Community Corner

Local Towns Could Lose Tax Revenues Under Ruling

A proposed state law seeks to preserve tax revenues from partially constructed properties. At stake in Middletown is $3.1 million in assessed property values.

 

The legislature will take up a proposed law this session that aims to protect some $30 million in local tax revenues, money some municipal assessors believe could be at jeopardy because of a recent court ruling.

House bill 5158, an Act Concerning the Assessment of Buildings Under Construction, would give Connecticut towns the ability to assess and tax partially constructed properties. Although towns and cities have taxed properties under construction for years, a court decision in 2011 has raised questions about whether the courts will allow the practice to continue.

Find out what's happening in Middletownwith free, real-time updates from Patch.

A Columbia resident in 2009 sued the town after its assessor valued a partially constructed house the resident was building at more than $600,000. Prior to the home’s construction, the land was valued at less than $22,000, according to court documents. Last fall, a Rockville Superior Court judge agreed with the homeowner’s argument that the town did not have the right to assess the partially built home and tax him based on that assessment. The town is appealing the ruling, but some local assessors want the state to weigh in on the issue and pass a law giving them the right to assess properties under construction.

Some individual cities and towns stand to lose more than $1 million in tax revenues if the Columbia court decision becomes law.  Statewide, there is more than $30 million in local tax revenues at stake, according to officials with the Connecticut Conference of Municipalities, which is lobbying in support of the new law.

Find out what's happening in Middletownwith free, real-time updates from Patch.

In Middletown, there were some $3.1 million in assessed properties under construction in 2011, which yielded $82,000 in tax revenues, according to the city's assessor. That figure could fluctuate each year, depending on the type and number of construction projects going on.

“Passage of HB 5158 would generate an immediate, positive impact on all 169 towns and cities by protecting over $30 million in local property tax revenue, statewide,” CCM said in a press released the agency issued today. “The opposite of HB 5158 – to not clarify local authority to assess, and to place this critical revenue stream in jeopardy – would devastate all local budgets, not just some. Simply put, even partially constructed properties have some level of fair market value within their communities.”

You can view pdfs of the proposed law and the Columbia lawsuit decision above.


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