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Barron attributes Norwalk property assessment appeals partially for .5% grand list growth

Norwalk Power LLC appealed the property assessments for Manresa Island, resulting in a $9.8 million loss to the 2017 grand list, according to Finance Director Bob Barron.

NORWALK, Conn. — Gains in Norwalk’s grand list are partially cancelled out by losses, Finance Director Bob Barron said.

Barron said he talks to Tax Assessor Michael Stewart and the city has lost “millions of dollars in assessed values” due to court cases that challenged assessments. The Board of Assessment Appeals (BAA) can also reduce assessed values, he said.

The comments came at last week’s Common Council Finance Committee meeting, where Council member Doug Hempstead (R-District D) asked for an explanation of why the city’s grand list has grown .5 percent in light of all the new apartments that have been built.

Barron said he’d send Council members a list of the top 200 changes in real estate for 2017; on Sunday he sent it to NancyOnNorwalk:

Top 200 RE Changes 1-31-2018

 

The list shows $87.5 million in grand list gains but $30.3 million in losses. Gains include $10.7 million for Norwalk Senior Housing, nearly $9 million for The Berkeley apartments on West Avenue and nearly $7.9 million for Head of the Harbor South. Maritime Village added $6.5 million to the grand list, the Norwalk Country Club added nearly $5.3 million and Norwalk Land Development LCC, developer of The SoNo Collection, added $4.4 million. Also on the list of big boosts were St. Joseph’s Roman Catholic Church at $3.1 million, Belden Square LLC at $3.1 million and SoNo Development partners at $2.2 million.

Losses include $11.3 million for SPUS7 RiverPark LLC (800 Connecticut Ave.) and $9.8 million for Norwalk Power LLC, a.k.a. Manresa Island.

SPUS7 RiverPark LLC bought 800 Connecticut Ave. in October 2015 for $48,559,600, according to the assessment card. Metropolitan Life Insurance bought it for “$0” in 2012 from River Park Property Owner LLC, which paid $106,261,200 for it in 2007.

Norwalk Power LLC sued Norwalk in 2014, appealing a Board of Assessment Appeals decision to uphold the valuation issued by Stewart and calling the valuation of equipment and the property “grossly excessive, disproportionate and unlawful.”

A judgement was rendered in April.

There are 18 six-figure losses listed, headed by St. Paul’s Flax Hill Cooperative at $763,460 and CT Hotel Partners LP at $555,250.

St. Paul’s also sued in 2014, appealing its assessment. A decision was issued in March.

Barron also said the grand list suffers when a building is demolished.

His document shows a $3 million loss in the 2017 grand list for 467 West Ave., the Loehmann’s plaza that is being demolished for Waypointe’s South Block.

“I really didn’t think it was that big of a deal, but Michael said, ‘Bob think of it this way: You have a $10 million building. A developer buys it and then he knocks it down to build a $30 million building,” Barron said. “For the two years he’s building it, we’ve lost $10 million off our grand list.’ Now, in the third year we get $30 million, it’s all well and good. But we do – all the redevelopment activity sometimes can cost us when they demolish a building.”

29 comments

Nonpartisan February 20, 2018 at 7:29 am

Why doesn’t all this development lead to significant increases in the Grand List”

SUBSIDIZED HOUSING

An apartment that rents for 800/mo is worth less than an apartment that rents for 1800/mo

When you have a 10% workfare requirement you reduce the value of the building ( based on rent income) significantly.

Lisa Brinton Thomson February 20, 2018 at 8:18 am

Interesting. Thank you Mr. Barron and Nancy. Will examine the properties and neighborhoods (hopefully the administration will as well) and see if there are some takeaways regarding how we are planning and zoning the city. A first glance, isn’t the former Loehman’s plaza and $3M loss now the subject of requested tax credits by the developer? I’m confused.

Sue Haynie February 20, 2018 at 8:24 am

Norwalk’s 10% requirement for subsidized rentals does devalue property value and the taxpayers are left covering the difference. Norwalk has done its share unlike our surrounding towns.

I imagine the reval is also going to hurt Norwalk’s grand list. Home prices in most of Norwalk have decreased.

