Hartford’s high property-tax rate was a major reason Daniel D’Aprile said he moved his D&D Market grocery store to Wethersfield, where he is saving tens of thousands of dollars annually on property-tax costs. Greg Bordonaro / Hartford Business Journal
Hartford’s high property-tax rate was a major reason Daniel D’Aprile said he moved his D&D Market grocery store to Wethersfield, where he is saving tens of thousands of dollars annually on property-tax costs. Greg Bordonaro / Hartford Business Journal

When D&D Market closed its Franklin Avenue storefront in Sept. 2016, Hartford lost more than a landmark small business.

The third-generation family grocer, caterer and purveyor of fresh foods traces its Capital City roots back to 1932, when present-day owner Daniel D’Aprile’s grandfather opened a bustling market that became a mainstay on one of Hartford’s most vibrant small-business corridors.

However, things changed dramatically over the decades. Shifting demographics, a shrinking customer base and higher rents all made doing business in Hartford more difficult, Daniel D’Aprile said in a recent interview.

But the biggest pain point was property taxes. Though D’Aprile didn’t own D&D’s old Hartford quarters at 276 Franklin Ave. — his father actually does — he was still responsible for paying real estate and personal property taxes. At its peak, he owed $54,000 a year to the city — a sum that became too much to bear and led him to buy a smaller property less than four miles away in Wethersfield, where he’d eventually relocate his entire business and 38 employees.

Since opening the Wethersfield location on Wolcott Hill Road in 2014, sales are up 35 percent, D’Aprile said. Just as important, he’s paying less than a quarter of the property taxes — $12,000 annually — than he did in Hartford.

“I never wanted to move my business out of Hartford, but the rent was skyrocketing, the property taxes were skyrocketing, and sales weren’t going up,” D’Aprile said. “We were working very hard for nothing. There was no money left over after paying property taxes.”

“If we stayed in Hartford we would have been out of business,” he added.

D&D Market’s story isn’t wholly unique. For years, Hartford’s small and large businesses have complained they’re paying an exorbitant and disproportionate share of property taxes, hurting their ability to prosper.

At 74.29 mills, Hartford’s property-tax rate is by far the state’s highest and among the nation’s highest. In fact, the effective property-tax rate for a commercial landlord in Hartford (over 5 percent) is higher than what New York City, Boston and Chicago landlords face.

That’s stifled economic growth in the city — Hartford’s $4 billion grand list is valued 30 percent below what it was near the turn of the 21st century, and 38 percent below its 1990 peak of $6.5 billion.

By comparison, neighboring West Hartford — one of the region’s wealthier communities with half the population of Hartford — has a 41 mill rate and $6.3 billion grand list.

New Haven, a city with a comparable population to Hartford but lower mill rate (42.98 mills) has a $6.6 billion grand list.

John Gale, Hartford City Council HBJ

“[Hartford’s mill rate] has brought development to an absolute screeching halt,” said Hartford City Councilor and lawyer John Gale. “It’s a huge drag. This has been the biggest single financial issue the city has faced in the last 15 years.”

With limited exceptions, private development has eschewed Hartford over the last decade or longer, unless it’s been supported by state government subsidies or city tax breaks.

The city’s small businesses in particular have felt enormous pressure from the high property-tax rate, part of the reason key commercial avenues — Franklin, Maple, Main, Albany, etc.  — in various neighborhoods have lost their luster.

And for anyone who thinks commercial taxpayers will soon get relief after the state last year helped the city avert bankruptcy by agreeing to pay off Hartford’s $550 million in general obligation debt over the coming decades, think again.

Despite its bailout, Hartford’s finances remain in a precarious position, and commercial taxpayers aren’t likely to see a tax-rate reduction anytime soon, according to Mayor Luke Bronin.

Hartford Mayor Luke Bronin (file photo) Kyle Constable / CTMirror.org file photo

“For a small business or any property owner paying the full freight 74 mills, it’s an unsustainable and unfair burden,” Bronin said. “I think it’s a huge issue and one that our state has to confront if we want to be competitive.”

