Correction, 9:17 a.m.: Nora King is a real estate appraiser.
NORWALK, Conn. – A $1,000 tax hike equates to a corresponding $40,000 drop in property value, according to a Rowayton representative on the Common Council.
Rowayton residents are being hit hard by the property revaluation, Councilman David McCarthy (R-District E) said at Tuesday’s council meeting, echoing comments made by others. He tried to persuade fellow council members to make taxes lower overall by shaving $1.5 million off Finance Director Thomas Hamilton’s recommended budget cap; that failed, as only McCarthy and fellow Rowaytonite John Igneri (D-District E) voted for it. The council eventually voted unanimously to shave $.5 million off Hamilton’s recommendation.
In the process of arguing for the larger drop, McCarthy said:
“A way of looking at this is that every $1,000 that we increase someone’s tax is decreasing the value of their home by around $40,000. That’s an impact that people feel.”
Zoning Commissioner Nora King, another Rowayton resident and a certified real estate appraiser, found that hard to swallow.
“That sounds like a very uneducated statement from someone who doesn’t understand property taxes or market values of homes. That is a cookie-cutter statement that he would have a very hard time supporting,” she said in an email. “What brings property values down is an inferior educational system, crime, poorly maintained roads and a low commercial tax base. Taxpayers do not want to pay high taxes when they feel they can’t send their kids to public schools, or drive down their roads without hitting a pot hole. They also do not want to see commercial businesses revalued at much lower rates.”
McCarthy used mortgage calculations to support his statement. If a taxpayer has to pay the city $1,000, that’s $1,000 that can’t be used to pay the mortgage or make another investment.
“Now if you were a savvy investor and made 20 percent on your investments then $1,000 means a lot of money. What I did was I said if you take $1,000 and … I used 4 percent as a mortgage rate. The way you do that mathematically is you take $1,000 and divide it by .04. That’s an annuity formula if you look it up. That results in $40,000. So if I had $1,000 invested at 4 percent as an annuity that would equal $40,000.”
Everything is an investment, he said. Supply and demand has nothing to do with this calculation, he said.
“We’re not talking about real estate. We’re talking about taking $1,000 – if I raise your taxes $1,000, I haven’t impacted your house. All I’m doing is taking an extra $1,000. … If you own a house and I raise your taxes $1,000, the only thing that has happened to you is at the end of the year you’re going to be $1,000 poorer.”
Taxes in the Sixth Taxing District, Rowayton, are going up as the revaluation conducted by Vision Governmental Solutions found that property values there did not drop as much as they did in other areas of the city. Rowayton’s tax burden is going up 8.2 percent, McCarthy said.
“I have seen properties that are increasing by as much as 25 percent on their tax bills before the new budget is factored in,” he said.
King agreed that’s an issue.
“If you really look at the latest revaluation it lacks a general overall knowledge of neighborhoods, waterfront properties, new construction and commercial real estate,” she wrote. “We all need to remember that Mayor (Harry) Rilling is not the one who hired the tax assessor or renewed his contract. Mayor Rilling has inherited this current revaluation from the last administration.”