On Thursday, December 1st, updated market values began arriving from the City of Hartford. We were eagerly awaiting our letter because, well, real estate things get us excited and the revaluation is important. Now it’s here and it’s time to go to work interpreting what it all means.
Proposed Fair Market Value
The first important point to make is that the numbers sent by the City have no immediate impact on our property taxes. They are an important milestone in the revaluation process that will show up in our July 2012 tax bills.
The values in the letter are also market values rather than assessed values. So the number you received is the value at which the City believes your home would sell in the open market. The value on which our homes are actually taxed is a much lower number, the assessment, which over the past few years has been less than 30% of the market value assigned in 2006. We do have an opportunity to challenge the new market values, if we feel they are unfair, which will be discussed below.
Over the next few months the City will finalize the market values for all the properties in the City in order to create the 2012 Grand List. Homeowners that do challenge their market values, and are not happy with that outcome, can appeal the initial result to the Board of Assessment Appeals. Please see your letter, and the City website, for more information.
Determining the assessment ratio for the residential property class is the next challenge for the Assessor. The letter notes that it will be established by the end of January, though it will depend on the Grand List, so a final number probably won’t be available until all market value appeals have been completed. Hopefully the January number will be a good estimate based on a mostly complete Grand List. Multiplying our market values by the assessment ratio of residential property will give the assessed value on which we’ll pay our taxes.
In May, the City Council will review the City budget. They will back into the mill rate needed to fund the budget based on the assessed values of all the properties in town. And in July we’ll receive our new tax bills that reflect the results of Revaluation 2011.
Over the next few weeks the market values are still open for discussion. Homeowners who want to challenge their values, or at least get an explanation, need to set up an appointment. The “informal hearing” appointments are held with the CLT Division of Tyler Technologies, who can be reached weekdays from 8:30 to 4:30 at 877-394-3379. Appointments must be requested by December 15th.
Homeowners choosing to discuss their values are expected to bring data and evidence to support their position. The letter we all received notes that “a change in value will be considered if the owner is able to demonstrate that the appraised value is in excess of market value.”
The primary source of market value data is the sales records that are kept Downtown in City Hall. Specific properties can be researched using the “On-Line Data” link in the right column of the Hartford Assessor page. The Assessor’s office intends to publish the Proposed Fair Market Values of all properties on this site so that owners have an easy way to perform their research.
Real estate agents are another source of market value information. We successfully challenged our market value in 2006, and are happy to help homeowners make a case for the lower valuation.
We have heard from a number of Hartford homeowners already, and the clear consensus is that assigned market values have fallen from the Revaluation 2006 numbers. That’s to be expected, as the actual market values in the neighborhood have fallen.
Values of the individual homes do seem to deviate from what we feel are their actual values. Some owners have surprisingly low values, while others are a little too high for the current environment.
More interesting is the big picture. Hartford has three assessment buckets that each have their own assessment ratios: residential, apartment, and commercial. The State legislature passed a bill in June that set the assessment ratios for the coming tax year at 50% for apartments and 70% for commercial. The residential assessment rate was capped such that homeowners would be responsible for no more than an additional 3.5% of the tax burden due to the revaluation. At the same time, the assessment ratio for residential has a floor of 23%.
Under the new system, apartment buildings will definitely have higher property taxes. That assessment class was expanded to include 4 family buildings, and the assessment ratio was increased from about 37.6% to 50%. Commercial buildings will continue to be assessed at 70%, but will no longer have an additional surcharge on top of that.
The wildcard in the whole process is how much commercial values fell compared to residential values. That will drive the residential assessment ratio, and play a big role in determining where the mill rate needs to be set in order to fund the budget.
The Courant’s Ken Gosselin published a story over the weekend which noted that the Assessor has not yet analyzed the impact of proposed fair market values on the different property classes. We have been in touch with the Assessor’s office too, asking for both their projections on the residential assessment ratio and likely mill rate. We have also requested the big picture market value data so that we can do our own analysis. Please keep an eye on this site in the coming weeks; we will publish additional information and findings as they are available.
In the meantime, take a second look at the letter you received from the City about your property’s proposed fair market value. If you are concerned that it might be too high, then it is in your best interest to look into the matter further — and we are happy to help if needed.
Overview of Hartford’s Property Tax System