FY'13 Outlook: Mill Rate To Soar, Property Values To Plummet

For many on the Town Council, it was news. Bad news. Really bad news.

The value of homes in East Haven will plunge as much as 20 percent. While it's unclear if that will translate into a beefier tax bill in FY'13, it's oh so clear, Town Assessor Michael Milici told the Council Wednesday night, the 26.84 mill rate will achieve new heights in FY'13.

That's what Milici said he's gathered from the ongoing 2011 revaluation, about 80 percent complete. The new values -- projected to reflect a loss of 18 percent to 20 percent -- will go into effect Oct. 1, 2011. Milici said the loss results from a declining real-estate market and most towns across the country are grappling with the same problem. (In East Haven, the fault also lies with some "political football" in 2004; more about that later.)

A $250,000 home would be worth roughly $200,000 come Oct. 1.

"It's really the worst of  both worlds," Milici said. "Essentially, your asset has decreased and your liability (taxes) may not. I'm just trying to be truthful. It's just an unfortunate byproduct of the economy we're in."

"There's a big elephant there," town Finance Director Tom Thompson said of the 20 percent drop. That equates to a loss of "several-hundred millions of dollars" on the town's grand list, which records all real and motor vehicle property values, he said.

Town Councilman Vincent Camera asked Milici if taxes will go down along with home values.

Milici said the mill rate will have to increase in order to meet spending, which doesn't mean a definite tax hike but a likely one for most property owners. It doesn't matter what real estate is worth, he said, the same number of tax dollars has to be raised in order to fund the yearly operating budget.

"I don't see anything changing from now to October that's going to drive these (values) up," he told the Council, which was holding a budget workshop. Milici's department was on the agenda.

Councilman Joe Santino later told Patch he was quite surprised to learn that property values were falling so hard.

"Nobody thought it was going to be 18 percent (lower). It's a lot," said Santino. "Everybody in this town works for their houses. With the economy the way it is, they're taking away the nest eggs of these people."

But Chair Jim Dougherty said the news wasn't so newsy to him.

"I am not surprised. I am not," he said. "Just knowing what the economic scenario has been over the last two and a half years, I'm not surprised."

Ready for some football?

The last revaluation was in 2006, when the real-estate market had peaked, Milici told Patch. Now the market is at the lowest it's been in at least eight years, he said. Waterbury firm eQuality Valuation Services is conducting the current reval, and also did the ones in '06 and in 2000. (The '00 and '11 revals included physical inspections of the interiors of properties along with sales and market analyses; the '06 assessment only entailed the analyses.)

Despite the lousy housing market which East Haven has no control over, Milici said if it wasn't for the Democrats in town, the current reval would have been conducted in 2009 before the market took a nosedive and home values would have remained fairly stable.

In 2004, the state-mandated scheduled revaluation was nearly finished when Milici said Democrats wanted it shelved and passed around a petition to support their position.

"I was two weeks away from filing the grand list and because it became a political football, the mayor at the time (Joe Maturo) said we won't implement it," the assessor said. "The issue was, Democrats said the values were too high and wanted to postpone it and (Maturo) went along with it."

Pressed for details on what the political motive was, Milici said he didn't know.

Meanwhile, the market kept climbing.

"I wasn't in favor of postponing it," Milici said, and eQuality had to be paid regardless. "I felt if we did it in two years (2006), the market would be higher and that's exactly what happened." And thus the dramatic loss in property values five years later after the near-crash of the market.

If the 2011 reval was conducted in 2009, as it would have been had the 2004 reval not been put away, "it would have benefited the taxpayers since property values would have increased" and the next revaluation wouldn't have been done until 2014, when perhaps the market would have been restored. So the currently projected 20 percent drop would have been avoided, Milici said, and the mill rate would have been stable.

If property owners disagree with their new assessments they can appeal them to eQuality and, if still unsatisfied, to the Board of Assessment Appeals, which meets once in September and three times in March.