Nora K King February 20, 2018 at 8:30 am

The city faces the challenge that commercial buildings are underassessed, which cannot be corrected until the next revaluation. If we actually assessed the commercial and residential with more accuracy there would be limited appeals and limited examples where Norwalk has left money on the table on the commercial side. The entire commercial grand list needs to be seriously evaluated because there are dozens and dozens of examples where the city did not evaluate our commercial real estate correctly.

The city suffers because we then cannot spend money on the schools, parks, sidewalks because we are just then trying to keep up with inflation and our over inflated pension plans. The entire taxation process needs to be rewritten. Residential tax payers have been carrying the burden for a long time and the citizens have suffered with lack of sidewalks, footpaths, great ball parks, sports programs because the city has not been able to figure out how to grow the grand list. Then all of the money the city does make on fees goes into the rainy-day fund, which Bob Barron won’t let us spend on items that our important to the tax base. It is an ugly cycle and it is controlled by the finance men that don’t even live in this city.

Piberman February 20, 2018 at 9:07 am

Stagnant Grand List for nearly a decade while the nation is booming, espeicially its housing sector, suggests Norwalk is undermanaged and overtaxed. All the City Hall hype about new apt. building doesn’t change the fundamentals. City Hall and the BOE can’t deliver affordable City services that encourage new comers to buy homes here or allow retired homeowners to live here. Come the next revaluation homeowners will have yet more burdens. Sadly help is not on the way.

Bill Nightingale Jr February 20, 2018 at 10:46 am

Note to self: don’t ever let a utility company come and install their infrastructure in our town…EVER! Never again!

And how did this power plant get built without major bonding to cover their clean up upon leaving or closing?

“Norwalk Power LLC sued Norwalk in 2014, appealing a Board of Assessment Appeals decision to uphold the valuation issued by Stewart and calling the valuation of equipment and the property “grossly excessive, disproportionate and unlawful.”

David Westmoreland February 20, 2018 at 11:12 am

Just a few examples randomly chosen from the tax assessor’s website that seem to support Nora King’s position:

104 W Cedar, appraised by the City in 2015 for $638,950. Sold on 9/22//17 for $1,100,000. An increase of 72% in two years.

15 Belden Ave, appraised by the City in 2015 for $864,500. Sold on 12/6/17 for $1,400,000. An increase of 62% in two years.

747 Belden Ave, appraised by the City in 2015 for $6,893,240. Sold on 6/22/17 for $11,900,000. An increase of 73% in two years.

40 Cross St, appraised by the City in 2015 for $13,009,540. Sold on 9/18/17 for $23,000,000. An increase of 77% in two years.

By no means an exhaustive list of all commercial sales, just four random picks. Perhaps there is an explanation for each, or the commercial real estate business is really booming in Norwalk?

Bill Nightingale Jr February 20, 2018 at 11:40 am

so here’s an idea. If commercial real estate doesn’t pay it’s fair share of property taxes, let’s just put a stop to it. Let’s amend our zoning to promote residential over commercial. Our neighboring towns clearly figured this out years ago. Let’s start with this being an objective of the new POCD.

Sue Haynie February 20, 2018 at 12:03 pm

This data was informative, even if discouraging. Thanks to Bob Baron for providing it and to Nancy on Norwalk for posting.

Al Bore February 20, 2018 at 12:20 pm

Norwalk’s leaders and all of it’s city government are weak at best. stagnant home values. Stop and think Mr.Mayor, weak council, and lack of planing and zoning before you let the developers build more apartments, the sky’s of Norwalk are disappearing to over development. The streets are over crowded the infrastructure can’t handle it and the cost of it is now and in the future will take it’s toll on the tax payers. You are ruining what was once a city people came to live and make roots in and now the city government want it to be a place for people to stop by and rent until you find a nice place to live. THINK just once and listen to the taxpayers who know a lot more than you ever will. We need a professional city planner and we need one quickly. Thank you Al Bore tax payer of a single family home that keeps loosing value!

Diane Lauricella February 20, 2018 at 12:20 pm

@Bill Nightingale Jr. While I hope you were only being sarcastic, I am opposed to Norwalk becoming a bedroom community when we have much more potential…

Have mentioned this before and encourage taxpayers to come out this Thursday night for the Council Finance and Claims Committee and for future Operating Budget Public Hearings to advocate that revenues and savings are being squandered. This is NOT just about the BOE Budget. It is about all of the Departments and the Boards and Commissions that are supposed to make Norwalk improve for all.

