What the Revaluation Means to You (and Your Wallet)

"Right now we're looking at mailing the reval notices around Thanksgiving (which should be a great start to the holiday season)!" Chief Fiscal Office Paul Hiller told me this spring. "So look for a fairly large increase in the mill rate, which will be driven by a decrease in the Grand List."

I used that to end a column warning that we're facing a scary 2011-12 fiscal year budget. The conventional wisdom among homeowners might be that the forthcoming revaluation of property values, the first since the housing bubble exploded, will lead to a more reasonable assessment on their homes and therefore lower property taxes.

Think again.

"It's one of the most confusing issues for residents," First Selectman Ken Flatto confirmed. "There's no correlation between their reassessment and their tax bill."

But, let's look at what this all means. The town bases its income, otherwise known as The Grand Levy, on The Grand List which is the total assessed value of all taxable property in town. The vast majority of that is residential compared to commercial properties. Our Grand List has barely grown over the last few years, just about 1 percent in the last 12 months.

Flatto offered some good news in that the commercial sector has "appreciated better than homes" over the last few years, meaning their assessed values will be higher. "That may help buffer and stabilize homeowners' tax bills," he said.

Every year, Thomas F. Browne, the town assessor for the last 26 years, prepares the Grand List which shows what the assessed property brings the town in tax revenue. That number is compared with the budget proposed by the first selectman and then reviewed by the Board of Finance. Once a budget figure is finalized by the Representative Town Meeting, the shortfall between income and projected expenses is closed by raising the mill rate; that is, the amount of taxes owed for every $1,000 in assessed property value, which led to the 1.95 percent increase in taxes beginning July 1.

The state shifted from an every-10-year revaluation to an every-five-year cycle beginning in 2005, and this fall, the results of the current study will be presented to the town. Municipal Valuation Services has been working on the study since last year – you may recall receiving a questionnaire with the town's understanding of your property, providing you with a chance to correct misinformation. For example, my home was stated as having central air conditioning, which we do not.

MVS looks at Fairfield as a dozen distinct neighborhoods and studies market values, real estate transactions, building permits, and other data to help determine the value of every home. They tour neighborhoods and in some cases visit individual homes to see the interiors. "The tax comparison is made in relation to neighboring homes, and neighborhood to neighborhood variations exist, sometimes block to block such as Fairfield Beach Road in comparison to Rowland Road," Flatto said.

"Neighborhood characteristics are a major factor. The last two revaluations came at a time when commercial values dropped so the homeowners had to make up the difference. The commercial vacancy rate in Fairfield County is 15 to 20 percent," Flatto continued. "We only have a 5 to 7 percent vacancy rate and that's a strength as more tenants mean more stability, increasing the value of the properties."

Optimistically, he said building permit income from January 1 through May 31 was already in excess of the income for all of 2009, which speaks well to the commercial base and eventually the Grand List.

MVS spent October studying current home sales data before finalizing their assessments. Just after the November elections, the new assessments, effective Oct. 1, will be mailed to home owners. Obviously, appeals occur and there's a finite window to challenge the findings. Once all those are completed, the town will have a new Grand List which will inform Flatto, who will already be fashioning the next budget. "I expect there to be fewer appeals," Flatto said, "because the revaluation will be more realistic."

Flatto praised MVS, new to the town, and noted, "I'm very impressed by the company. I think they're very professional and if there are appeals, they will be well prepared to provide good explanations for their assessment."

Homeowners will open their notices and in most cases jump for joy, seeing lower assessments which they conclude will mean lower taxes at the current mill rate. Unfortunately, they won't know the truth until July 1, 2011 when the new mill rate goes into effect.

Fairfield will still need minimum revenues equal to the 2010-11 fiscal year budget of $251.5 million. The tax rate will stand at 19.27 mills. Using the common example of Flatto, his house is assessed at $444,430 so his tax bill is now $8,564. That tax bill is obtained by dividing the assessment by 1,000 and multiplying the resulting figure by 19.27.

Should Flatto's assessment go down to, say, $350,000, his tax bill, theoretically, would drop to $6744.50 with a mill rate of 19.27. But obviously, if most homes in town see assessment reductions, the revenue funding the town's budget would drop precipitously. As a result, when the Board of Finance has to set the mill rate for the fiscal 2011-12 budget, beginning July 1, they are likely to sharply increase the mill rate so the town has the income it needs to operate.

Bottom line? A lower property assessment doesn't necessarily mean a lower tax bill, and homeowners who see very little change in their property assessments are likely to see much larger tax bills beginning July 1.

But one factor homeowners never consider is that the revaluation also impacts vehicles, and usually, the reset values mean lower property taxes on cars, trucks and motorcycles, which make up 5 percent of the Grand List. As a result, their overall property tax bill may actually decrease.

"No matter what happens this fall," Flatto concluded, "some taxes will go down." So no, your taxes won't automatically be going down, which is not what anyone running for Board of Selectman, Board of Finance or Representative Town meeting want to deal with in the fall of 2011, when the next municipal election takes place.