Proposal: Arcadia Crossing in West Hartford

John Scobie, of Center Development Corporation, spoke to the Park Road Business Association this morning about his firm’s plans for the Sisters of Saint Joseph property on the southwest corner of Park Road and Prospect Avenue in West Hartford.

Center Development hopes to build a 320 unit apartment community that will be called Arcadia Crossing. The existing 185,000 sqft structure would receive a 308,000 sqft addition to connect the southern end of the existing wings, and wrap around the eastern end of the chapel.

2015-02-20 Arcadia Crossing

Scobie said that the $90 million project is designed to include 60 studios, 120 one bedrooms, and 160 two bedrooms. It is a market rate project, and rents are expected to range from $1,400/month to $2,800/month.

One of the unique features of the development is that the Sisters of Saint Joseph will remain on the site. The property will be legally structured as a condominium community, but with only two units. One unit will be the residences for the Sister in the west wing of the building. The other unit will be the 320 apartments and associated common spaces that will be managed by Center Development.

Scobie highlighted two other constraints that were a point of emphasis in the design phase. Center Development wanted to maximize the amount of open space on the property, and has 14 acres of it in the current proposal. They also wanted to minimize the visual impact of the addition. The southern wing will not be visible from Park Road, and they have broken up the exterior design so that the façade is architecturally varied when viewed from Prospect Avenue.

The current proposal calls for 549 parking spaces for the apartment residents (plus more for the Sisters). A two level parking garage will form the base of the southern addition, and will accommodate 295 cars. The remaining 254 spots will be surface parking.

Community amenities will include a swimming pool, tennis courts, barbecue/picnic area, community “living room,” fitness center, yoga/pilates studio, and catering kitchen.

Scobie said that Center Development plans to pursue the necessary zoning permits soon. They hope to begin construction in the fall of 2015 and be ready for occupancy in the spring of 2017.

2432 at Bishops Corner Construction

There has been lots of construction at this brick building on Albany Avenue in West Hartford over the past month.

2432 Albany at Bishops Corner

The project will convert a former convalescent home that was vacated in 2011 into an apartment community with 64 units ranging in size from studios to two bedrooms. The proposal adds a third level to the structure, and an addition, and works with the existing architectural elements.

West Hartford Town Council unanimously approved the proposal at the February 25, 2014 Council Meeting that followed a public hearing in which only one concern was raised by the neighbors.

Hartford’s Property Tax Task Force Report

In June of 2013 the City established a Task Force “for the purpose of examining and analyzing Hartford’s property tax system, and making recommendations for State legislation to rectify imbalances resulting from the system.”
We follow the City’s property tax system closely, and the Task Force’s recently released final report makes this a good opportunity to quickly review Hartford’s current tax situation, analyze the recommendations of the Task Force and share our thoughts.

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Hartford’s property taxes are calculated differently than those of all other Connecticut municipalities. Special legislation at the state level allows the City to assess taxes at different rates to different property classes. The effect is to shift a portion of the property tax burden away from residential property owners (condos, single-family, two-family and three-family) and towards commercial property owners. Owners of larger residential buildings (four or more apartment units) are currently seeing their protections quickly phased out. Shifting of the tax burden to protect residential owners has been occurring in one form or another for over 30 years.

The Task Force’s Report

The Task Force was a small group containing community members who are knowledgeable about the issues, and who have previously worked together to create and guide the City’s tax structure. They met weekly beginning in the fall to study the issue and debate potential solutions. Their report notes that the City needs to grow its Grand List (increase its taxable property), but that the high mill rate and the high percentage of tax-exempt property are impediments to achieving that goal.

The Task Force tried to identify strategies to reduce the mill rate, which would hopefully encourage private development of taxable property, without dramatically increasing the tax burden on the residential class of property owners. The primary recommendation is to slowly phase out the protection that the residential class receives.

Our reading is that they are proposing a 30 year process to equalize the assessment ratios across all property types. This strategy is a modification of the legislation that the City is already operating under. There is currently a mechanism for phasing out a portion of the residential protection each year that is triggered by increases in the City budget. However, the calculation is very complicated and the timeline is open-ended. Debate about the current law motivated the business community to promote clarifying legislation during recent sessions. The Task Force’s proposal would simplify the calculation, providing clarity and certainty to the phase out.