Are we getting the best “bang for the buck” with select key Personnel and expenses? If not, where can we seek changes?

A well-done update of the POCD needs to embrace a more balanced, diversified tax base and that may mean a PROHIBITION of converting any more Industrially-Zoned property for big box stores or residential development. Clean Industry and true mixed-use would bring great paying jobs, local jobs, and higher grand list growth.

Check the history…think Norden, Connecticut Avenue, Glover Avenue, Muller Park, MLK…never reaching its full tax-base potential as staff, land use commissions, elected and appointed officials from long ago refusing to help encourage true “Economic Development” that benefits ALL of the taxpayers.

We do not need any more sports facilities in the MLK Industrial Zone, for example. Let’s be more creative.

Education101 February 20, 2018 at 1:23 pm

This is more reason to safeguard the rainy day fund/reserves ahead of what will be numerous looming threats (state funding, lower reval, tax overhaul . . . ). Given the BOE is the largest devourer of city finances, what contingencies are in place to contain and reduce spending during a multi-year challenging landscape? Has the superintendent and BOE performed a scenario analysis on funding scenarios? . . Or is at business as usual at the BOE which continues to squeeze city taxpayers for ever more funding / adding fuel to a vicious cycle of more long-term residents voting with their feet and threats of much higher mill rates?

Bob Welsh February 20, 2018 at 1:30 pm

This story, and the many thoughtful comments above, show NancyOnNorwalk‘s value as a community resource and digital town square.

Please mark your calendars for March 1, Fairfield County Giving Day, and donate between 10 AM and 11 AM. Your donation of just $10 could win a $1000 prize for NON!!!

Bill Nightingale Jr February 20, 2018 at 2:50 pm

Diane: If bedroom community means lower property taxes and healthier quality of life then yes I’ll take it.

Despite all the planning ideas I’ve seen over the years none have alleviated property taxes anywhere near the suburban single family home model. It sure isn’t commercial retail, office buildings don’t do it, despite a lot of talk about mixed use development none has delivered a lower property tax burden for us, and its definitely not industrial zones and for sure not power plants!

So yes, I would favor more single family residential as a goal for our POCD. It is simply why our neighboring towns have lower property taxes.

Adam Blank February 20, 2018 at 2:59 pm

Don’t forget that GGP is projecting construction costs of $500 million on the mall. they get a 50% abatement for 7 years, I believe, but even treating it as a $250M project that raises the grand list a couple percentage points all on its own and equates to about $4M in tax revenue annually for first 7 years.

Bill Nightingale Jr February 20, 2018 at 3:34 pm

Adam

I would wager a pretty large sum that the additional revenue will be well under $4mm on GGP. I don’t think it is as simple as what they say they will spend to what we actually collect on for property tax. Of course their lawyers will fight whatever is assessed. The fact that a mall developer got a tax abatement is abhorrent. And the mall is an even bigger disaster for tax payers when you take into account the lost property tax revenues for the last 20 years – going back to eminent domain battles etc, which in my opinion is one more thing the Redevelopment Agency needs to be held accountable for but have not.

Adam Blank February 20, 2018 at 4:19 pm

Bill – I agree that having that property sit vacant for so many years was far less than ideal. I spend close to half my time representing property owners or municipalities in appeals of property taxes. On a new construction commercial project the cost of construction will play a very significant role in the determination as to its fair market value – quite possibly it will be the only valuation approach that matters. The argument will most likely be over what (and how much) soft costs should be included in cost of construction(i.e. taxes, carrying costs/mortgage, lease up costs/marketing, developer’s profit overhead, entrepreneurial profit, etc.)

Nora K King February 20, 2018 at 4:29 pm

David Westmoreland provided great examples. I have many more.

The grand list is not growing because our properties are not being valued correctly. There will always be some incorrect assessments and that is normal. But Norwalk has undervalued commercial properties in the past revaluation period. If we don’t value correctly the city doesn’t get its fair share. We need to keep building smartly but the assessor needs to ensure these buildings are valued correctly. They are not. The list David provided is just a small number that haven’t not been valued correctly.

We also need to realize that the Rainy Day fund doesn’t need to be bulging at the seems. Many of the money that gets sent to this fund from permits (for example GGP) goes into this fund and we never use it to put back into the community. Some of this money should not be going there but should be tagged to go towards sidewalks, parks and general enhancements to make Norwalk even better.

