OLR Bill Analysis

sSB 379

AN ACT ESTABLISHING A LAND VALUE TAXATION PILOT PROGRAM.

SUMMARY:

This bill allows a municipality to tax land at a higher rate than buildings (i. e. , land value taxation) on a pilot basis. The municipality must meet the bill's narrow criteria and apply to the Office of Policy and Management (OPM) secretary for approval. The authorization to levy the land value tax ends five years after the municipality adopted the implementing ordinance the bill requires. The secretary must annually report to the Planning and Development Committee about the status of the land value tax beginning January 15, 2010.

EFFECTIVE DATE: Upon passage

LAND VALUE TAX

Under current law, municipalities must tax land and any improvements made to the land (e. g. , buildings) at the same rate. The bill allows a municipality to tax land at a higher rate than buildings on a pilot basis. The municipality choosing to tax real estate in this manner must adopt an ordinance dividing real estate into two classes: (1) land or land exclusive of buildings and (2) buildings on land. It must set a different tax rate for each class, with the rate on land higher than the rate on buildings and other improvements.

ELIGIBILITY CRITERIA

The bill allows only one municipality to levy the land value tax. A municipality is eligible to levy this tax if it is a state-designated distressed municipality with up to 26,000 people and has a city manager and city council form of government. (New London is the only municipality that meets these criteria. )

APPLICATION PROCESS

A municipality must apply to the OPM secretary for approval to levy the land value tax. The secretary must specify the application procedure and any other criteria besides those the bill establishes. He may select an eligible municipality if its legislative body approved the application. If the application is in order, he must notify the municipality's chief executive officer about whether he approved it.

If the secretary approves the application, the municipality must adopt an ordinance implementing the land value tax within one year of the secretary's notice. It must send him a copy of the ordinance. The municipality must also send the secretary periodic reports about the program. The program expires five years after the municipality adopts the ordinance levying the tax.

COMMITTEE ACTION

Planning and Development Committee

Joint Favorable