St. Luke's Senior Housing, Inc. v. City of New Haven (2010)

MEMORANDUM OF DECISION

STATEMENT OF THE CASE

The plaintiff owns property known as 120 Goffe Street in New Haven and operates it for low income elderly tenants.

The defendant's assessor assessed this property at $1,595,500, utilizing the cost approach appraisal method.   The plaintiff argues that the assessment was illegal and violated § 12-216a which it claims requires that low income housing projects be assessed using the income capitalization approach.

The City has enacted an ordinance, § 28-4(a), which defined “low and moderate income housing” and allows such housing projects to enter into tax abatement contracts with the defendant.   Authority for such ordinances is based on § 8-215 of the C.G.S.

Though styled originally as an appeal from the over assessment of real property under § 12-117a, the plaintiff has moved to file an amended pleading.   This has resulted in the defendant filing a motion to dismiss pursuant to § 15-8 of the Practice Book.

The Motion To Dismiss

If for no other reason, this motion must be denied as it would render useless the time and effort already employed by the parties and the court since the plaintiff could re-institute the appeal process.   Serious legal issues have been presented to the court and their resolution, even if appealed, would move this issue toward finality.

The plaintiff has also made out a cogent claim in support of its view that the method of assessment utilized was improper.   Only after succeeding on that question would it be logical for the plaintiff to present its evaluation and the basis for it.   The defendant would have the plaintiff present its evaluation without knowing if the income capitalization method was proper.

The Motion to Amend

Prior pleadings put the defendant on notice of the true nature of its claim.   Permitting the amendment would tighten up the pleadings and compliably frame the issues.   The court sees no delay, unfairness to the defendant nor negligence by the plaintiff to warrant denying this motion.   The motion to amend is granted.

Discussion

At trial, the court heard from the parties as to the general statutes which combine to deal with “low or moderate income persons” and the properties which house them.   The preferential treatment accorded them renders it feasible for municipalities to accommodate them.  Sections, 8-215, 8-216, and 8-216a, were discussed at some length and the court had questions about their interaction with § 28-4(a), the city ordinance.

The court concludes that the defendant's failure to assess this property utilizing the income capitalization method violates Section 8-216a.

That Section provides in relevant part that “the present true and actual value of the real property classified as property used for housing solely for low or moderate-income persons or families pursuant to [General Statutes § ]8-215 ․ shall be based upon and shall not exceed the capitalized value of the net rental income of the housing project.”   This language only refers to how a property is classified.   This language does not refer to whether a property has received an abatement pursuant to § 8-215.  Section 8-215 in turn permits a municipality to perform two actions:  1) to provide by ordinance a partial or whole real property tax abatement to an owner of property used solely for low or moderate-income housing and 2) to classify by ordinance such property as property used solely for low- or moderate-income housing.   New Haven Ordinance § 28-4, entitled “Tax abatement on low and moderate income housing,” first defines “low and moderate income housing” in one section and then describes how the city and an owner of a qualifying property may enter into a contract for an abatement in another section.

Section 215 and Ordinance Section 28-4 would appear to treat the classification process and the abatement application process as separate and independent.   The plaintiff is not required to receive an abatement in order to receive classification as “a provider of low or moderate-income housing” under Section 28-4 and Section 215.

In the course of argument and in part due to a question by the court, the defendant argued that the plaintiff must be classified as a low or moderate income housing provider pursuant to an ordinance such as 28-4.   The definition in 215 reads:

Any municipality ․ may by ordinance classify the property on which ․ housing is situated as property used for housing solely for low or moderate-income persons or families.

Though the defendant appears to have adopted such a policy, the language of Section 215 does not require a separate ordinance that exists for the classifying of projects as providers of low or moderate income housing.

There were four cases cited by the parties.   The defendant notes that these cases may be distinguished from this case because in each instance the parties agreed that the income capitalization method was proper.

However, the plaintiff points out that this did not influence the court's determination that Section 8-216 requires the income capitalization method.

The following excerpts are significant:  Scott Garlens v. City of Waterbury, 1991 WL 42144) (Superior Court), page 1:

The parties acknowledge that the fair market value of these properties is determined by the capitalization or net income approach, as mandated by § 8-216a of the Connecticut General Statutes.

Grace Congregate Housing Corp. v. City of Waterbury, 2004 WL 1789515 (Conn.Super.) [37 Conn. L. Rptr. 144], Page 2:

Connecticut Statute 8-216A regulates how federally sponsored, subsidized, housing is to be evaluated for tax assessment purposes.   Under these regulations the Income Approach is require, taking into consideration the rental rates allowed under the sponsoring program.

Saranor Apartments L.P. v. City of Milford, 2005 WL 1090600 (Conn.Super.) [39 Conn. L. Rptr. 144], page 2:

“Both appraisers appropriately relied entirely on the income capitalization approach to valuation.   They did so both because of the inapplicability of the other two approaches approaches (costs and comparable sales), and the effect of General Statutes Section 8-216a, which provides in pertinent part as follows:”

Execution Square L.P. v. Town of Wethersfield, 2006 WL 240417 [40 Conn. L. Rptr. 548] (Conn.Super), page 4:

“When looking at the valuation of property, it is clear that § 8-216a trumps §§ 12-63 and 12-63b(a) with respect to the consideration of market rent and contract rent in determining fair market value.

Clearly, a plain reading of key language in § 8-216a such as “to the contrary notwithstanding,” “shall” and “shall not” shows a clear legislative intent to exclude any other method of valuation for low and moderate income rental housing for the elderly.”

CONCLUSION

Addressing the questions raised by the plaintiff, the court responds as follows:

1. Section 8-216a applies to the subject property as one which has not been granted a discretionary tax abatement under Section 8-215.

2. The defendant violated Section 8-216a by failing to use the income capitalization method.

II

This matter having proceeded in a bifurcated manner, and each side seeking summary judgment, such judgment may enter for the plaintiff with further proceedings ordered to determine the proper assessment.

Anthony V. Demayo, J.T.R.

DeMayo, Anthony V., J.T.R.