No Surprise, Norwalk Has Higher Property Tax Burden Than Stamford

The Advocate did a nice article on comparing Stamford to surrounding towns. Stamford, has managed to do what Norwalk is still struggling with –transform its downtown into a livable urban landscape. The tale of the property taxes tells the story:

Among the six compared municipalities, New Rochelle had the highest property tax burden, 1.6 percent, when measured as the proportion of median real estate taxes paid to median home values.

Greenwich had the lowest property tax burden, at 0.5 percent.

Stamford fell in the middle of the pack, at 1.0 percent, a lower burden than that of Norwalk, which came in at 1.3 percent.

Considering that the median income in Norwalk is also lower, this translates into Norwalk residents feeling the pinch of property taxes to a greater extent than any of the six towns mentioned. The reason is that Norwalk still hasn’t taken steps to increase its Grand List significantly, and particularly with commercial development.

Coincidentally there’s an article in the Hour that talks about expanding the Enterprise Zone.

Redevelopment Agency officials maintain that extending the zone, which would offer tax abatements to more property owners, is needed to make Norwalk competitive with Stamford and get redevelopment efforts off the ground.

Councilwoman Nora K. King, however, said she is inclined to vote against extending the enterprise zone. King said the city should streamline its planning process rather than offer tax abatements to developers.

“We have a great city and I think builders have an opportunity to come in and build and develop here without relying on the individual taxpayer carrying the weight,” King said. “I think a better solution is to figure out how to streamline the planning process for the City of Norwalk and worry less on providing tax incentives and tax breaks.”

The Redevelopment request, if approved by the council and the state Department of Economic and Community Development, would extend the existing enterprise zone southward along Woodward Avenue and northward into the Reed Putnam area, where Spinnaker Real Estate Partners LLC plans to build District 95/7 SoNo.

Within the existing enterprise zone, 80 percent of local property taxes are abated for a five-year period. The state reimburses the city for half of the abated taxes, leaving the cost to the city 40 percent, according to the agency.

Moccia, who supports extending the enterprise zone, noted that nothing is being built at the District 95/7 SoNo site.

Stamford developed its urban core by being smart about incentives, fast tracking development projects, and recognizing that the only way to reduce property taxes on individual homeowners was to increase the Grand List. Yet, we have many in Norwalk, some even in politics, that don’t understand the basic calculations that are used to determine taxes. If you are one of them, that means you Nora King, then I urge you to read this explanation:

There’s a type of populism that goes like this, we don’t want our tax dollars to subsidize developers. But like the federal tarp bailouts, the beneficiaries of investment in development is not just the developers, its the residents and tax payers of Norwalk.

How can this be so?

You have to start with an understanding of finance. The taxes you pay are determined by very few things. One is how much taxable assets are out there, otherwise known as the grand list. The finance department spends months counting all the expenditures the City is the hook for and then takes that number and divides it by the grand list to arrive at the average mill rate.

Tax Levy $ 246,269,456
Divided by: Net Taxable Grand List $12,571,603,519
Equals: Average Mill Rate 19.589

…

Five years ago Norwalk and Stamford were about $3.5 billion apart in total grand list value. Call it 2 or 3 big developments and we’d be even. Today we are just under $12 billion apart. Call it the price of not keeping pace.

Yes, it’s an investment in your future to craft policies that offer tax abatements. An economy, as we’ve seen globally is fragile. You need all kinds investments to spur activity. Expanding the Enterprise Zone is one that all council members should embrace, and as quickly as possible. The fact that this issue was brought up in December and it has taken till now to get to a council vote is mind boggling.

And as an update, the Federal Government is reporting that the TARP bailouts have cost less than anticipated. The reason is that the stocks that the government took is exchange for bailout money have all risen price, netting capital gains that were unanticipated.

  • Secondhand Hosebeast

    Someone please explain to me why development continues unabated in Stamford (south of I95, that is) whereas Norwalk is still the perpetual donut hole (in the ground)? I have lived here for 20 years and we keep turning the page of redevelopment and yet, nothing.

    I’d also like to know how extending the Enterprise Zone, by abating local property taxes for a period of five years, is going to alleviate my obscenely high property tax rate. According to the info above, the city still needs to come up with 40 percent that the state doesn’t reimburse. Is that supposed to come from new development? And if so, how long before the city actually pockets any of that reimbursement from the new development? Bueller?

