Three Connecticut communities would have new leverage to press owners of blighted commercial sites to redevelop or sell their property under legislation raised by the General Assembly’s Planning and Development Committee.
The land valuation measure developed by Senate Majority Leader Martin M. Looney, D-New Haven, would allow participating communities to modify how municipal taxes are levied on commercial properties in targeted zones.
In particular, communities could levy a higher rate on a parcel of land to reflect its potential commercial value. If the parcel contains buildings, the bill allows local officials to affix a higher tax rate on the land than on the structures.
The goal, Looney said Wednesday, is to stem what he fears is a growing problem of property owners allowing valuable commercial parcels to remain vacant, and effectively robbing communities of the added property taxes they would collect were the sites developed to their full potential.
“I believe we should give municipalities the greatest flexibility possible to deal with this,” Looney said. “The intent was not to allow land to just lie fallow.”
The legislature enacted a pilot program two years ago that would have allowed New London to set what was commonly called a “land value tax” rate starting in 2010. But the southeastern Connecticut community opted not to implement it after a local study committee concluded that “the city has too many unique parcels and businesses” and that existing private, vacant commercial parcels that were considered “buildable” were “too small and too few in numbers for the committee to… justify changing the tax structure.”
Sen. Stephen T. Cassano, D-Manchester and co-chairman of the Planning and Development Committee, said he expects a land value pilot measure to be approved by his panel later this month, though he said its final form still is being negotiated.
Cassano said he believes the final version likely would allow up to three communities to volunteer to participate in a pilot. And while New London officials were wary of imposing “land value tax” rates citywide, the latest bill likely would offer communities the option of limiting the special rates to specific commercial districts, zones or even a few brownfield sites.
“I think the New London pilot may have been too ambitious,” he said, adding it’s crucial for communities to have flexibility because there is an element of risk.
“It’s something of a gamble,” he said. “You’re saying to an owner: ‘We’ll charge you more for doing nothing with the land.’”
But Cassano noted that if the rates are applied, for example, on commercial site owner with a hefty delinquent tax bill and a parcel with little development potential, that owner might opt to do nothing and simply sink further into debt.
The senator and former Manchester mayor, recalled how his town’s officials and residents grew frustrated in the late 1990s when the southern half of a commercial center off Broad Street and Middle Turnpike, the Parkade, gradually lost all of tenants.
The Parkade finally has a new direction now, after voters and the town’s Board of Directors agreed earlier this winter to purchase the southern half for $1.85 million from its Boston-based owner. “There clearly are some commercial parcels that have much higher potential and the back part of Manchester’s Parkade was a perfect example,” he said.
The proposal did attract criticism from one group, the state’s chief business lobby.
Bonnie Stewart, vice president and tax specialist for the Connecticut Business and Industry Association, testified before the committee that officials in participating communities might find it “politically expedient” to “increase taxes on one group of property owners as a way to appease another class of property owners.”
Stewart added that a better solution would be for the state to increase efforts to help communities and businesses abate pollution, one of the primary reasons commercial sites are abandoned.