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Norwalk Residents to See Tax Increase Due to Rising Property Values

The Norwalk Finance and Claims Committee met on Thursday, Feb. 22.

Residents across the city will see an increase in taxes under this year’s recommended budget, due in large part to higher property values. 

Tom Ellis, the city’s director of management and budget, told the Finance and Claims Committee of the Common Council at its Thursday meeting that the city’s grand list—or the value of all taxable properties within a municipality—increased from $15 billion to $18 billion. 

“The increase is almost entirely due to residential valuations,” Ellis said, adding that “commercial was down” or about flat.

Last year, 66% of the grand list was residential properties, with 34% commercial. This year, that swung to 71% residential and 28.5% commercial.

“Commercial definitely had a bad last five years,” said Paul Gorman, the city’s interim tax assessor.

Municipalities across Connecticut are required to conduct revaluations on their properties every five years. This was Norwalk’s first one since 2018.

A look at the median home values in Norwalk

The increases in property values were across every district in the city, ranging from a 29.85% increase in home value in the 5th district to a 60.97% increase in the 2nd taxing district. 

The median home value in each district is: 

  • 1st Taxing District: $368,860 up from $240,170 last year
  • 2nd Taxing District: $366,070 up from $227,420 last year
  • 3rd Taxing District: $449,530 up from $304,840 last year
  • 4th Taxing District: $376,370 up from $275,550 last year
  • 5th Taxing District: $488,035 up from $375,840 last year
  • 6th Taxing District: $1,083,710 up from $764,730 last year

Ellis said the shift would have been even more substantial without the multifamily buildings that have been added since 2018, the year of the city’s last property revaluation. 

“Without those apartments, it would have been even more significant in the change in the difference between commercial and residential,” he said. 

Ellis said that apartments have added more than $333 million in assessed value to the grand list since 2018. 

Budget Impact

The committee voted 6-1, with council member Heather Dunn opposed, to recommend a budget cap of $440.6 million. This is slightly reduced from the initial proposed budget of $442.7 million that the mayor presented to the council two weeks ago. Ellis said that they went line-by-line with departments and found some savings.

“There were some areas we went back to three times. It’s quite possible I’m the most hated person in city hall,” Ellis said. “I don’t know what more the [Board of Estimate and Taxation] is going to be able to scrub when they start doing these meetings in March. It’s as lean as I think it can be.” 

Based on that budget, Ellis presented the median tax bills for each taxing district. Those include: 

  • 1st Taxing District: $1,829 tax increase from last year, for a median tax bill of $7,854
  • 2nd Taxing District: $2,090 tax increase from last year, for a median tax bill of $7,795
  • 3rd Taxing District: $1,925 tax increase from last year, for a median tax bill of $9,572
  • 4th Taxing District: $1,096  tax increase from last year, for a median tax bill of $8,029
  • 5th Taxing District: $938 tax increase from last year, for a median tax bill of $10,321
  • 6th Taxing District: $3,679 tax increase from last year, for a median tax bill of $21,975
A look at the tax impact across the city

The budget includes an $8 million drawdown from the city’s Rainy Day Fund to help “offset” some of the tax increases, Ellis said. 

He said they had an “extensive conversation with our bond advisor,” and he “was comfortable with an $8 million drawdown,” as that would not “impact or jeopardize our AAA bond rating.”

Council member Greg Burnett, who chairs the committee, said that this is what the Rainy Day Fund is for.

“The revaluation is creating a tremendous impact on the tax base and the Rainy Day Fund is providing a level of relief, not total relief, but some level of relief,” he said. 

Former council member Bryan Meek, the only member of the public to speak at the meeting, raised questions about the city’s debt service, which is about $42 million in this recommended budget. 

“It’s very concerning to me the rate at which we’re going on our balance sheet, especially with interest rates maybe even going up,” he said. “The elephant in the room is the ‘free Norwalk High project,’ and not to look a gift horse in the mouth, but I’ve never once seen any conversation or detailed analysis on the cost of capital this will burden Norwalk with over time.” 

