Low and Moderate Income Property Tax Valuation Remains Challenging
Property Tax

A recent decision by the Appeals Court of Massachusetts* about the entitlement of two nonprofit corporations which rent apartments at below- market rates to low-income elderly individuals and individuals with disabilities prompts your writers to visit the issue in Connecticut.

There are literally hundreds of nonprofits in Connecticut that own thousands of apartment units dedicated to occupancy by the demographic referred to above.  In many or most cases, the residents receive rental subsidies from the federal government; property owners also receive housing assistance payments from the Department of Housing and Urban Development.

Massachusetts courts have ruled for over 100 years that merely providing housing for low-income persons, while a charitable activity, does not entitle a charitable landlord to a local property tax exemption.  In order to achieve the Massachusetts exemption, property owners must assist residents with their daily living and/or medical needs or provide some other additional services and assistance.

In contrast, Connecticut has dealt with the issue legislatively.  In 1967, the General Assembly enacted a prohibition against granting property tax exemptions to charitable housing corporations.  It is believed the primary motivation to pass such legislation was the impact such exemptions would have had on municipalities’ exchequers.

A question not yet resolved by any Connecticut appellate court is how to value properties for ad valorem purposes used to house low and moderate- income persons.  Should the property be assessed as if it were market rate housing, ignoring the various income restrictions, government subsidies and financing benefits obtained by the charitable owners, or should a tailormade formula be employed?

While there have been several trial court decisions on the topic, neither the Connecticut Appellate Court nor the Supreme Court has addressed this issue.  As a result, property owners and municipalities have been left to resolve valuation disputes between themselves informally or to litigate in the hope of obtaining clear directives from the judicial system.

Please contact Laura Cardillo or Elliott Pollack should you have any questions. 

* The case discussed above is Unquity House Corporation v. Board of Assessor of Milton, Appeals Court of Massachusetts, Feb. 2, 2023 (2023 WL 1456725).

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