Businessman pushing to change state law

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PROSPECT — A Prospect businessman has taken his issues with a state law governing methods to assess rental properties to the legislature in hopes of getting the law changed.

James DeCosta has owned Forklift Service & Sales in the industrial park for about 25 years. About 10 years ago, DeCosta built a commercial warehouse on the property with four bays to rent out.

Although DeCosta has been renting out his building for years, he said last May was the first time he received an annual income and expense report summary from the town to fill out for the rental property.

DeCosta didn’t know what the form — which seeks detailed information to determine the rental income on a property to be used for assessment — was at first and gave it to his long-time accountant, William Kadish.

Kadish said he has other clients with rental properties, and in all his years of being an accountant he hadn’t seen the form before.

“Jim felt, and I agree with him, it was invasive,” Kadish said.

State law defines three methods for assessing properties that are primarily used to generate rental income, explained Assessor James Clynes. The income approach, as it’s referred to, uses the capitalization of net income based on market rent for similar properties. It requires property owners to submit information on their rental income.

The cost approach uses the replacement cost of a building minus depreciation plus the market value of the land. The market approach uses sales comparisons of comparable property.

Clynes said when dealing with rental properties like the one DeCosta owns, the income method is the best one to determine a fair assessment. He said there aren’t a lot of comparable sales of similar buildings in town, and the cost approach is hard to judge because of depreciation.

DeCosta and Kadish said they met with town officials and talked with other rental property owners after receiving the form. They said the response they got from property owners was mixed, with some saying they’ve been filling out the form for years, others weren’t sure what they were talking about or ignored the form.

Ultimately, DeCosta submitted the form. He said one of his concerns is that the building’s assessment, and his taxes, will now jump.

Clynes, who became the town’s assessor in 2012, said that wouldn’t be the case. He said he uses the information to follow trends between property revaluations and to keep people in the habit of submitting the forms, though some municipalities may handle it differently. He said property assessments in town won’t change until the next revaluation in 2020, unless there is a change to a building, like an addition.

While DeCosta is concerned about taxes, he has taken a broader view on the matter, arguing that the income approach method is a roundabout way for the town to charge an income tax because the assessment is based on income generated.

“It should be my business if I get a million dollars a month or a hundred dollars a month, the building is still the building,” he said.

DeCosta, who also lives in town, said he wouldn’t be happy if the town raised the mil rate one mil, but it would be a level playing field.

“I don’t mind paying a fair tax, but they’re not giving a fair tax,” he said.

DeCosta and Kadish took their concerns to state Rep. Lezlye Zupkus, R-89th District.

Zupkus said she’s heard about the issue from a few people in town and in other areas of the state. She said she brought a concept up before the Planning and Development Committee to look at possibly changing the income approach in the law.

“We suggested to remove it, but we’ll see what happens,” Zupkus said.

Zupkus said the committee is interested in the idea and she was told the matter will go to a public hearing. She said there isn’t a date set yet for the hearing, but it could possibly be next week.

Zupkus called Connecticut the most unfriendly business state in the country, adding if there’s something that can be done to help businesses, the state should do it.

DeCosta and Kadish are trying to drum up support for changing the law. Kadish said it could be an uphill battle but could be done if enough people speak up.

“Just because it’s the law doesn’t meant it’s a fair law,” Kadish said.