The report makes a number of additional recommendations targeted at some of the property owner groups within the City. For example, they propose allowing tax fixing agreements to help smaller apartment and commercial properties, and allowing monthly tax payments for both small commercial taxpayers and elderly taxpayers.

There are also recommendations that attempt to address tax delinquency and tax avoidance. The Task Force encourages legislation that would allow the City to look further back in trying to collect overdue vehicle and business property taxes, and enable the City to withhold state tax refunds to compensate for back taxes. One recommendation that doesn’t require legislative action at the state level is to more vigorously identify residents who register their cars elsewhere.

Finally, and importantly, the Task Force recommends that the City work with other stakeholders in the region to look for additional opportunities. They mention other City Task Forces, past and present, and regional initiatives that started at the state level.

What Does it Mean for Homeowners?

There is nothing in the Tax Force’s recommendations that radically change the environment for homeowners. We feel that their main proposal, a 30 year phase out of the protected tax status of residential property owners, is best understood as a clarification of the rules we are currently using.

The underlying hope in following this strategy is that the economy will improve over time so that the mill rate can decrease organically. If the economy doesn’t improve, if there isn’t new private investment in the City, then this strategy will gradually raise residential property taxes over time. Either way, it is unlikely that homeowners will see their tax burden skyrocket over a short period of time, which has historically been the concern when state legislation is discussed.

The other recommendations of the task force seem like they are either ideas about how the City could enhance the tax process or help individual taxpayers manage their tax burdens more effectively. They are all reasonable ideas, and worth discussing, though some seem more practical than others. The Task Force did a nice job bringing forward both a concrete proposal on the phase out and numerous other ideas for discussion.

It’s difficult to know how successful the Task Force was in identifying opportunities to reduce the mill rate. The report does not attempt to quantify the impact of their various suggestions, either individually or in total. Additionally, the property tax only contributed about 33% of the City’s total revenue for the year ending June 30, 2012 (the most recent year for which audited financial statements are available). The Task Force points out that there are important factors on the expense side of the equation, showing that they understand that their scope is limited.

Our biggest concern with this plan is that it requires fiscal discipline on the part of the futures mayors and the members of the City Council. The slow phase out of the tax protection for residential owners will likely cause overall property tax revenue to increase slightly each year. City leaders will then have to decide if they want to use that additional revenue to incrementally reduce the mill rate, or spend the money. Without long-term thinking, collective discipline and an explicit focus on City expenses, it is easy to imagine the municipal government growing instead of the mill rate falling.

We have learned that the Hartford City Council will convene a Committee of the Whole meeting on Tuesday, February 4th, 2014 to discuss Hartford’s legislative agenda for the upcoming state legislative session. The meeting will be held at 6:30 in Council Chambers at 550 Main Street. We cannot find any mention of the meeting on the City’s website, but believe that the Tax Task Force Recommendations will be a primary topic of discussion.

 
Related Information
Summary of Hartford’s Property Tax System
January 22, 2014 Tax Task Force Recommendations

Hartford Revaluation 2011 – Mill Rate Estimate

Bushnell Park Fountain at NightThursday’s Hartford Courant contained an article and photo gallery projecting possible tax bills for a number of different properties in the City of Hartford. Their story contained just enough information to figure out what their model of the revaluation’s results say about the mill rate and residential assessment ratio.

The Courant is projecting that the three property classes will have assessment ratios of 70% for commercial, 50% for apartments (which now includes four-family buildings) and 30.6% for residential (condos, single-families, two-families and three-families). They expect the mill rate to be somewhere between 76 and 77, and used 76.79 in their calculations.

Hartford property owners interested in estimating what their July 2012 property taxes based on this model can use the following formula:

(Market Value) x (Assessment Ratio) x (Mill Rate/1000) = (Property Taxes)

So for a residential property this comes out to be…

(Market Value) x (30.6%) x (.07679) = (Property Taxes)

… which is about the same as …

(Market Value) x (2.35%) = (Property Taxes)

Owners of commercial and apartment properties would need to start with the first formula and plug in the appropriate assessment ratio.

Since we are still in the early stages of the revaluation process, this is a rough estimate and a lot can still change before tax bills go out at the end of June of next year.

