🔒How much Hartford real estate is tax exempt? The percentage is higher than you think

Of the $7.1 billion of assessed real estate within the city of Hartford’s tightly confined borders, 59 percent of it is untaxed because its owners are nonprofits or other tax-exempt entities, according to a Hartford Business Journal data analysis of the city’s 2018 grand list.

It’s an issue city officials have long decried as a significant contributor to Hartford’s financial woes, limiting the property base from which it can extract tax revenues.

For the total grand list, when factoring in commercial personal-property and motor vehicles, the tax-exempt ratio lowers to 51 percent.

Of the approximately $4.2 billion in tax-exempt real estate on Hartford’s 2018 grand list, the city owns nearly 26 percent of it, including hundreds of parcels with a combined assessed value of just over $1 billion, HBJ’s analysis found.

That tally includes only city-owned real estate — schools, parks, firehouses, public-safety and public-works complexes, city hall, plus sundry residential and commercial parcels seized in lieu of back taxes.

Besides the city, the state is a major owner of tax-exempt property in Hartford. It owns more than 100 parcels with a combined assessed value of over $820 million, including state and judicial offices, the governor’s mansion and state Capitol.

Since 2013, the state has increased its Hartford office footprint by 26 percent, adding 1.6 million gross square feet of space, mainly through its acquisition of two major downtown office towers — 55 Farmington Ave. and 450 Columbus Blvd., according to the state Office of Policy and Management.

It bought those buildings as part of a strategy to consolidate some of its leased holdings.

Combined, the city and state own nearly 50 percent of the tax-exempt real estate in the city (by assessed value not number of parcels).

Hospitals and colleges also own hundreds of millions of dollars in tax-exempt properties, while the federal government, churches and charitable organizations are also major tax-exempt property owners, HBJ’s analysis found.

Lost opportunity

The amount of potential revenue the city cedes to tax-exempt properties is significant.

For example, if all tax-exempt real estate suddenly became taxable, Hartford would reap, based on the city’s current 74.29 mill rate, at least an extra $300 million in annual tax revenues.

If you exclude city- and state-owned property from that calculation, Hartford would still raise an additional $168 million in revenues from colleges, hospitals, churches and other tax-exempt organizations.

By comparison, the city’s current-year budget is about $570 million. An expanded tax base would give the city a chance to lower its mill rate.

State government reimburses the city for some of its tax-exempt property, but it doesn’t come close to filling the revenue gap.

According to the Office of Policy and Management, the city draws annually from the state more than $30 million in payments in lieu of taxes, or PILOT, to help offset lost tax revenues from tax-exempt properties.

However, for most of this century, Connecticut — as it’s dealt with its own budget issues — has been severely underfunding the amount it owes Hartford (and other municipalities) under its PILOT funding formula.

Statutorily, the state is supposed to reimburse municipalities 45 percent of lost tax revenue for state-owned property and 77 percent of lost tax revenue for hospitals and colleges.

The city estimates it has been shorted $376 million from the state’s PILOT program since fiscal 2011.

Return to HBJ’s special series examining Hartford’s high and inequitable tax structure