New construction beefed up the town’s tax base last year, pushing Ridgefield’s grand list of taxable property over $4.7 billion — an increase of more than $81 million, or close to 1.8%.
The growth should provide close to $2 million in added revenue to support town and school operations in next year’s 2014-15 budget, which town officials are now putting together.
Boehringer Ingelheim’s ongoing expansion is responsible for nearly half of the $81-million increase — 45%, according to Assessor Al Garzi.
Boehringer’s expansion will eventually be worth in the vicinity of $500 million, according to town officials, with $380 million of construction in Ridgefield and $120 million in Danbury.
Disappearing dollars
A substantial portion of the $2 million in new tax income anticipated next year is expected drop off the town’s books in 2015-16, the fiscal year after next, as a result of tax abatements the town granted to encourage Boehringer’s expansion.
Buildings under construction are taxed at increasing value as they’re being built, but when they’re complete the abatements kick in, reducing the tax income from newly completed projects by 85% for seven years. After seven year they go from 15% to full value on the tax list.
“The 1.7% is certainly welcome news,” First Selectman Rudy Marconi said. “However, we must keep in mind that this is somewhat of a false economy.
“The reason for the sharp increase is due to Boehringer Ingelheim’s expansion. However, once the construction project is brought to full value, Boehringer then, per our agreement, applies for an abatement that reduces the assessment to 15% of the value,” Mr. Marconi said. “This value stays in place for a period of seven years. Then it comes back to 100% of assessed value.
“We’re in the first year of a large increase,” Mr. Marconi said. “Next year, when the abatements become effective, those additional dollars will disappear. So we need to keep that in mind.”
The abatement agreement was reached several years ago when Boehringer was considering whether to expand here, or elsewhere, and was approved by voters at town meeting.
Making the list
The exact total for the newly completed October 2013 grand list is $4,700,421,763, according to Mr. Garzi.
“This is an increase of $81,540,462 in assessed value over the previous grand list,” Mr. Garzi said.
The higher assessed value will produce an increase in revenue of $2,069,497, he said.
He calculates the annual growth as an increase of 1.7653% — close to 1.77% or 1.8%.
Real estate
The town’s revenue comes from property taxes. There are three types of property that the town assesses for tax purposes: real estate, motor vehicles, and business equipment — with the business equipment listed under a category called “personal property.”
Real estate makes up the vast majority of the town’s tax base, totaling more than $4.3 billion of the new $4.7-billion grand list.
Increased value of real estate in town made up $78 million of the grand list’s $81-million increase.
The town’s 10,018 real estate accounts are now worth $4,356,015,226, according to Mr. Garzi, up by $78,071,586.
The assessed values that make up the grand list represent 70% of market values as of Oct. 1, 2012. So the $78 million in growth to the real estate portion of the list actually represents “roughly $111 million” worth of new development” at full market value, Mr. Garzi said.
In addition to Boehringer Ingelheim’s major expansion, the increasing value of assessed real estate was “fueled by small multi-family and commercial developments,” Mr. Garzi said, as well as “a large number” of remodeling projects and new additions to existing residences and “a small number of new houses built around town.”
Vehicles and property
There are 21,377 motor vehicles taxed in Ridgefield, representing $241,930,290 on the grand list — an increase of $3,940,746, according to Mr. Garzi.
The “personal property” portion of the grand list is made up of business equipment, furnishings and fixtures — machines, computers, desks and chairs, restaurants’ stoves, shelving in stores.
The total value of personal property in the October 2013 grand list is $102,386,247, according to Mr. Garzi.
Under the state’s tax regulations, business equipment is depreciated 10% a year for seven years, then continues to be taxed at 30% of its initial value.
Last year the added value of newly purchased business equipment didn’t quite keep pace with the depreciation of equipment already here. So the $102 million in business equipment on the grand list is actually a decrease of $471,870 from the previous year’s personal property total.
“We have to grow 10% to break even,” Mr. Garzi said. “There was definitely growth in it, and it was pretty close to the 10%.”
The town’s projected income from business equipment is also hurt by a change in state law. The state has ended reimbursements the town used to receive from the lost tax value of manufacturing equipment which the state exempts from property taxes as a means of encouraging businesses to expand in or relocate to Connecticut.
“New business equipment purchased for use in manufacturing, that was previously exempt and reimbursed by the state of Connecticut, is now completely exempt and not reimbursed,” Mr. Garzi said.
Exemptions
There are 711 tax-exempt properties in town. This includes town and state property, and also property of educational, religious and cultural institutions that is used for tax-exempt purposes.
The value of properties exempted from the 2013 grand list is $482,514,640. If they could be taxed, the town’s annual revenue from these would be $12,246,000, according to Mr. Garzi.
There are other properties that are on the grand list but at a reduced value due to various tax breaks for categories like farm land or antique cars, or because they’re owned by a veteran, a senior citizen, or a volunteer firefighter — there are 18 in all, according to Mr. Garzi.
The assessor said that just for the five different state and town programs that apply to veterans, the tax reductions total $1,529,179, lowering revenue to the town by $38,810.