For Hartford’s mill rate to be competitive over the long run, Bronin said it needs to be cut in half. That, however, would likely require major reforms at the state level, or a miraculous surge in new commercial development.

House Majority Leader Matt Ritter (D-Hartford) said he agrees Hartford still has a long road to recovery, but he also thinks the bailout he helped broker provided the city with much-needed financial stability. He said it could take 10 to 15 years to put any sizable dent in the mill rate, and that’s only if Hartford is able to grow its grand list and secure additional state funding, among other efforts.

He also said the bailout deal was the best the city could have hoped for, given the political environment.

Rep. Matt Ritter, the new House majority leader, addresses the chamber. Jacqueline Rabe Thomas / CTMirror.org

“For anyone who thinks the deal could have been better, they are sorely mistaken,” Ritter said. “There was not an appetite to reduce the mill rate.”

The Hartford Business Journal has spent months interviewing property-tax experts, commercial property owners, landlord-developers, policymakers, homeowners, city officials and others about the effects of Hartford’s property-tax system, which is complicated and broken in myriad ways.

Occupying just 18 square miles, Hartford is a tiny city that also houses many tax-exempt properties, significantly limiting the city’s ability to grow its grand list.

In fact, 59 percent of the assessed real estate in the city is exempt from taxation because it’s owned by governments, nonprofits, churches or other tax-exempt organizations, an HBJ analysis of city property records shows. Meantime, Hartford is also home to one of the poorest populations in the country, increasing the need for social, health care and other services.

Adding insult to injury, Hartford has the state’s only bifurcated property-tax system, in which commercial property owners pay a higher tax rate than residential homeowners.

Hartford’s challenges are a statewide concern because the city’s fortunes are directly tied to the state’s, especially as more employers and skilled workers want to be in or near vibrant cities.

Despite its challenges, some business leaders are still bullish about Hartford’s future, especially given downtown’s new vibrancy in recent years, helped by the additions of Dunkin’ Donuts Park, UConn’s West Hartford campus, a fledgling tech scene and about 1,500 new apartment units.

Jon Putnam, Executive Director, Cushman & Wakefield HBJ

“I’m more optimistic about Hartford’s increasing attractiveness as a location for companies due to the urbanization trend,” said Jon Putnam, executive director of commercial realty broker Cushman & Wakefield.

How did we get here?

Hartford didn’t land in its current financial and property-tax predicament overnight. Numerous factors over many decades stacked up to create an unstable and untenable situation with no clear or easy solutions.

The start of the decline of Hartford’s property-tax base and system can be traced to the mid-20th century when the city — like many others in Connecticut and across the U.S. — was going through major economic and demographic shifts as more people moved to the suburbs. That squeezed out a large portion of Hartford’s middle class, and the affluence that went along with it. The city’s manufacturing and industrial base also began to shrink, while its impoverished populace grew, leading to higher city-government costs.

As taxes rose to compensate, more properties also shifted to nonprofit ownership. That came on top of the enormous share of city property already owned by tax-exempt institutions like colleges, hospitals, sewage plants and even the state itself.

Over the past half-century, the portion of Hartford’s tax-exempt grand list has more than doubled.

State government reimburses the city for some of its tax-exempt property, but it doesn’t come close to filling the gap.

City government, too, has exacerbated the problem over the decades by overborrowing, making pension promises whose costs have outpaced grand-list growth, and then kicking the can down the road either through short-term and costly debt restructurings or by raising taxes.

However, Bronin, who is running for reelection this year, said much larger structural issues have been the leading cause of Hartford’s fiscal stress.

“At the root of the problem is the fundamental flaw of having an 18-square mile city with an enormous concentration of non-taxable property and intense concentration of poverty and asking that city to run itself on only one local source of revenue,” he said, referring to the fact that municipalities in Connecticut are only allowed to raise revenue through the property tax (in addition to permit and other fees). “The biggest problem is that you have a city built on the tax base of a suburb. That, from the start, is a structural flaw that has all kinds of consequences.”

“The biggest problem is that you have a city built on the tax base of a suburb. That, from the start, is a structural flaw that has all kinds of consequences.”

