140,245.08 2002 2,139,305 55.2 118,089.64 2001 2,076,200 62.4 129,554.88 2000 2,013,095 65.0 130,851.18 1999 1,949,990 65.0 126,749.36 * In 2005 additional payments of $24 for a lien and $11,128.89 for interest were made to the City, probably for a late payment of taxes.A chart like this, taken from City records for this property over a 15-year period, shows:
• Proper assessments are important for all property and should include at least part of the expense of capital renovations and improvements probably
• The mil rate has been higher than it is today. And tax payments were actually higher. The City survived and the owners dealt with it
• Total tax payments are what pay for City appropriations each year. Has the City Council looked at a chart like this on any property for which they are considering abatements? Where are those charts to accompany ECDE minutes?
• How recently have you looked at what happened in the last century relative to activities today? What trends are most important to you?
Good job, JML. “The public sees activities at the Bridgeport waterfront developing, but much slower than anticipated and they understand that the majority of this district’s taxes will be used to repay State funds.”
But on this part I disagree in part: “… they understand that the majority of this district’s taxes will be used to repay State funds.”
Maybe some people in Black Rock and other parts of the city understand this, but the majority of them just don’t know it; won’t understand even if I drew charts to explain it; simply aren’t paying attention. I don’t know where we would be without your unrelenting effort to inform the dormant citizenry of Bridgeport. Thank you.
Well done, JML. Does the city administration prepare this type of analysis for the city council? Would they comprehend it? What kind of analysis is done for the city council? Or do they (four or five people on the committee) simply hear the slanted view of the organization looking for a break?
Whatever happened to putting your money where your mouth is?
Where is Bob Walsh’s comment on this? Just asking. Time will tell.