September 6, 2006 |
2006-R-0481 | |
ROLE OF THE TOWN MEETING AND BOARD OF SELECTMEN IN APPROVING PROPERTY TAX BENEFITS | ||
| ||
By: John Rappa, Principal Analyst | ||
You asked for a comparison of the optional property tax benefits the town meeting must approve and those the board of selectmen must approve.
SUMMARY
Fifty-five statutes allow towns to abate, exempt, or defer property taxes or the interest on back taxes for specified reasons. Over half (30) require the legislative body, including the town meeting, to decide whether to grant these benefits and almost one-third (17), require board of selectmen approval. Most of the statutes designating the selectmen do so explicitly in lieu of the town meeting, which is the legislative body in 101 towns. Nine statutes authorize benefits without designating a local body to decide whether to grant them.
As Table 1 shows, over 40% of the benefits are for economic development, and most of those requiring the selectmen's approval (10) fall in this category. The selectmen must act mostly on benefits for existing businesses, such as amusement parks and food manufacturing plants, or personal property, such as new school buses and information technology. The town meeting must act mostly on benefits for stimulating large-scale commercial and industrial development. The statutes do not specify any entity for acting on five benefits.
The selectmen approve fewer benefits in the other categories, and the differences between these benefits and those the town meeting must approve seem minor. For example, the selectmen must act on tax abatements for poor people and those whose tax bills exceed 8% of their incomes. The town meeting must act on abatements and exemptions for seniors, veterans, and people with disabilities.
Table 1: Optional Property Tax Exemptions by Purpose and Decision Making Authority
Purpose |
Total Exemptions |
Decision Making Authority | |||
Town Meeting |
Selectmen in Lieu of Town Meeting |
Selectmen |
Unspecified | ||
Economic Development |
24 (44%) |
7 |
10 |
2 |
5 |
Tax Relief |
12 (22%) |
10 |
1 |
1 |
0 |
Housing |
8 (13%) |
6 |
0 |
0 |
2 |
Nonprofit Operations |
4 (7%) |
2 |
2 |
0 |
0 |
Energy Conservation |
3 (5%) |
3 |
0 |
0 |
0 |
Historic Preservation |
2 (3. 5%) |
1 |
0 |
0 |
1 |
Farm Operations |
2 (3. 5%) |
1 |
1 |
0 |
0 |
Total |
55 (100%) |
30 |
14 |
3 |
8 |
ECONOMIC DEVELOPMENT
The statutes authorize 24 different economic development tax incentives and half of these require the board of selectmen to decide whether to grant the incentive. The latter include two statutes that require the selectmen to act without referencing the town meeting.
As Table 2 shows, those requiring the selectmen's approval involve a narrower range of activities than those requiring the town meeting's approval. For example, the selectmen must approve exemptions for food manufacturing plants, amusement theme parks, and cleaning up environmentally contaminated property. They must also approve exemptions for specific types of personal property, such as information technology, telecommunications, and school buses. Most of the exemptions are for up to 100% of the taxes.
The town meeting must approve incentives for fewer but more diverse types of activities. These include fixing the assessments for a wide range of commercial and industrial projects and exemptions for businesses providing day care services to town residents as well as the business' employees.
Five statutes authorize abatements without designating the local body that must approve them. These include the abatements for cleaning up contaminated sites and improving property in enterprise zones and entertainment districts.
Table 2: Economic Development Tax Exemptions
Exemption |
Decision Making Authority | ||||
|
Description |
CGS and Yr Enacted |
Town Meeting |
Selectmen in Lieu of Meeting |
Selectmen |
Unspecified |
Fixed assessment for office, retail, factories, and other major real estate developments. Amount and term depend on investment: 100% for 7 yr for minimum $ 3 m investment, 100% for 2 yrs for minimum $ 500,000 investment, and 50% for 3 yrs for minimum $ 25,000 |
12-65b 1971 |
X |
|||
Fixed assessments for machinery and equipment in manufacturing, biotechnology, and research and development facilities according the schedule above |
12-65h 1992 |
X |
|||
Up to 100% abatement on business real or personal property if inability to pay taxes bars a business from receiving a government loan |
12-125 1949 |
X |
|||
Additional abatements and tax deferrals for enterprise zone properties |
32-71(e) 1981 |
X | |||
Seven-year, 100% real and personal property tax abatements for improvements in entertainment districts |
32-76a 1993 |
X | |||
Up to 100% abatement for bankrupt railroad companies |
12-124 1977 |
X |
|||
Up to 100%, 10-yr abatement for rehabilitated commercial or industrial property |
8-296 1977 |
X |
|||
Up to 100% abatement on personal property located in a damaged or destroyed building whose assessment the municipality has reduced |
12-64a 1981 |
X |
|||
100% tax interest abatement in any one year for a food manufacturing plant located on at least 100 acres and served by a regional sewer system whose treatment facility is in an adjacent town |
12-81o 1994 |
X |
|||
One-year, 100% tax or interest abatement on any amusement theme park of at least 200 acres which has operated for at least 100 years and is determined to be historic |