Hartford Mayor Luke Bronin

Bronin said his administration is running a “very lean government” and has made deep cuts over the last few years. The city council just passed the mayor’s $573.2 million budget for fiscal 2020, which does raise spending by $3.2 million, but doesn’t rely on borrowing and keeps the city’s workforce — excluding public-safety personnel — 11 percent below 2015 levels. Notably, since taking office in 2016, Bronin has also managed to not increase the city’s sky-high mill rate.

Even still, Hartford is unable to lower its property-tax rate. That shows excess borrowing isn’t the root cause of Hartford’s problems, Bronin said, since the state essentially eliminated most of the city’s long-term debt.

“If the city had never borrowed a single dollar, you would still have a mill rate of 74.29 to make the city function,” he said, noting that city finances are now reviewed by a state oversight panel.

Without the state bailout or bankruptcy, Hartford would have had to quickly raise its mill rate an additional 10 to 15 mills, Bronin said, which wouldn’t have been sustainable.

He argues much more drastic reforms are still needed at the state level, including giving the city additional ways to raise revenue. The bailout has provided enough relief to prevent a financial Armageddon, but the city still has limited financial flexibility, Bronin said. At the end of the day, he said there is a cost to delivering basic core services in Hartford and the value of taxable property does not come anywhere near funding that.

State Rep. Jason Rojas, D-East Hartford Claude Albert / CTMirror.org

State Rep. Jason Rojas, a Democrat from East Hartford who co-chairs the powerful Finance, Revenue and Bonding Committee, said the city will likely continue to lean on the state.

“Absent pretty significant economic growth in the grand list, which I think is difficult to do, … I think there’s still a lot more work to do for the long-term future of the city,” Rojas said.

Marc Fitch, an investigative reporter for the Yankee Institute, a free-market think tank, said there’s plenty of blame to spread for Hartford’s fiscal situation.  

On the one hand, the city awarded “really generous” labor contracts in the past, so Fitch views the bailout, at least partially, as rewarding fiscal mismanagement. On the other hand, the state has not fully reimbursed Hartford for its tax-exempt property, shortchanging it of vital operating funds.

Hartford has avoided bankruptcy for now, but Fitch, who credits Bronin for his budgeting discipline, said the city appears stuck in limbo for the foreseeable future.

“Even with the bailout and everything, their finances are razor thin and they’re relying on potential grand list growth to hopefully fill those gaps in the next few years, and that is a gamble,” Fitch said.

Out-of-whack property taxes

Hartford’s financial and economic instability over the years have birthed arguably the most dysfunctional commercial property-tax structure this state has seen in the last half-century.

Besides the exorbitant mill rate, Hartford is the only Connecticut municipality allowed to assess commercial property at a higher tax rate.

To calculate any property-tax bill in Connecticut, owners must multiply their property’s assessed value by a city’s or town’s mill rate and then divide by 1,000.

In the 1970s, Connecticut passed a law requiring municipalities to adopt a 70-percent assessment ratio. That means to determine the assessed value of a property — whether it’s a single-family home, commercial property or apartment — assessors multiply its market value by 70 percent.

By the late 1970s Hartford faced a crisis. The city was in the middle of its first revaluation in 17 years and many residential properties experienced a significant spike in value. If all properties were assessed at the same level, some homeowners faced average tax increases of well over 80 percent, which was deemed practically and politically untenable.

So, city officials hatched an agreement with state policymakers that, among other things, allowed Hartford to lower its residential assessment ratio to 45.8 percent. That shielded homeowners from a major tax hike, while leaving commercial property owners with a higher tax rate.

That initial bifurcated tax structure was actually phased out by 1986, but adopted again in 2006 and remains in place today. Commercial and apartment properties are assessed at 70 percent of value, while single-family homes are assessed at 35 percent.

There is a formula in place that gradually raises the residential assessment ratio to 70 percent, but it will take decades before that happens, said City Assessor John S. Philip.