Thoughts & Observations

The most challenging part of modeling the Hartford tax system is getting the residential assessment ratio correct. For the coming year it is supposed to be set so that the overall tax burden of residential property class increases by 3.5%. That was a compromise agreed to by the various stakeholders last spring and passed into law by the state legislature. The primary article attributes the 30ish percent assessment ratio to City Assessor John Philip, and lead author Jenna Carlesso confirmed that he provided that number.

The Courant is forecasting that the mill rate will actually increase under the new system. This is a bit of a surprise since the City’s overall goal is to start reducing the mill rate in order to help attract more businesses.

Although it seems counter-intuitive, it’s okay if the mill rate rises. The data clearly shows that the tax burdens for commercial property owners is decreasing, which is more important than the perception caused by the slightly higher mill rate. In the previous system we had an additional layer of complexity called the Business Surcharge – an additional tax over and above the standard tax – that is now gone. The City has taken an important first step to making the commercial mill rate directly comparable to other towns in the state.

Since the City Assessor has not come out with an official set of projections, we think it is important to continue to develop our own model on what could happen. We’ll keep trying to get data from the Assessor and hopefully have a second set of projections to share in the coming weeks.

Presumably the Courant team succeeded in getting additional information from Assessor Philip as inputs to their model. In thinking about repeating the calculation on our own, we don’t see any way to accurately do it without knowing the aggregate market values for each property class for both last year and this year. Last spring the previous City Assessor provided us a good amount of information, but not the breakdown of the residential class. Since the rules of the game changed to move four-families from the residential assessment bucket to the apartment bucket, we would need to calculate the impact of that change before being able to distribute the tax burden correctly and arrive at a potential mill rate.

Using the Courant’s Data to Calculate Their Projected Mill Rate

For those that are curious, here’s how we used the data that the Courant published to back into the mill rate and residential assessment ratio they are projecting.

After inputting all the data into a spreadsheet, we focused on the commercial and apartment properties. We knew the assessment ratios, so we were able to calculate the assumed mill rate. Once we knew the mill rate, we were able to use that in the residential properties to calculate the assessment ratio. Fortunately the values were consistent across all 9 properties once rounding errors were considered.

Here is our table, the cells with blue text are inputs while the cells with black text are calculations.

Hartford Courant Hartford Revaluation 2011 Model

 

Related Posts
Hartford’s Revaluation 2011 – Update
Overview of Hartford’s Property Tax System

Office Tower Conversions

Today’s question … what would it take to make a former office tower an interesting/hip/cool place to live?

While walking through Downtown Hartford I was once again thinking about how interesting a neighborhood it is becoming. There has been a noticeable change since I moved to town in 2004, with the highlight being numerous projects filling previously underutilized sites with housing.

The former home of UnitedHealthcare overlooking the Connecticut RiverThere are plenty of underutilized sites that remain – many of them are office buildings. What would it take to make an office tower an interesting place to live?

Industrial buildings are frequently converted into loft-style residences. They embrace the exposed structural and mechanical elements, making it their unique style. They restore the heavily used, yet incredibly sturdy, wood floors to add a feeling of age. And they utilize the high ceilings to create interesting lofted spaces.

Is there something inherently “office-y” about an office tower that could be accentuated to create a compelling residential space?

Some of our buildings don’t require much creativity. 777 Main, for example, is a perfect building for a condo/apartment conversion. The footprint of the building is appropriately rectangular for all the main rooms to all have windows. And most of the windows will have terrific views either to the east or to the west. The location is very convenient to everything Downtown, and there is a large attached parking garage. I can easily imagine people wanting to live in that building.

Other buildings are a little more tricky. Many have no defining characteristics that could be accentuated, or marketed, in a residential use. Some have footprints that are more difficult to re-imagine as residential space (interior bedrooms with no windows, anyone?).

How can we work around these challenges?

Maybe we could add a vertical component to the different floor plans. Rather than making the units all on one floor, what if we made two level residences? Have the main living area on the 9th floor with a private staircase up to the bedrooms on the 10th floor … a townhouse-in-the-sky. There are some units like this in Regency Towers on Woodland Street that are interesting. I sometimes see them on Selling New York too.

What else have people seen that make an apartment/condo interesting and might work in an office tower?