12-81p 1994 |
X |
|||
Up to 10-year abatement for all or part of the property taxes due on and after July 1, 1997 on property owned by an entity that has been ordered to acquire a water company by the Department of Public Health or Public Utility Control. The property must be used to make infrastructure improvements ordered by the departments |
12-81q 1997 |
X |
|||
100% exemption for commercial fishing apparatus worth over $ 500,000 and subject to corporation tax |
12-81s 1998 |
X |
|||
Up to 100% up to 100% exemption in any year on information technology personal property |
12-81t 1998 |
X |
|||
Up to 100%, 7-yr exemption of taxes or interest on delinquent taxes on abandoned or contaminated property slated for clean up and redevelopment |
12-81r 1997 |
X |
|||
Up to 100% abatement for real or personal property of telephone, telegraph, radio and television broadcasting, cable television, or other communications companies |
12-81u 1998 |
X |
|||
100%, one-yr abatement on property of an electric cooperative organized under the state Electric Cooperative Act |
12-81v 1998 |
X |
|||
Up to 100% abatement on new school buses |
12-81y 2000 |
X |
|||
Up to 50%, five-year abatement on increased value of industrial site or urban investment projects, if they qualify for state tax credits and do not qualify for any other property tax credits under the law |
12-81aa 2000 |
X | |||
Up to 100%, 20-year exemption for property developed under the Connecticut City and Town Development Act |
7-498 1975 |
X | |||
100% exemption for improvements on or to landing area owned by a private airport if owners allow free take offs and landings |
12-81(48) 1961 |
X | |||
Fixed assessments for improved residential and commercial property improvements in designated housing development zones based on 11 yr schedule |
8-380 1987 |
X |
|||
Up to 100% exemption of the property a business uses to provide day care services to town residents and up to 10% of the other property |
12-81n 1990 |
X |
|||
100% exemption of taxes due or interest on delinquent taxes for any acute care hospital converted to another type of medical service provider under a Department of Public Health and Office of Health Care Access five-year demonstration project |
19a-617a 1996 |
X |
|||
100%, 15-yr fixed assessments for Capital City and Adriaen's Landing projects |
32-666a 2000 |
X |
|||
ABATEMENTS AND EXEMPTIONS FOR INDIVIDUALS
Ten of the 12 statutes authorizing tax exemptions for individuals, such as seniors and veterans, require the town meeting to decide whether to grant the exemption. As Table 3 shows, the exemptions requiring the town meeting's approval apply to real and personal property. The amounts range from up to 100% for the surviving spouses of police officers and firefighters killed in the line of duty to 10% for elderly and permanently disabled homeowners.
Table 3: Tax Relief to Individuals
Exemption |
Decision Making Authority | ||||
|
Description |
Statute and Year Enacted |
Town Meeting |
Selectmen In Lieu of Town Meeting |
Selectmen |
Unspecified |
Up to 10% abatement for elderly or permanently disabled homeowners |
12-129n 1973 |
X |
|||
Up to 100% exemption for motor vehicles adapted for use by a person with disabilities and owned by such a person or his parent or guardian, provided the municipal legislative body adopts a definition of such a vehicle |
12-81c(3) 1998 |
X |
|||
Up to $ 3,000 additional exemption for blind people whose income is under circuit breaker eligibility limits |
12-81j 1985 |
X |
|||
Exemption for prorated amount of any special tax levied on real property for low-income elderly and disabled people eligible for tax freeze program |
12-129o 1976 |
X |
|||
Up to 100% exemption for motor vehicles owned by disabled veterans |
12-81h |
X |
|||
100% exemption for veterans receiving federal funds for specially adapted housing |
12-81 (21) (C) 1985 |
X |
|||
100% exemption taxes or interest on delinquent taxes owed by poor people |
12-124 1982 |
X |
|||
Up to $ 10,000 or 10% of assessed value additional exemption for low-income veterans and surviving spouses receiving the mandatory veterans' property tax exemption |
12-81f 1949 |
X |
|||
Exempt taxes on owner-occupied residence that exceed 8% of owner's income in the year immediately preceding tax year |
12-124a 1978 |
X |
|||
Up to $ 1,000 optional additional exemption for veterans receiving mandatory exemption for disabled people under 12-81 (55) |
12-81i 1985 |
X |
|||
Abatement of up to $ 1,000 of property taxes due in any year or an exemption for real or personal property equal to $ 1 million divided by the mill rate for the municipality's nonsalaried local civil preparedness director and staff and volunteer firefighters, emergency medical technicians, paramedics, or ambulance drivers. Towns may also provide relief to residents who volunteer in another town under an interlocal agreement. |
12-81w 1999 |
X |
|||
Abatement of up to 100% of taxes due on the principal residence of the surviving spouse of a police officer or firefighter killed in the line of duty |
12-81x |
X |
|||
The board of selectmen must decide whether to grant the two exemptions for people experiencing economic hardship. The statute authorizing one of these exemptions explicitly requires them to do so in lieu of the town meeting. That statute exempts the portion of a homeowner's tax bill on his residence that exceeds 8% of his income.