Bruce Becker, Developer, Becker + Becker HBJ

Hartford and New Haven developer Bruce Becker says the uneven property-tax setup matched with the high mill rate dissuades commercial investment and fosters an environment in which the city must cut tax deals to spur development, especially for larger, costly projects.

He knows that firsthand. He redeveloped the 777 Main St., 26-story office tower into 285 apartments in 2015, an $85-million project that relied heavily on public financing and tax credits.

He also got a tax break from the city. Without that support, he said the project wouldn’t have happened.

“Relying on the property tax exclusively to fund municipalities,’’ is inefficient, Becker said.

Delayed revals

One source of Hartford’s problems over the years is that it often waited long periods between revaluations. When that coincided with wild swings in the real estate market it led to dramatic changes in assessed property values.

For example, Hartford waited 10 years before conducting its 1998-1999 reval, which shrank the city’s grand list 38 percent, to $3.6 billion, while the mill rate jumped from 29.50 to 47.

The grand list nosedived because assessed property values hadn’t fully taken into account the effects of the late 1980s and early 1990s savings-and-loan crisis, which put Connecticut and the nation into recession.

Over a 40-year period starting in 1962, Hartford only conducted three revals. Today, state law requires municipalities to do revaluations at least every five years.

“Waiting 10 years to do a revaluation is not a great idea,” Philip said.

Some have pitched the idea of conducting revaluations more frequently to better capture real estate value changes in a more timely manner, but it’s seen by many as too costly.

Hartford has also experimented with a commercial property-tax surcharge that reached as high as 15 percent and stayed at that level for nine years, starting in 1997. The surcharge drew the ire of the business community, led by the MetroHartford Alliance, which eventually lobbied to phase out the additional tax in 2010.

Hartford’s mill rate has stabilized since 2011. There have been no tax increases under the Bronin administration, but the mill rate went on a consistent and steady climb at the turn of the 21st century going from 29.50 in 1998 to its current 74.29 mills today.

Bottom-line impact

The effect of Hartford’s bifurcated tax system is that commercial landlords and their tenants are shouldering a much higher tax burden than homeowners.

In fact, city homeowners have an effective tax rate of about 2.2 percent, on par with the statewide average, while commercial properties have an effective tax rate of more than 5 percent.

That means for every $1,000 of assessed value, a Hartford commercial taxpayer pays more than $50 in taxes vs. $22 for residential. By comparison, the effective property-tax rates on commercial properties in Boston and New York City are 1.8 percent and 3.9 percent, respectively, according to the Lincoln Institute of Land Policy. (Businesses in those cities, however, face other unique costs. Property values are also much higher in those cities.)

Hartford’s high tax rate has a negative effect on commercial property values, said John McDermott, a former Hartford city assessor during the 1970s, who is now a consultant to Connecticut businesses.

Commercial properties are valued based on how much net operating income they generate from rents. Property taxes are typically the second-highest expense behind a mortgage. When taxes rise, they eat into a building’s profitability, thus eroding their market value.

That, in turn, negatively impacts the city’s grand list. In 1996, when Hartford’s effective commercial mill rate was 33.4, the grand list totaled $5.8 billion. Today, Hartford’s grand list sits at only $4 billion.

Making things more challenging for commercial landlords, particularly those who own downtown’s Class A office towers, is that rents have been stagnant for nearly three decades, settling in at about $22 to $26 per square foot, while property taxes and operating expenses increased, squeezing their bottom lines.

Combined, operating expenses and taxes cost downtown landlords around $10 to $11 per square foot in the late 1980s, but reached as high as $15 to $17 in the early 2000s. Those costs have retreated a bit more recently as landlords found ways to reduce operating expenses and the city kept a lid on real estate tax increases, said Putnam, the Cushman & Wakefield commercial realty broker.

And it’s not just landlords stuck paying higher property taxes. Many commercial tenants have a “triple net lease,” meaning they must pay a share of a building’s property taxes.

Businesses must also pay taxes on personal property like machinery and equipment and motor vehicles. That’s how tax bills begin to add up for small and midsize merchants — like D’Aprile’s D&D Market — that rent space in the city.