Meek said that he believed this project “day by day is looking more unaffordable and not free,” adding that he believed the city should take a pause for a year on this project and focus on the South Norwalk School project. 

“We are on the precipice of going into a debt hole on top of the issues with the revaluation, shifting a lot of tax liability to homeowners with commercial office space tanking,” he said. “We just need to do the right thing.”

Next Steps:

Once a cap is officially set by the Common Council, the Board of Estimate and Taxation will begin its review and discussion of the budget. There will be another public hearing on the budget on March 20.

Comments

13 responses to “Norwalk Residents to See Tax Increase Due to Rising Property Values”

  1. Joel Bedol

    The explanation offered for pending tax increases strikes me as a bit too convenient. The bottom line is, and always has been, the amount of money the city wants to spend. We saw what happened when used car values spiked under Covid and the personal property tax bills in the city skyrocketed. It would seem that the housing shortage in the city -again driven at least in part by Covid – has elevated home prices and that the city is prepared to take advantage of that. The fact that real estate values are higher does not mean that taxes have to go up. The city can assess at the higher rates and simply adjust the mill rate so as to keep taxes as low as possible. Again – city spending is the driver for all of this. It does not strike me there that there was much exertion toward controlling spending but rather a cynical calculation that homeowners should simply expect that higher home values will naturally lead to higher taxes. I would encourage the Board of Estimate and Taxation to take a hard look at all of this. Real estate taxes in Norwalk are becoming entirely too frothy.

  2. John O’Neill

    For those of us who actually pay attention to this stuff, it should be noted the validity of the revaluation should be questioned. If an 8th grader spent 30 minutes on a computer they could find a large number of properties that are mis-valued. I’d recommend the city hires a high school intern 5 years from now to check their work. Someone once said there are two things that are certain in life – Death and Taxes. I would argue there are 3 – Death, Taxes and appealing my assessment.
    It might be worthwhile for NON staff to investigate a section of Norwalk and compare real values vs assessed values. It may be eye-opening to your readers. I would wager you’ll find a number that are under-appraised by 20% of more in some of the wealthier sections of Norwalk …I find that unfair, don’t you?

  3. Adam Blank

    Headline is a bit misleading on the story. Taxes are going up more than most years for single family homeowners because the single-family housing market did much better than commercial/office/industrial over the past five years. So, some of the taxes that would have been paid by those businesses is shifting to homeowners. That part is really just a fact of the real estate market, and the city has no control over that. However, Stamford had this same issue last year in its revaluation and to soften the blow on homeowners Stamford did a phase-in of the increased values over 2 years for residential properties. Would be nice if Norwalk did the same.

  4. Bryan Meek

    A more accurate headline would read due to runaway spending.

    Not that we can tell what we are spending it on because we don’t even have a budget document.

    I guess we had to pass it to see what’s in it.

    Sad thing is these taxes will NEVER go down unlike the housing market bubble.

  5. walter o’reilly

    Tell me you’re raising taxes without telling me you raised taxes. This is the city’s back door way of getting a tax increase on its homeowners.

  6. J.P. Coleman

    If the reason for the projected tax increases is the increase in residential property values, then the process is a DISGRACE!!! Residential property values rise & fall, like the commodities they are. We all know that if property values decline,, there won’t be any decrease in taxes.. This sounds like a VERY HOLLOW EXCUSE to fund some pet projects.

    Slight increases in the town budget are done on the basis of adjusting the mill rate. Compared to some of the surrounding towns, our taxes are on the high side. There needs to be closer scrutiny of this process to insure that we aren’t OVERTAXED !!!

  7. Justin Matley

    @JP – property taxes rise and fall all the time. In fact, it’s to be expected property taxes go up or down within a +/- 10% window year over year. Some semi-recent outliers are:

    2020-21 they went down ~12%
    2008-09 they went down ~22%
    2022-23 they went up ~15%

    Currently my taxes are nearly identical to what they were in 2005. They dropped a bunch and then crept back up again.

