Updated, 9:14 a.m.: Comments from Adam Blank. 8:21 a.m.: Copy edits, revised headline
NORWALK, Conn. – Two hundred sixty commercial property owners have been denied a hearing on their assessment appeals, because the city body that hears appeals doesn’t have the necessary experience. City officials are scrambling to find a solution that doesn’t require costly litigation for each case.
Property owner Carl Cooke’s request for an appeal was turned down by the Norwalk Board of Assessment Appeals, and he finds the situation “insane”.
“As the owner of about two dozen properties in Norwalk, paying over, $175k in yearly taxes, I find it incredible that I have to take the city to court to argue some relief on what I believe to be an over valuation of my property,” he wrote.
Cooke said he knows roughly half a dozen property owners who are similarly outraged, and that may be just the tip of the iceberg: City officials say 260 Norwalk commercial property owners, whose properties are assessed at more than $1 million, have been denied a hearing on the results of the 2018 revaluation, an outcome permitted by state statute.
Mayor Harry Rilling on Wednesday evening said he was blindsided by the outcry on decisions he knew nothing about, and ordered Tax Assessor Michael Stewart to send out a second set of letters to the aggrieved property owners, informing them that although the BAA won’t hear their complaints, the City will go through an “informal process” to resolve the situation without great expense.
Meaning, they can file a lawsuit, and the City will go through pre-trial conferences in an effort to informally settle the issues “under the auspices of the court,” Board of Estimate and Taxation Chairman Ed Camacho said.
Cooke owns Utopia at 150 Connecticut Ave.; the property’s appraisal has leaped from $1,291,230 under the previous revaluation to $1,844,620 under the new one.
“I am working on an appraisal that will come in at about $1.2M, a third less, than the city has valued it at. Given the current mill rate that would increase the taxes on that one property by over 50%,” Cook wrote. “So, to dispute my assessment, I need to hire an appraiser for thousands of dollars, hire an attorney for what I figure to be at least ten thousand more and sue the city because they are not capable of getting competent people to hear these appeals.”
“It’s another shortsighted thing that the city does which makes me want to move out of this town. It’s discouraging,” Cooke said to NoN, estimating that a lawsuit will cost him $15,000 – if it doesn’t go to trial – and that he’s thinking about the relative costs, the taxes he might save versus the money he’ll spend in court.
Connecticut State General Statute 12-111 states, “The Board may elect not to conduct an appeal hearing for any commercial, industrial, utility or apartment property with an assessed value of greater than one million dollars,” the letter he received from the Board of Assessment Appeals stated.
“Norwalk’s BAA members are appointed by the Mayor, and the current members are primarily residential realtors,” Stewart wrote to Greater Norwalk Chamber of Commerce President Brian Griffin on Thursday. “In recent years these residential realtor’s lack of commercial valuation expertise has diminished their willingness to conduct appeal hearings with commercial owners or their agents. The BAA has exercised its prerogative to not conduct certain hearings as is permitted by state law. More BAA members with commercial property backgrounds would go a long way toward eliminating this issue.”
“Understanding that our volunteers on the BAA do not have the requisite knowledge to assess multimillion dollar properties, the only resolution would be to attempt to recruit commercial property Assessors to serve. As most are extremely busy during a reval year, that could be quite difficult,” Rilling wrote Wednesday to NancyOnNorwalk.
The Board of Estimate and Taxation during a Wednesday evening meeting queried Stewart about the issue.
The BAA has never before exercised that state statute on appeals due to a revaluation, Stewart said, explaining that in 2008 there were fewer appeals and the Board was very different, with a “very experienced, very strong chair that wanted to hear” the commercial appeals.
“I was more in a position to encourage them to do it,” he said, characterizing the current Board as uncomfortable with sitting with commercial property owners and their agents.
Rilling said he “gets it,” most of the BAA members “have residential real estate knowledge, and they feel, if you will, intimidated” by facing attorneys and appraisers working for a commercial property owner.
