NORWALK, Conn. — Properties in Norwalk’s Enterprise Zone program are now generating more than eight times the tax revenue they did before development began, according to city records. And when the tax breaks fully expire, the city stands to collect even more.
The Enterprise Zone (EZ) is a state-authorized program that gives developers reduced property taxes for up to seven years to encourage investment in designated areas of the city. Norwalk’s version was adopted by the Common Council in February 2021, updating an earlier version of the program dating back to 1982.
The program is set to expire on July 1, 2030, unless the City Council votes to extend it.
Under the program, developers who improve property within a designated Enterprise Zone receive a break on the increased assessment their improvements generate.
In the first two years, 100% of that increase is deferred, meaning developers pay taxes only on what the property was worth before improvements. The deferral then steps down gradually over years three through seven, until the full assessment kicks in.
The city’s Department of Economic and Community Development, known as DECD, administers the program.
Before and After
Before development, the 16 properties with abatements had a combined assessed value of about $19 million. The city collected roughly $475,000 in property taxes from them each year.
Today, those same properties are assessed at more than $190 million. The city now collects about $4 million a year in taxes from them, even with abatements still in effect on many of them.
Once all the abatements expire, the city’s projected annual tax haul from those properties climbs to more than $8.1 million, a more than 17-fold increase from before.
The Mall Properties
Three of the entries in the analysis are connected to the SoNo Collection mall at 100-101 North Water St. The mall was not originally an Enterprise Zone property. Before development, the land was assessed at just over $9.1 million and generated about $233,000 in annual taxes.
The three mall parcels now have a combined assessed value of more than $101 million and generate nearly $2.4 million in taxes each year. Once their abatements end, the projected annual taxes from those three parcels alone would exceed $4.8 million.
Some Properties Lost Value
Not every property in the program gained value. Several addresses, including 2 Park St., 205A Wilson Ave., 129 Woodward Ave., 3 East Wall St., and 3 Park St., are currently assessed at lower values than before their Enterprise Zone designation began.
One property, 5 Mott Ave., had its application submitted late, so it received no abatement benefit for 2023 or 2024, despite being designated that year.
Oversight and Reporting
Under the charter, DECD is required to report to the mayor and City Council at least once every three years. That report must include how many projects received benefits, the types of benefits they received, how much new investment was generated, and the program’s overall impact on the city’s grand list and tax collections.
The City Council also has the power to grant developers additional tax deferments beyond the standard seven-year schedule, up to 100% for another seven years, if DECD determines the extra break is needed to promote development. Any such extension requires a majority vote of the Council.
The Bottom Line
For most of the properties analyzed, the city is already collecting far more in taxes than it did before the Enterprise Zone designation, even during the abatement period. The city is on track to bring in an estimated $342 million in total taxable assessed value from these 16 properties once all abatements expire, compared to the roughly $19 million base it started with.
Related: SoNo Collection mall owner sues Norwalk over property tax assessment.
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