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Partially completed construction: Towns may continue taxing

A bill now awaiting the governor’s signature will ensure that towns can assess and impose property taxes on partially completed construction.

That right was in jeopardy after an October 2011 state Superior Court ruling in the case of Kasica v. Town of Columbia. The court ruled that municipalities are not permitted to assess partially constructed structures until completion and the issuance of a certificate of occupancy. In other words, property taxes on partially completed construction — including additions and renovations — could not be imposed by municipalities, even though historically they had been.

The ruling would have undermined the ability of towns to assess fair market value for partially completed construction, according to the Council on Small Towns (COST).

Weston First Selectman Gayle Weinstein joined with neighboring first selectmen Natalie Ketcham of Redding and Pat Llodra of Newtown, and state Sen. Toni Boucher (R-26th, which includes Weston), to push for legislation this session to reverse that opinion so municipalities could continue their practice of partial assessments. Rep. John Shaban (R-135th, which includes Weston) also lobbied for the legislation.

HB5035 — An Act Concerning Property Assessments by Municipalities was passed in the Senate during the last hour of the legislature’s session. Gov. Dannel P. Malloy had initiated the legislation.

According to COST, the bill would plugs a potential loss of $30 million in revenue [statewide] by authorizing towns to continue taxing partially completed construction.

“It would have cost Weston hundreds of thousands of dollars” had the town not been allowed to tax properties under construction, Ms. Weinstein said.

“Clearly, the loss of revenue would have had to be made up with an increase in the mill rate, and that’s totally unacceptable,” Ms. Ketcham said, calling the court’s ruling “a bad decision.”

After Sen. Boucher discussed it with Redding’s first selectman, Sen. Boucher understood the bill would continue a practice towns and cities had been following, she supported it, said Ms. Ketcham.

The only snag came when Sen. John McKinney (R-28th, which includes Weston), Senate minority leader, placed an amendment on the bill to exempt one- to three-family homes from it.

Ms. Weinstein said that amendment would have encouraged builders of spec houses and people putting on additions to simply delay getting a certificate of occupancy as a way to avoid paying taxes. “They would have the benefit of living there without having to pay taxes,” Ms. Weinstein said.

At that point, said Ms. Ketcham, “we had to either advocate for a No vote because of the amendment or fight to get the amendment withdrawn.

The first selectmen in Mr. McKinney’s district and Ms. Boucher banded together to fight the amendment.

“Through concentrated phone calls and working with the CCM (Connecticut Conference of Municipalities ), we were able to convince Sen. McKinney to withdraw his amendment,” Ms. Ketcham said. “The bill passed the Senate at the last moment intact.

“It reinforces how important it is for local officials to be vigilant by following legislation not only day to day, but minute to minute.”

Ms. Weinstein agreed and said it was a “good example of women in politics getting over ourselves and our political differences [Ms. Weinstein is a Democrat and the others are Republicans] and putting forward what is best for our municipalities.”

Ms. Ketcham said she was grateful to Ms. Boucher “for her responsiveness and advocacy on our behalf” and to Mr. McKinney “who understood and responded appropriately to our concerns about the impact on taxpayers ultimately. The process worked, but it was a nail-biter.”

 

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