The other statute requires the board to act without referencing the town meeting. It authorizes a 100% exemption for poor people who cannot pay their taxes. In towns other than town meetings, this statute requires the chief elected official and the legislative body to act together.
HOUSING
As Table 4 shows, the town meeting must act on all but one of the housing related tax benefits. These include fixed assessments on rehabilitated homes and apartments and those that were made accessible for people with disabilities. They also include abatements for landlords who set rents at levels low- and moderate-income people can afford. The statute authorizing abatements for developing different types of housing in targeted areas does not designate an authority for approving them.
Table 4: Housing Abatements and Exemptions
Exemption |
Decision Making Authority | ||||
|
Description |
CGS and Yr Enacted |
Town Meeting |
Selectmen in Lieu of Meeting |
Selectmen |
Unspecified |
Up to 7-yr fixed assessment and deferred increase in assessment due to rehabilitation of new multifamily construction in designated rehabilitation areas |
12-65d, e 1973 |
X |
|||
Up to 5-yr deferred increase in assessment due to rehabilitation or renovation to accommodate disabled people |
12-65g 1975 |
X |
|||
Up to 100% abatement for properties in designated redevelopment or housing site development areas |
8-129a, 8-213a 1965 |
X | |||
Up to 100% abatement for low- and moderate-income housing |
8-215 1967 |
X |
|||
Up to 16-yr fixed assessment on housing projects that are part of a larger redevelopment, urban renewal, or community development project |
12-65 1949 |
X |
|||
Up to 100% credits to owners of residential property bound by long-term affordable housing deed restrictions |
12-81bb 2000 |
X |
|||
Up to 100% abatement for property conveyed in an urban homesteading program |
8-169u 1975 |
X |
|||
Abatement for abandoned property in targeted investment communities developed as single room occupancy housing for the homeless and receiving aid under a Department of Economic and Community Development pilot program: 1st yr, 75%; 2nd yr, 50%; and 3rd yr, 30% |
8-362 1993 |
||||
ABATEMENTS AND EXEMPTIONS FOR OTHER PURPOSES
Table 5 summarizes the abatements and exemptions for nonprofit operations, energy conservation, historic preservation, and farm operations. The town meeting must approve the exemptions for ambulance companies and charitable organizations while the selectmen must approve those for nonprofit water companies and organizations offering citizenship classes. It must also approve the exemptions for alternative heating and cooling systems or facilities using renewable resources or water to generate electricity.
The town meeting must approve the exemptions for preserving historic structures, but the statutes do not designate a body to authorize exemptions for historic properties awaiting demolition. These statutes require towns to wait 90 days before demolishing an historic property to give the Connecticut Commission on Culture and Tourism time find a purchaser who will preserve it.
The statutes authorizing exemptions for farm operations require the town meeting to approve those for farm machinery, and the board for those for specific types of farms.
Table 5: Abatements and Exemptions for other Purposes
Exemption |
Decision Making Authority | ||||
|
Description |
CGS and Yr Enacted |
Town Meeting |
Selectmen in Lieu of Meeting |
Selectmen |
Unspecified |
Nonprofit Operations | |||||
Exemption for property owned by nonprofit ambulance companies and ambulances used exclusively to transport medically incapacitated people without profit |
12-81c (1), (2) 1975 |
X |
|||
Exemption for real and personal property leased to charitable, religious, or nonprofit organizations |
12-81(58) 1977 |
X |
|||
Waiver for private, nonprofit water companies |
12-125a 1983 |
X |
|||
Abatement of up to 100% of property taxes due on real or personal property owned by a nonstock, nonprofit corporation providing classes in U. S. citizenship |
12-81z 2000 |
X |
|||
Energy Conservation | |||||
15-year exemption for active and passive solar energy heating and cooling systems installed between 10/1/76 and 10/1/06 |
12-81 (56) & (62) 1976 |
X |
|||
15-year exemption for solar energy generating or cogeneration system meeting OPM standards and not eligible for the above exemption installed after 6/30/81 and before 10/1/06 |
12-81(63) 1981 |
X |
|||
Exemption for Class I renewable resource or hydro-powered facility installed to generate electricity for private use in a one-to-four-family dwelling after 9/30/77 |
12-81 (57) 1977 |
X |
|||
Historic Preservation | |||||
Abatement for historic or architecturally meritorious structures |
12-127a 1969 |
X |
|||
Temporary abatement during required 90-day deferral period for historic properties scheduled for demolition |
7-147j & 7-147y 1961 |
X | |||
Farm Operations | |||||
Up to 50% abatement for dairy, vegetable, nursery, and tobacco farms; any farm that employs nontraditional farming methods; and vineyards and fruit orchards. Orchard abatement may include seasonal residences of orchard workers adjacent to orchards. |
12-81m 1990 |
X |
|||
Additional maximum $ 100,000 exemption for farm machinery worth more than this amount. |
12-91(b) 2001 |
X |
|||
JR: tjo