Southington's Revaluation, Part I: Owners of Smaller Homes See Spike in Tax Bills
Editor's note: This the first of two articles on Southington's recent revaluation process and its impact on real estate tax bills. The second, scheduled for publication next week, will take a look at the effects of revaluation on non-residential properties.
“It’s too much,” said long-time Southington resident Phil Santopietro. “The schools are wonderful. We have a great house that we had built, and we love it. But how can you afford it anymore?”
Santopietro was speaking about the increase in his property tax bill, which in his case jumped this past year nearly three-times the current 3.4% inflation rate. He was just one of many residents who reacted with a mix of disbelief, outrage, and fatalism when they opened the envelopes containing their bills.
It was not supposed to be this way. This past spring, town officials worked together to cap the overall growth of the town’s operating budget at a relatively modest 2.7%.
Once the budget was finalized, the Board of Finance voted to slash the mill rate – the tax rate, expressed in tenths of a percent – for local real estate from 32.80 to 23.29.
The reason the board implemented such a drastic cut was to offset a sharp spike in real estate values over the past five years. Revaluation - the process of updating official estimates of property values - showed that, since the last time Southington assessed its properties in 2020, the combined values of all real estate in town increased by roughly two-fifths. The mill rate cut, which was also roughly two-fifths, was meant to compensate for that growth.
Yet the increase in real estate values after revaluation was not evenly distributed. Small houses and condominiums, for example, soared in value over the past five years, in some cases more than doubling, due largely to demand.
Meanwhile, larger homes, for which there was less demand, also rose in value, but at a less dramatic rate, closer to the two-fifths average. Finally, certain kinds of commercial real estate, such as big-box stores and undeveloped land, gained little in value.
The upshot: even though the mill rate cut kept the average property bill increase close to 2.7%, the vast majority of homeowners saw their bills rise.
Residential Property Tax Hikes
Tax bills, like property records, are public information. They can be accessed on the town’s website, on a page maintained by Vision Government Solutions. With the help of a computer script that dumped that information into a spreadsheet, we were able to study property bills by street address and category.
The results were eye-opening. In general, homeowners with small- or medium-sized residences saw much larger increases in their property taxes than the owners of large properties, at least in percentage terms. This was easiest to see when focusing on streets or developments with similar-sized residences all built at around the same time. For example:
Condominiums at The Meadows: 62.0% Average Increase
The Meadows condominium complex on Darling Street, built in 1978, has a mix of 1-, 2-, and 3-bedroom units that average about 900 square feet each.
WWII-Era Duplexes on John Street: 38.9% Average Increase
All the homes on John Street, just off of Mill, are two-family brick buildings constructed around 1944. Each family residence is about 800 square feet in size.
Condominiums on Village Road: 22.3% Average Increase
Village Road runs through Spring Lake Village, a 55+ condo complex built in the early 1970’s. Residences on this road average 1,200 square feet.
Post-War Capes on Pondview Drive: 21.6% Average Increase
The Pondview Drive development dates to the mid 1950’s. Individual homes average 1,200 square feet, though with considerable variation.
1970’s Single-family Homes on Harness Drive: 10.0% Average Increase
The Harness Drive development dates to the early 1970’s. Most homes there are between 1,300 and 1,800 square feet.
1970’s Single-family Homes on High Tower Road: 4.2% Average Increase
The High Tower development was constructed around the same time as the one on Harness. However, its houses tend to be larger, with most between 1,800 and 2,100 square feet.
1980’s Single-family Homes on North Star Drive: 2.8% Average Increase
The original homes on North Star were built in the late 1980’s. Homes there range from 2,500 to over 4,000 square feet.
In short, the only home owners whose tax increases were in line with the town’s 2.7% budget growth were those who owned the largest houses. Almost everyone else paid more.
A Local Version of a National Problem
What happened in Southington has been affecting almost every community in the United States that collects local property taxes. And why that is so remains something of a mystery.
As a rule, real estate assessments are conducted by private vendors rather than municipalities. Southington’s revaluation was done by Fairfield-based Municipal Valuation Services LLC. On their website, Municipal Valuation describes their method of appraisal this way:
“In a Revaluation, the value of your property is based on an analysis of the entire Town/City’s real estate market for the period of time selected by the Assessor (typically it consists of 12 to 24 months of sales prior to October 1st of reval year). A study is done of sales that occurred during this period, so that the Revaluation Company can establish valuation parameters such as construction tables, land rates, market adjustment tables etc. When these valuation parameters are applied to the properties that sold, the resulting value should be very close to its sales price. After testing these valuation parameters, the Revaluation Company will then apply these valuation parameters to all properties in the town/city. By doing so, the Revaluation Company is approximating the market value for every property in town from information derived from all town sales.”
In other words, the company deploys a computer algorithm that collects a property’s features and makes a comparison with similar properties to estimate its sale price, and thus its market value. (The popular real estate website Zillow does something similar.)
Revaluation practices must adhere to government rules and industry standards. Yet a study of 26 million home sales nationwide by Christopher Berry of the University of Chicago showed that, over the past few decades, less expensive homes have been assessed more generously than more expensive ones. As a result, people who own more modest properties have been paying taxes at a higher effective rate, even when the mill rate was the same for all.
There is no consensus as to why this happens. Berry pointed to a flaw in the assessment process: assessors are not allowed to enter people’s homes. Thus, they assume that the value and quality of the interior match the value and quality of the exterior, which is often not the case.
As if to illustrate the point, Southington resident Christopher Platt Jr., whose tax bill went up nearly 16% this year, told the Outsider that the assessment misrepresented his house’s interior amenities. “The assessment was wrong,” he wrote. “It said I had a finished basement.”
He said that he could have appealed, although he was not inclined to: “It’s done by a third party, which muddies the waters. They want you to testify. I would just show them pics of my supposed finished basement where I have no drop ceiling and the foundation is the walls.”
To file a successful appeal, it is often not enough to show officials a picture. Generally it takes time, and some expertise, to find the right kind of ‘comps’ or comparisons that would prove that one’s property is an outlier.
What Can the Town Do?
The town government strove to keep spending in line this past spring, growing its budget by less than the rate of inflation. But while every bit of fiscal prudence helps, in most cases these cuts were dwarfed by the effects of a market and a revaluation process that has behaved in a rather crazy way. For example, if your real estate tax bill went up 15% from $6,000 to $6,900, about $162 of that increase was due to growth in the town budget. The remaining $738 was due to the action of the market – or at least the market modeled by Municipal Valuations.
So the realistic answer to the question, what can the town do, is: not much.
Officials are keeping their eyes peeled for a market rebalance. It could happen that the rate at which large homes increase in value catches up with the rate at which small homes do so, or that the rate of small home appreciation slows relative to that of larger homes. If something like that were to happen, the town could hold an early revaluation rather than wait until 2030, when the next one is scheduled. According to Town Council Chair Paul Chaplinsky, that is one option on the table.
“If property values in our area appear to drop or shift significantly prior to the next scheduled 2030/2031 revaluation,” he told the Outsider, “this… would not be reflected by the town’s tax department because it occurred in between revaluation dates. If this scenario happens, [Board of Finance Chair] John Leary and I… would be supportive of petitioning the elected boards to do an off-cycle revaluation to reflect the lower valuation and appropriate tax burden change. The message… is that we are keeping an eye on this and if there is a way to provide that relief, we will seek it out.”
Another option would be for officials to shop around for a valuation agency that has a flatter valuation curve, one that avoids the distortions Berry has drawn attention to.
For now, though, most Southington residents must contend with another unexpected hike in the money they need to pay to keep a roof over their head.