    With respect to Nora King’s opposition: I understand that she’s new on board with the Dems and has to cowtow to the party’s intransigent posturing towards anything that might benefit the current administration. However, being a real estate appraiser, I would expect her to provide a more nuanced understanding of our situation – as well as more proactive solutions for addressing the imbalance.

    The glaring (donut, anyone?) hole that everyone is sidestepping here is the issue of WHY DON’T OUR USELESS $&*#()%&#@(& FF COUNTY LEGISLATORS GET OFF THEIR FEELGOOD LEGISLATING ASSES AND DO SOMETHING BESIDES PASS MEANINGLESS BILLS??!?!?!

    Sorry, don’t mean to fall into wHour troll mode, but it sure felt good…

    • turfgrrl

      Secondhand Hosebeast: Tax abatements incentivize development because it reduces costs of ownership, particularly in the first five years when occupancy rates are lower and construction is taking place. Stamford not only does tax abatements, but also uses city bonding capacity to build infrastructure, seeks federal money for infrastructure and development. Norwalk does not follow this path for many reasons, but mostly because of the political process which is dominated by misguided agendas.

  • Secondhand Hosebeast

    That still doesn’t answer the question of where does that unsubsidized 40 percent come from? Somehow I get the impression that despite all the rhetoric the homeowning taxpayer is still gonna get boned.

  • turfgrrl

    Secondhand Hosebeast: It doesn’t come form anywhere. A tax abatement is a discount. So if a hypothetical property that is undeveloped contributes $1 in taxes, and if developed it will contribute $5, the abatement would reduce the taxes paid to the city, say $3 for the first five years. The state kicks in 60% of the “missing” taxes, so it brings it $4. And yeah, overly simplified, and rounding errors all over the place. The point is, that it’s more than the taxes collected on undeveloped properties and long term it gets back to 100%.

  • Not convinced

    This sounds really oversimplified, comparing tax abatement and developer giveaways to the federal bailout? Plus, one would have to believe that Seligson is going to make his parking garages proftable before the city bails him out. Everyone who believes this, get ready for more giveaways, like Norwalk government buying the Globe building at an inflated price.

  • turfgrrl

    Not Convinced: Yes it’s simplified, and yes they’re comparable. Both are based on forecasting the expected returns from the investment. So if you craft policy that is an incentive, you kinda want to know if they work as incentives. So, in the absence of zero incentives, you get, Norwalk- undeveloped property. Incentives, Stamford, bigger grand list.
    As you point out, there are many ways to incentivize, and create bad policy. Eminent Domain is a tool that do good and bad. Too bad some political flunkies don’t understand that.

  • joe norwalk

    I do not agree that we need more abatements, nor that this is the primary issue that is stalling redevelopment and therefore causing higher property taxes.
    Our property taxes are high for two reasons:
    1) Commercial Properties in Norwalk are assessed and therefore taxed at way below their market value as recent sales have shown (the new Walgreen’s building on West Ave sold for $7m – it is assessed at $2m, the CVS and ShoeMart buildings sold for $6m and are assessed at around $2.5m), just to name a couple. The last revaluations were done at the height of the real estate market, yet now, in the worst commercial real estate market in history, commercial properties in Norwalk are being sold at significant premiums over their tax-assessed values. Clearly, the tax assessor and the current administration have decided that the burden of property taxes in Norwalk should be shifted primarily to residential homeowners and away from commercial properties. This, in effect, is a huge tax abatement to every commercial property owner in the city, funded at the expense of homeowners. If we fix the assessed values for commercial property, then we can talk about abatements for new development.
    2) The City’s process for redevelopment is fundamentally flawed, as applicants are required to move through all of the commissions and committees serially instead of on parallel tracks, requiring years and years of meetings to get anything done on large complex redevelopment efforts. Additionally, the council has gotten bogged down over debating doing things like building parking garages like every other city in America does in their downtowns to spur development, and has been too afraid to even contemplate the use of emiment domain, even when it makes sense as a bargaining tool to use with property owners who have unrealistic expectations (ie., Globe Theater). While the Redevelopment Agency is staffed with nice, conscientious people, we need to be brutally honest regarding their lack of accomplishments over the past decade. They should have led the charge to streamline the city development process and educate the council members on issues such as eminent domain, what other towns do regarding municipal bonding, etc. They should be pressing our state and federal politicans much harder for our fair share of the millions of dollars that Stamford receives to spur their development. It is time for a fresh set of eyes and new leadership. Without new commercial development, our property taxes will continue to increase.
    Peter Berman (sp. Bergman? sorry) had an excellent editorial in the Hour last week regarding taxes in Norwalk. Everyone should read it. We are about to have a 4% property tax increase imposed on us by our elected officials, while incomes, property values and employment continue to decline.
    Unfortunately, we are likely to see an even higher increase next year.

