At a Board of Aldermen committee meeting last night, the Low Income, Supportive and Affordable Housing Tax Abatement Working Group (LISHTA) presented its final report and recommendations regarding low-income housing tax breaks.
The proposal comprises the city’s efforts to establish a comprehensive policy for affordable housing tax breaks, after concerns over the lack of a standard policy arose in 2011. The report defines how the Board of Aldermen will review abatement requests and the policy for new and existing abatements, which incentivizes property owners to develop low-income housing.
Challenges remain however in creating a fair tax structure model, said Ward 8 Alderman Michael Smart. As a result, the Joint Tax Abatement-Aldermanic Affairs Committee voted unanimously to hire a consulting firm to develop a model for the tax abatement structure.
“I think certainly they’re going to have to get some realistic calculations and a model that they can understand, that’s going to work for the city and the taxpayers,” said Ward 8 Alderman Michael Smart, the chair of LISHTA. “We don’t want to give out abatements that are going to be on the backs of tax payers, that they’re going to have to foot the bill for.”
In November 2011, Mayor John DeStefano Jr., called for a moratorium on granting tax abatement agreements for affordable housing due to budget constraints and a lack of consistent policy. The following month, The Board of Aldermen established LISHTA to research and develop a comprehensive and standard policy for affordable housing tax breaks.
“The goal was to create a standardized process where the board could review applications for abatement, and secondly create transparency and accountability, [and] third to try and quantify and standardize the benefits, all with goal of trying to ensure there’s sincere effort in place to pursuit and develop low affordable housing,” said LISHTA committe member Erik Johnson.
In the first part of its proposal, LISHTA recommended the establishment of a standard application for housing projects seeking tax breaks. The report states that no tax abatement requests are to be considered without an application.
Johnson said that this was in response to requests that there was not a uniform standard to apply, and to ensure that the Board of Aldermen and the general public understand what is required of developers.
What remained unclear, however, was the exact structure and model for both new and existing tax abatements. Concerns remain over the calculations of the tax policy, as well as how abatements will be applied to existing property owners without contracts and to new owners seeking tax abatements, said Joyner.
During the hearing, Joyner said that for some existing abatement agreements, tax rates would in fact drop, placing a greater burden on taxpayers themselves. The committee was unable to come up with a model that would mitigate these issues.
In response, Ward 4 Alderman Andrea Jackson Brooks put forward a motion to hire a consulting firm to find a way to resolve the problems that the committee raised. The consulting firm will work with LISHTA to calculate the benefits and costs of the city’s tax abatement policy, as well as formulate a clear model that suits the city’s goals, according to Smart. Both the committee and LISHTA hope to have a resolved policy by the end of the year.
“I think we’re 80 percent there, but that’s the most important component, really making sure,” Smart said. “It’s irresponsible to pass legislation you don’t understand. If you make a mistake and you pass something that’s not going to work, who’s going to pay?”
New Haven currently has 30 tax abatement requests that total losses of $4 million dollars a year in revenue, according to Smart.
LISHTA began researching in the Spring of 2012 and completed its findings in January of 2013.