HARTFORD, CT — Every four years since 1965, nonprofits have been required to remind municipal tax assessors why they should be exempt from property taxes. But according to a member survey conducted by the Connecticut Community Nonprofit Alliance, municipalities have been denying those tax exemptions on an increasing basis.
About two thirds of the 35 nonprofits responding to the survey said their properties – which had a history of being tax exempt and had no changes of use – were suddenly being denied tax exemptions in 41 towns.
“Why suddenly are assessors looking at nonprofits as a source of revenue?” asks Gian-Carl Casa, the Alliance’s executive director.
Casa said he believes that as municipalities have been losing state aid, they have been looking to make up that revenue by bringing more property onto the tax rolls. The property tax, Casa said, is the only revenue source they control.
Barry Simon, president and CEO of Oakhill, said the process has been “fairly arbitrary.” Oakhill is a nonprofit organization that offers a full range of services to developmentally disabled people at 152 properties in about a half dozen towns.
Simon said they’ve had their lawyer file appeals in some of the cases, but the tax assessor — who makes the final decision according to statute — says they decided to eliminate the exemption because “you have a lot of money.”
Simon says it might look that way on paper, but all the money is spent on services to their clients.
He said the tax assessor might be able to eliminate the tax exemption and get an additional $5,000 to $7,000 a year from the property. He said it’s not exactly cost effective for his organization to fight each one in court because the cost of an appeal runs upward of $25,000. But a new tax bill would be a recurring hit to the organization.
“I believe it’s because town budgets are under strain,” Simon said. “Towns have ability to raise mill rate, they just don’t want to.”
He said the state’s decision to cut municipal aid has forced them to look at nonprofits as taxable when they are doing the same job as government in serving disadvantaged populations.
Casa called the policy “misguided.”
“Both serve the public,” Casa said. “The reason nonprofits get tax exemptions is because they provide services to public without pursuing a profit.”
Chandler Rose, president of the Connecticut Association of Assessing Officers, said tax assessors are simply following the law when they look at these properties.
Rose also serves as the tax assessor in Windham and Chaplin. He said the information that the nonprofit coalition is presenting is anecdotal. He said suggested that there’s no database of information to show an increase in the number of denials and there’s been no change in the law to show that somehow tax assessors are changing how nonprofit property is viewed.
Cromwell Tax Assessor Shawna Baron said some of the nonprofit organizations “don’t know why they are exempt.”
She said the law is clear that it needs to be used exclusively for the stated nonprofit purpose in order to continue to receive the exemption.
Baron, who will be replacing Rose as president of the Connecticut Association of Assessing Officers in the fall, said some of the exemptions — like the one for group homes — are a little “gray” and it would be nice if it were clearer, but “assessors don’t generate legislation.”
Dan Osborne, president and CEO of Gilead Community Services, said his nonprofit filed an appeal of Baron’s decision to put one of their mental health group homes on the tax rolls.
“We haven’t changed the use of property,” Osborne said.
The lawsuit says the assessor denied the tax exemption in January without explanation. Gilead appealed it to the board and were denied again in March. They filed the lawsuit at the end of May and a hearing in the case has been scheduled for October.
The dispute in that case may come down to the definition of “temporary housing.”
Rose said there’s also some gray areas in the law when it comes to solar panels. Some towns are taxing them, while others are not.
However, he said the law is clear when it comes to the use of certain properties and if that use has changed then its tax exemption might change, too.
Wendy Bury, executive director of a new nonprofit organization in Norwich called the Southeastern Connecticut Cultural Coalition, said there’s wide variation in how tax assessors are communicating with nonprofit organizations.
In Norwich, 36 nonprofits were denied tax exemptions. Of those, an estimated 18 had failed to submit the form and as a result were automatically denied.
The General Assembly passed legislation on the final night of session May 9 that gave the 18 Norwich-based organizations a chance to apply for the tax exemption, even though the original deadline had passed.
Bury said “we were completely unprepared, confused” by the assessment paperwork.
She said they have since opened lines of communication between the Norwich assessor and the nonprofit community.
Casa said they will be approaching the General Assembly next year to see if they can’t get a clearer definition of what constitutes a charity, which would exempt nonprofits from property taxes.
Editor’s note: The original version of this story said 44 towns had denied exemptions when it was 41 towns.