“If I had known that, we could have tried to recruit some people with commercial real estate experience that could hear (these appeals), even if we had two people that could hear these appeals only, that would be another benefit,” Rilling said. “But the letters went out, I had no knowledge they were going out and I get blindsided.”
Rilling asked if it’s common for Connecticut BAAs to refuse the appeal requests.
“I don’t know that it’s common practice, but I know that it’s done,” Stewart said.
Stewart resisted the suggestion that new letters be sent out to inform the 260 property owners that they won’t face a court battle.
“We will do it, but that wasn’t the requirement under the statute, but if that’s what you want done,” he said.
“I am requiring that,” Rilling said. “We are dealing with people here. We are dealing with commercial property owners that have to make a living like everyone else, and to give them less than total information as to their options is not acceptable. We have to let them know… If you want to talk to us, file with the court. Then request to come into the assessor’s office and we’ll see if we can come to an agreement.”
Stewart said he wasn’t sure what the fee is to file a lawsuit.
Camacho, an attorney, said that plaintiffs through the discovery process would have access to the City’s appraisal and wouldn’t necessarily have to hire an appraiser or even an attorney, “because before that, you would tell the court that you are willing to have a pre-trial conferences, either here in City Hall or somewhere else, to try to resolve these matters informally, albeit under the auspices of Superior Court.”
There could be a stipulated agreement, and it “doesn’t mean full-blown litigation,” Camacho said. “There is still the possibility to sit down with the city to resolve the appraisal… these are considerations that the City, that the tax assessors’ office is providing to see if we can work these things out cooperatively.”
Former Zoning Commission Chair Adam Blank, a supporter of Rilling and a real estate attorney who specializes in assessment appeals, wrote in a NancyOnNorwalk comment Thursday morning that taxpayers would still face substantial costs despite the informal meetings. “…Even if the Mayor forces the Assessor to give taxpayers an informal meeting the end result will be that the Assessor will decide he doesn’t have enough information to justify a reduction and a formal appeal will be necessary. There also is the problem that the Assessor is not legally permitted to change an assessment once the BAA denial is sent out; any change now has to come through a court filing and court approved stipulation. These appeals aren’t cheap, typically $10k to $15k in attorneys fees, $5k to $10k for an appraisal report, $750 for court filing/service fees, and that’s all if the case settles at the first settlement conference in New Britain,” Blank wrote.
Blank was also critical of Norwalk’s practice regarding appeals. “Despite (the Mayor’s) best intentions he does not control the handling or settlement of tax appeals. That lies solely within the Assessor’s statutory authority. Norwalk is the most litigious municipality in the state when it comes to tax appeals. Norwalk does not do informal settlement conferences. Many other municipalities do so. Norwalk will not settle any of these without forcing the case to New Britain. Norwalk will require formal, tedious discovery from each and every taxpayer before they will even schedule a settlement conference,” Blank wrote.
Cooke said he understands appraisals are “not a perfect science” and while he’s confident one of his residential properties is over valued – he sold the house next door for $600,000 and the City says the one he still owns is worth $880,000 – some of his residential property might be undervalued.
“I get the city, they are shifting some of the tax burden on those they think can afford it,” he said. “It’s just not fair.”
Then-Chief Financial Officer Bob Barron told Common Council members in January that residential appraisals have gone up 20 percent but commercial appraisals have gone up at least 40 percent.
That’s the opposite of what happened in the 2013 revaluation, following the economic crash, because, “The crash hurt businesses a lot more than it hurt residential values,” Barron said.
Real estate makes up 75 percent of the grand list, and of the real estate portion, 15 percent is commercial, he said. With the shift, he expected that maybe commercial would become 17 percent of the grand list.
“The commercial share, they are taking a bigger share of the cost (to run the city) then they would have,” he said. “Their values went up essentially at twice the rate of residential. We are really pleased to see that. Anything that’s going to provide some tax relief to the residential homeowners is good news.”