Last week, I attended the Common Council meeting when Norwalk’s newest employee, Tax Assessor William Ford, was confirmed. After welcoming him, I was compelled to share housing issues unchecked for too long. My hope is he’ll apply his experience from Worcester. Census figures reveal a city with 185,000 residents and only 42 percent owner-occupied housing. Is Norwalk headed in that direction? I think so. How does Worcester fund everything?
Norwalk’s shift in housing stock has been gradual, with a rise in multi-unit rentals, both new and illegal, resulting in a decreased percentage of what was historically and reliably taxed owner-occupied single-family homes. Demographic shifts, northeast affordability, a struggling state economy, new immigration trends and City Hall policy has resulted in a more densely populated, less affluent population settling into Norwalk, with a need for cheaper housing. City Hall’s reliance on individual landlords, LLCs and real estate trusts for property taxes comes at a time of increasing city costs including headcount, salaries and benefits, school enrollment and infrastructure.
At the same time, the current administration continues to push for tax credits and subsidized redevelopment, diverting future property tax revenues, while Norwalk struggles with school funding. Taxpayers just received the largest BoE ask in memory: $14 – $18 million dollars, or 7- 9 percent. No additional help is expected from the state, except possibly a new, $200 million ‘regional’ high school that taxpayers will initially fund, with 80 percent state reimbursement expected later. Maybe.
How will Norwalk pay for it all?
Unfortunately, a significant amount of rental housing is NOT reflected in city records, resulting in under reported income or no reporting at all. Norwalk’s housing requires stricter financial accounting. Illegal apartments have flourished in homes across the city. In addition to lost revenue, many aren’t up to safety code, creating needless liabilities for the city.
Hopefully, Mr. Ford will clarify if Norwalk’s tax assessment and collection practices have been adapted to our housing shift. I don’t think they have. Homeowners face public shaming and tax lien sales every two years if they fail to pay. Anonymous LLCs or slum landlords don’t appear to face the same level of scrutiny or consequences. One issue – lost revenue due to Norwalk’s allowance of four-unit rental houses to claim residential versus commercial status and owner occupied up to six units not having to report. Other cities have tighter classifications and profit and loss accounting measures. Failure to collect these taxes cannot be understated, considering that 62 percent of our school enrollment consists of low income students, likely residing in this type of housing. Improved accounting of landlord income is needed. Housing policy and school enrollment costs are linked.
Complicating Norwalk’s future revenue stream is the 2018 Revaluation and whether it was inflated or accurately captured market values. Currently valued ~ $14 billion, Mr. Ford is facing hundreds of appeals and a record number of commercial lawsuits making their way through the system. Analysis of approximately 20 major commercial properties valued at ~$2B along the Merritt and West and Connecticut Avenues showed an average increase of 37 percent. What happens to Norwalk’s revenue if major appeals like these are successful?
I won’t belabor the fairness or eroding market consequences of homeowners forced to pick up the slack for multi-unit houses ‘off the books’ or major commercial appeals. Preliminary 2020-21 budget figures show increased density has brought increased city costs. Development isn’t keeping up with city spending and individual employee wages are outpacing median household income. The need for additional funding cannot be on the backs of homeowners simply because they’re easier to track. Norwalk has reached a tipping point with school enrollment. Has the time come for serious discussions about property tax reform and revenue diversification before the homeowner scale tips further? I think so. If Mr. Ford brings better assessment practices, that’s a good start, but City Hall needs to start living within its means, and we need to go further. We need honest conversations about the future direction of Norwalk’s finances.