    • turfgrrl

      joe norwalk: Right now, Stamford and Bridgeport have kept their development going with abatements and incentives. Norwalk is not. While it is worth looking into the undervalued assessments of commercial properties, it is a separate issue. The sad fact is that Norwalk is not growing its grand list despite the revaluations, and that is why property taxes are high. The 4% property tax increase is directly attributed to the lack of growth in the grand list, and a political calculation to not raise taxes incrementally in 2009, an election year for the majority of Norwalk. The same issue btw, that is being fought over the proposed WPCA incremental fee increases.

      • joe norwalk

        The Grand List would probably increase by at least 30 to 40% if the commercial properties were to be accurately assessed – that is why property taxes remain high! We would be talking about a huge REDUCTION in taxes for most homeowners if this were fixed now!
        I’m all for more development – giving abatements is only one very small piece of the puzzle, but given the City’s policy of underassessing commercial properties, each time you give an abatement, you are just shifting more of the tax burden to homeowners to pay for the services that the new developments require.
        The reality is that none of the slated developments are not moving forward because of a lack of abatements – it is a lack of potential tenants and inability to obtain financing for these projects.

  • She’s Curious

    I am way out of my league here, but I REALLY like this level-headed debate. I am learning something new. Thanks Turfgrrl and Joe Norwalk, and Not Convinced, too. Keep it coming!

  • http://YourCT.com Anonymouse

    I’m out of my league too, but maybe Stamford does a better job of staying on top of kids from other towns and cities who’s parents sneak them into the public schools and lie about where they live and get people to provide phony affidavits. Corda always refused to acknowledge the problem in Norwalk; hopefully maybe Dr. Marks will step up to the plate. Of course it also requires that building administrators not stomp on the people who try to call the problem to their attention. Of course many of the administrators don’t live or pay taxes in Norwalk so they don’t care.

  • OLD TIMER

    The council passed an extended enterprize zone last night that carries tax abatements up to that 95/7 project at West Ave. The debate was pretty much along party lines and the best comment in favor was this is an incentive to attract tenants, and financing for actual construction depends on signing tenants.
    If the assessor is way off on commercial properties, will the assessment change to reflect the recent sales of under-assessed properties ? If you look at the City’s web page on assessments, you will find that most water front homes are not assessed for docks. Docks add big money to the actual sales price of a waterfront home. The City does not require building permits for docks and there is no good process for the assessor picking up on them.

  • Apathetic Voter

    No, there’s no building permit for docks, but before a dock can be built it has to be passed through the Harbor Commission. If the Harbor Commission says nay, the dock doesn’t get built.

    There are many layers of commissions and committees that a plan must pass through before you ever get to put the first shovel into the dirt or lay the first brick. And Zoning is not the only commission out there that can stop something from being built, or give permits either.

  • SUCKED DRY SENIOR

    I guess this economy kind of sinks the idea of freezing 65+ seniors house taxes.

    The ones who survive on SS and little or no other income.

  • OLD TIMER

    Apathetic Voter:
    The only way the tax assessor changes the assesment on your property, if you add to it, is through the building permit process when the building dept. notifies the assesor. If the addition is a dock, which may add many thousands to the market price of your property, the assessor is not notified, because the city does not require building permits, and the dock that may have cost $100,000 is not taxed as real estate. Effectively, that is a nice loophole for some who have docks. The assesor has some docks, but a lot are not. If a dock slip is purchased from a condo association, for example, that sale, as real estate, gets recorded and the assessor is notified, If you have a dock built, nobody notifies the assessor. Harbor management reviews dock applications, but DEP issues the permits, and doesn’t always follow harbor management reccomendations.