    I venture the city will tinker with the mill rates to mitigate an immediate jump, but hey, while I don’t like taxes going up much, most of us made a good bit of equity the last few years in our homes.

  8. stephen balazs

    Appreciate Adam and Justin’s comments- No one likes taxes and it sucks when they go up. I wish the article included the total assessed value of property to get a clearer understanding how the 333 million in new apartment building will affect the bottom line for residential properties. I love that my property is so much more valuable than 5 years ago but the same issues that drove up the price of my property drove down the value of commercial property. if the total tax bill is $100 million dollars and commercial was previously paying $34million of that and now only 28.5- while Residential was paying 66 and now $71 million, regardless of the budget- residential properties would rise about 8%. If new apartments cover the cost of $3 million of that 100 million then residential properties then a flat budget would be about a 5% tax increase….Hopefully, commercial properties will see a rebound and the new buildings will continue to add value to Norwalk but for now–we’re kinda stuck. Hopefully, as Adam mentioned the tax increase due to the revised residential/commercial ratio can be phased in rather than all at once. Regardless I’m pretty happy that I’m not one of the commercial owners who would much prefer that their taxes were still 34% of the budget and that their properties didn’t fall in value.

  9. Bryan Meek

    It’s the spending, stupid.

    A department we never needed that was supposed to keep businesses here is now costing. $6 million a year to throw parties. Two weeks ago they asked for 5.8 million up from 5.5 million and today is 6 million what happened? to throw another party for the next restaurant closing it doors.

    The mill rate a function of the spending and the grand list. It’s not some chicken and egg thing . The idea that it can be tweaked somehow is shear ignorance of governmental accounting.

  10. Mike Murray

    Property values increased in Darien, Westport, New Caanan, and Wilton also. Do we know if their taxes went up like this too? They don’t have the “multi-family buildings ” that Norwalk does, so I guess theirs skyrocketed.

  11. Liz Conti

    The chart above represents a “staggering” obscene increase especially in District 1 which represents largely lower middle class and poor homeowners who are not in a position to “absorb” this likely “illegal” and unaffordable increase. Is the city looking to gain more property with tax liens so as to welcome more developers from NY to steal property from honest lower income homeowners? We need to review our charter, as I do not believe such increases are in line with legally allowed increases. Just because property values went up does not give Norwalk governance a right to improperly expect homeowners to foot the bill for the over-exorbitant development and cost of infrastructure it requires when residents didn’t ask for this!

  12. Durelle Alexander

    When reval goes way up, more tax dollars come in – way more- so shouldn’t tax rates automatically go down?? That’s the way it used to work…

    1. Ana Tabachneck

      Yes, if the town’s budget stays the same as the prior year, and if the balance between commercial and residential assessed value stays the same as in the prior year, and the rate of new development stays the same as the prior year.

      In this case, residential values are a higher % of the grand list than commercial,, and the budget is proposed to go up by 4%. So even though the overall grand list went up, property taxes will still go up. There would have to be way more residential development, or a big increase in commercial values, or deep budget cuts to see the tax rates go down. If our property values had stayed flat there would be more of an increase.

      What’s interesting is that they looked at what it would be if they kept the budget flat (vs the 4% increase) and the difference was negligible. That’s what prompted the conclusion that the increase is wholly due to the reval.

      But that’s not exactly true. All these factors contribute in different ways. Like they said that multifamily apartments added 333mil to the grand list. That indicates that if the apartments hadn’t been added our property taxes would be going up by even more. But how much more? What percentage of the residential assessed values is from large multifamily buildings this year, vs. last year vs 5 years ago? If everything else stayed flat (which it won’t) how many more multifamilies would we need to have come on line within the next year to lower the mill rate? If everything stayed flat and we put a moratorium on new multifamilies (as some have advocated) for X years, how much would it raise the mill rate?

      What would the mill rate be this year if the multifamilies built in the last 5 years had not been built?

      All of these factors contribute to the result, it’s never just one thing.

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