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Landlords Oppose Licensing Ordinance In New Britain Connecticut, Fight Back With Lawsuit!
Attempting to fill a budget shortfall, the New Britain Common Council passed a controversial ordinance charging rental property owners a license fee of $150 per unit, per year. Members voted for the new fees despite record opposition to the policy.
These comments were made as a result of the New Britain Common Council voting 11 to 4 to pass O'Brien's controversial housing ordinance requiring landlords in his city to obtain a license to own their rental property. The new licensing ordinance requires non-owner occupied rental property owners to pay an annual fee of $150 for every apartment unit they own to the city.
DeCosmo warned; "All New Britain residents will be negatively impacted by this ordinance as it almost forces landlords to increase rents to offset the new cost. If a landlord does not choose pass the fee onto their renters, the landlord's property value decreases. In fact, the licensing fee decreases a multi-family property value by a negative factor of 10 to 1 in a benefit analysis when a 7 percent capitalization rate is used for valuation purposes.”
The income approach to value, an appraisal technique most often used to value rental property indicates values will decrease by $1,500 per unit as a result of the $150 annual fee at a 7-cap rate. Lowering property values on the rental property sector creates a huge loss to the city’s grand list. That loss must compensated for and it must be shifted to the single family homeowners; ultimately the shift will raise property taxes on every New Britain single family homeowner.
"This ordinance is truly causing a large ripple effect that the Council members simply didn't think through.” According to DeCosmo; “If the fee doesn’t get you, the fine will kill you!” The ordinance has a penalty clause allowing the city to fine each landlord $250 per unit, per day for failure to pay the annual $150 fee. If the owner can't pay the fee, after just 60 days, the ordinance creates a Super Lien on the land records and allows the city to foreclose out both the owners interest in the property as well as the banks mortgage.
DeCosmo said; “The fine and superior lien the ordinance allows is the classic text book definition of a Government Takings Action and tantamount to inverse condemnation. I was surprised the New Britain Corporation Council’s office left this language in the ordinance. We feel the ordinance is very poorly constructed and they will loose the lawsuit on the penalty grounds alone”
The CT Property Owners Alliance is a statewide trade association for property owners and was the initial group spearheading opposition to the new ordinance and fee. Several others groups have since joined in the efforts to repeal the ordinance and a coalition in opposition to the license fee has developed; most notably is the CT Association of REALTORS to recently vote to oppose the policy.
On November 13, 2012, the CT Property Owners Alliance along with four larger landlords filed for an injunction in New Britain Superior Court to stop the measure from going into effect, an initial hearing date is December 3, 2012.
The injunction is the first legal action the CTPOA has taken but other lawsuits, including an Interstate Commerce Action and a constitutional challenge in Federal Court may be filed if negotiations fail. Both sides appear willing to discuss their differences and seek common ground to resolve the matter.
The CT Property Owners Alliance has put up a special website; www.savenewbritain.com (http://www.savenewbritain.com/