McDermott said Hartford’s mill rate is a major impediment to renaissance efforts taking place downtown.

“It’s a competitive environment,” he said. “In today’s world, clearly entrepreneurs have an opportunity to go anywhere they want to go. There are clearly advantages to being in the city, but also from an economic perspective, the suburbs have a tax impact that is dramatically less. You can very easily go to Glastonbury or Rocky Hill where the tax burden is half or two-thirds of the city’s.”

Andy Bessette, Travelers Cos.’ executive vice president and chief administrative officer, said he is bullish on Hartford, despite the city’s challenges. HBJ file photo

Urban draw

Despite Hartford’s tax burden, the city, particularly downtown, has seen noticeable development and investment in recent years. Most of it, however, has been subsidized by the state, or is the beneficiary of city tax breaks.

Still, many employers find it necessary to have a Hartford presence, especially as Millennials and others desire urban settings where they can live, work and play. In fact, Hartford has seen some employers move from the suburbs to downtown in recent years to be closer to a wider talent pool and the various amenities the city offers.

The vacancy rate for Class A office space downtown is currently 17.7 percent, down from 25.5 percent in the first quarter of 2011, according to commercial realty firm CBRE. The city’s overall office vacancy rate fell from 26.1 percent to 16.5 percent over that same time period.

The state’s purchase of two major office towers and the conversion of vacant office buildings into apartments have helped lower the vacancy rate.

Meantime, the grand list, despite being well below historical highs, is up 23 percent since 2006.

The city lately has also attracted out-of-state realty investment, including from New York landlord Shelbourne Global Solutions LLC. Shelbourne has invested more than $200 million since 2014 buying up some of downtown Hartford’s most prized office towers, cementing it as one of the center-city’s most prominent landlords.

Most recently, it teamed up with Hartford parking giant Laz Parking to buy the city’s iconic “Gold Building” skyscraper for $70.5 million.

Shelbourne managing member Ben Schlossberg said his group finds the city attractive because it’s walkable, uniquely located between New York and Boston, and has a strong corporate and higher-education presence.

However, he is also cognizant of Hartford’s high tax rate. Shelbourne sued the city a few years ago after its appeal for lower property taxes on several of its recently revalued buildings was denied. It eventually brokered a tax-break deal with the city to resolve the issue. Without that helping hand, some of Shelbourne’s properties would have gone into foreclosure, Schlossberg said, an issue familiar to downtown, especially in the wake of the 2008 financial crisis.

“We are very excited about what is going on in Hartford,” Schlossberg said. However, he added “the state needs to find a way to lower the mill rate, which is oppressive.”

Travelers Cos. is one employer that has made significant investment in Hartford. In recent years the property-and-casualty insurer spent about $55 million giving its famous Travelers Tower office high-rise and campus a facelift. It’s currently spending millions more to spruce up its interior offices.

The company was also one of three insurers — in addition to The Hartford and Aetna — to promise a combined $50 million donation to the city over five years to help Hartford deal with its budget crisis.

Travelers, which is the second-highest taxpayer in the city with $143.2 million in assessed real estate and property, is aware of the high property-tax rate but is also bullish about Hartford’s future, said Andy Bessette, the company’s executive vice president and chief administrative officer.

He said companies look at more than just taxes when deciding where to locate and he’s attracted to Hartford because of the insurance talent here and the quality of life and amenities the region offers.

Bessette also sits on the board of the Capital Region Development Authority, which has helped finance development of 1,500 apartment units downtown in recent years. That, along with a growing innovation ecosystem, has added to the center-city’s vibrancy.

“Do we care about property taxes? Absolutely,” Bessette said, adding he recognizes that the high tax rate might impact small and midsize companies more than a large corporation. “Would you like to have them lower? Absolutely. But you know what, we believe in the city and want to be sure it’s successful.”

“You need a thriving urban environment,” he said.

The Cities Project, a collaboration between CT MirrorConnecticut Public RadioHearst Connecticut MediaHartford CourantRepublican-American of Waterbury, Hartford Business Journal, and Purple States, will publish periodic articles exploring challenges and solutions related to revitalizing Connecticut’s cities. Send comments or suggestions to ehamilton@ctmirror.org.

