As the only Connecticut municipality which imposes a property tax surcharge on commercial and industrial property, the City of Hartford also is the only municipality that can take advantage of a newly created mechanism to provide residential property tax relief. This mechanism is set forth in Public Act No. 06-183 which became law in June of this year.

Hartford may elect to avail itself of this legislation effective with the revaluation scheduled to be implemented for the October 1, 2006 Grand List. Under the new law, the Hartford assessor would determine the assessment rate to be used to ensure that the revaluation does not cause the average property tax for residential (four or fewer units) and apartment (five or more units) properties to increase by more than 3.5% in the first year of revaluation. That assessment rate would be recalculated for each of the following four years in the revaluation cycle so that the average property tax for residential and apartment properties increases by 3.5% annually. Thus, the Hartford assessor would make annual changes to the assessments of residential and apartment properties (by changing the assessment rate) so that the average taxes on these property types will go up cumulatively no more than about 18.8% over 5 years after the revaluation. The legislative objective is to largely shield residential and apartment properties from the tax impact which otherwise would have resulted from the large appreciation in market value that has occurred for these property types since Hartford’s last revaluation in 1999.

In order to fund this program of residential property tax relief, the Hartford assessor is permitted to develop a new assessment rate for non-residential and non-apartment properties on an annual basis that can differ from (and presumably exceed) the 70% ratio that has been a fixture of Connecticut assessment law for many years. Those familiar with the financial modeling done in connection with this legislation expect the new rate to stay near 70%. To offset this tax exposure to some extent, the property tax surcharge imposed by Hartford on commercial and industrial properties gets ratcheted down annually over the five year revaluation cycle. It is anticipated that the surcharge will be reduced approximately 1.5% per year down to 7.5% in the last year of the revaluation cycle.