Wondering February 20, 2018 at 5:16 pm

…and if properties are not being valued correctly who’s responsible and who’s accountable for this person or firm’s work?

Patrick Cooper February 20, 2018 at 5:19 pm

Is this correct? “SPUS7 RiverPark LLC bought 800 Connecticut Ave. in October 2015 for $48,559,600, according to the assessment card. Metropolitan Life Insurance bought it for “$0” in 2012 from River Park Property Owner LLC, which paid $106,261,200 for it in 2007.”

So – the “Priceline” office building was bought in 2007 (height of the real estate drop) for 106 million, and woops – 5 years later Met Life bought it for – ZERO? Then sold it 3 years later for 48 million? Why does this sound like clever accounting? There is more to this story – much more.

As for commercial assessments – this is a joke. @David Westmoreland – I get it, and yes – that’s a small sample of what is likely an endless list. But why? News Flash: this is a symptom of a town hall – lead by a crony mayor – without skills. Also, can the mayor explain his two contradicting positions? Why does Harry crow publicly about how fabulous our city is – and yet in these back-room negotiations – we get rolled over like we have something to be ashamed about. Add to the poor assessments the tax abatements – what did we see – 7 years at 50% for the mall? Just outrageous. It would be nice to know if we ever won a case.

This town voted for the wrong leader for the wrong reasons – and this is what you get. At what point does the residential homeowner hold this mayor accountable for the numbers – because they are HIS numbers. Instead – they remain disenfranchised, and along with our growing transient population – stay away from the polls and the news. Meanwhile, the campaign cash provider landlords and developers – take valuable pieces of this towns assets and turn our schizophrenic planning & spot zoning into personal ATM machines. Tax payers are taking the best worst option: pack up and leave.

Nonpartisan February 20, 2018 at 7:09 pm

@ Adam Blank

I am very confused by your posting. I’ve alway been taught Construction costs do not determine the value of a commercial ( or multi family ) building. Rent, projected repairs, and underlying cost structure do.

The value of a commercial building as an asset is its current and projected cash flow.

More than one commercial property owner appealed their appraisal based on this

It’s also why the assessor keeps annual track of the rent income ( self reported and in audited) of every commercial property.

And- this makes an even better case for a professional city manager.

Adam Blank February 20, 2018 at 10:00 pm

Non partisan- you value most commercial property on an income approach. But new construction is different. Under most scenarios a developer will not spend more on construction costs than it believes the property will be worth once completed. GGP is not going to spend $500M to develop a property worth $300M. This makes the cost approach a fair valuation method on new construction.

Bill Nightingale Jr February 21, 2018 at 12:24 pm

Sadly by the time the 7 year tax abatement expires on the GGP mall the property assessment will have nothing to do with the amount invested in building it. By that time, given the way brick and mortar real estate trends are going, the property will be very depreciated and probably owned by a REIT who doesn’t care to invest a whole lot in it.

Nora K King February 21, 2018 at 1:09 pm

When determining Market Value for a commercial building three approaches are always reviewed. The Cost Approach, Sales Comparison Approach and Income Approach. The Cost Approach is based on how much did the building cost. You would extract the cost of the land and then determine the cost of the building. Sales Comparison is using sales similar to the subject and the Income Approach is using an investor cap rate and the potential income on the building. For a project like the mall all three approaches would be reviewed. Typically the Cost Approach is given some weight because it will be new construction, however the Income Approach will also be heavily considered in valuing a property of this scale.

Debora Goldstein February 21, 2018 at 5:46 pm

I’ll wager that a list of property tax appeals would be an eye opener too. How many do we win, lose or settle? How many commercial properties (or housing complexes owned by LLCs) get reductions vs how many residential properties do?

Nonpartisan February 21, 2018 at 11:56 pm

@ Adam

Pretty sure I know what I am talking about

All real estate is appraised at what it’s value is ie- what can it be sold for. A commercial or retail building can be sold for s a function of actual, or anticipated future rent.

Reduced long term rent roll is the basis for most commercial certiary proceedings.

Jay February 27, 2018 at 12:57 am

The board of assessment appeals are (I believe) open to the public as are the results. It’s posted right on the website. Stop into the assessors office and ask them about sitting in on the hearings. Could be eye opening to say the least.

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