Join the Conversation


  1. The state should sell a significant portion of it’s Hartford real estate to private interests and lease the buildings back. This puts the buildings on the grand list, making them taxable and reducing the overall non-taxable real estate in Hartford.

    1. The state’s rent would have to cover taxes paid. So that’s an indirect way of giving Hartford more state money. With any profits to the buyers also paid by the state.

      1. True but the state would also have the proceeds from the sale to offset those payments for a period of time. And they would be relieved of maintenance expenses that a private company could control better than the state.

        Not perfect.

  2. The following is a significant contributor to the high “commercial” property tax rate in the City of Hartford.
    “Commercial and apartment properties are assessed at 70 percent of value, while single-family homes are assessed at 35 percent. There is a formula in place that gradually raises the residential assessment ratio to 70 percent, but it will take decades before that happens, said City Assessor John S. Philip.”

    No other City or Town in the entire state assess “Residential” Property at such a ridiculously low rate. This clearly shows commercial property owners are giving home and condo owners in the City of Hartford a “Free Pass” when it comes to Property Taxes.

  3. Bessette said, “Would you like to have them lower? Absolutely. But you know what, we believe in the city and want to be sure it’s successful.”

    What is a city if it is not the sum of its constituent parts? There is no city, no vibrancy, no natural standard of living, without small business to which people are drawn. To me, the proof is found when a long established Hartford business like D&D Market is forced to move because politicians believe in the “city” more than they do in the institutions that made the city what it was and will never be again.

  4. It’s not just the mill rate, it is what is the city is not doing to bring teachers, nurses, police and fire fighters back to live in Hartford.
    Other cities have residency laws to keep city workers in their cities. Give them incentives to live in the city instead of building baseball stadiums. A vibrant middle class living within the city would go a long way to help grow it.

  5. This sentence is central to the problem: “Meantime, Hartford is also home to one of the poorest populations in the country, increasing the need for social, health care and other services. ”
    Where does a non-profit serving poor people want to be located? Near poor people.
    Because poor people can’t pay high rents or mortgages, taxes have to be kept low to assure that apartment buildings and homes can continue. That’s the source of the bifurcated tax system.
    People in cities vote, so the legislature is sympathetic. As the article observes, “Despite Hartford’s tax burden, the city, particularly downtown, has seen noticeable development and investment in recent years. Most of it, however, has been subsidized by the state, or is the beneficiary of city tax breaks.”
    How much in tax breaks can a nearly bankrupt city afford to give? And such efforts may not be able to create jobs that a poor population can fill.
    Add the fact that the urbanization mentioned in the article has mostly affected comparatively few large cities, and the idea that Hartford’s high commercial property tax rate is likely to continue is well supported.
    CT’s (small) cities will remain a problem for some time.

  6. Hartford spent itself into oblivion with decades of corruption, decades of financially unsustainable progressive policies being promoted under decades of Democrat “leadership” paid for by ever increasing taxes that we all have to now pay (not just the people of Hartford). Far larger long-term cuts to city services, contracts and entitlements should be mandated by the current administration and the MARB. Bankruptcy would have been the fairer and probably better long term option instead if financial limbo.

  7. More than 100 communities have differential tax rates in Massachusetts. What remains of the middle class in Hartford cannot afford or sustain a doubling of the tax rate on residential property. There are many ways to increase revenues to Hartford from the state of CT. Reducing expenditures further will be very difficult when the services provided are very much needed. Another way to address the problem is to provide for a regional tax structure. Hartford is simply too small to be economically viable under the current tax structure. Lee Erdmann

  8. One need to look no further than the Hartford Police Sargent who retired two years ago after a career of exactly 20 years on the force. His pension is $129,977. When someone is collecting $10,831 a month after exactly 20 years worked, you have a problem. Having the state pay more for Hartford’s excess will only drag the state down faster. Is the $500 million in bonded debt the state picked up not enough? Layers of overpaid bureaucrats at the Hartford Board of Education.

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