Governor Lamont’s Executive Order 7S issued on April 1, 2020 contains a number of provisions that may have a significant effect on municipalities and taxpayers alike. Several of these pertain to property tax deadlines and collection. Others make modifications to the appropriations and borrowing processes for some municipalities. Finally, there are some other provisions which address various assessment and revaluation requirements. As is the case with many of the previous executive orders, there are some ambiguities in terms of how they apply to particular circumstances and municipalities, as well as areas in which clarification would be helpful.
Suspension and Modification of Tax Deadlines and Collection Efforts
Section 6 of Executive Order 7S creates two programs designed to provide relief to affected taxpayers – a deferment program and a low interest rate program. As drafted, EO 7S requires municipalities to participate in one or both of these programs and to notify the Secretary of the Office of Policy and Management prior to April 25, 2020 which program or programs it elects to participate in. The determination of which program or programs will apply in a municipality is made by the legislative body or, if the legislative body is the town meeting, by the Board of Selectmen. Note that, as currently written, these programs are only available to cities, towns and boroughs, but not to other taxing entities such as fire districts, special services districts, etc. It is anticipated that a future order or clarification will extend these programs to those taxing entities as well.
· Deferment Program
This program allows eligible taxpayers to have a deferment of ninety (90) days of any real estate taxes, personal property or motor vehicle taxes, or municipal water, sewer, electric rates, charges or assessments. The deferment begins on the date on which such tax or charge becomes due and payable. It applies to any tax or charge that becomes due and payable between March 10, 2020 and July 1, 2020. This program would also apply to the July 1, 2020 tax bills issued on the grand list of October 1, 2019.
Eligibility for such a deferment is limited to taxpayers, businesses, nonprofits or residents that attest to or document significant economic impact from COVID-19, and/or those that document that they are providing relief to those significantly affected by the COVID-19 pandemic. OPM is to issue guidance as to which taxpayers are considered eligible, but a municipality’s legislative body may vote to extend or broaden eligibility for the deferment program beyond what OPM advises. It is anticipated that OPM will issue the appropriate guidance shortly.
In order for a landlord, or any taxpayer that rents or leases to commercial, residential, or institutional tenant or lessee, to be eligible for the deferment program, that landlord would have to provide documentation to the municipality indicating that the property has or will suffer a significant income decline or that similar deferments or forbearance have been offered to tenants or lessees.
· Low Interest Rate Program
This program provides that the interest rate on delinquent payments of the principal of any real estate taxes, personal property or motor vehicle taxes, or municipal water, sewer, electric rates, charges or assessments shall be three percent (3%) per annum, instead of the existing rate which is generally eighteen percent (18%), for a period of ninety (90) days from the time such tax or charge becomes due and payable. It applies to any tax or charge that becomes due and payable between March 10, 2020 and July 1, 2020. There are no eligibility criteria for this program and it applies to all taxpayers.
Following the expiration of the ninety (90) day period, the ordinary delinquency interest rates and penalties would once again be applicable. Any tax or charge that was already delinquent prior to March 10 shall be subject to the lower interest rate for a period of ninety (90) days, after which the ordinary delinquency interest rates and penalties would once again apply.
In order for a landlord, or any taxpayer that rents or leases to commercial, residential, or institutional tenant or lessee, to be eligible for the low interest program, that landlord would have to provide documentation to the municipality indicating that similar deferments or forbearance has been offered to tenants or lessees upon their request.
· Escrow Payments
Financial institutions and mortgage servicers holding property tax escrows on behalf of borrowers shall be required to continue to make property tax payments to the municipality as long as the borrower is either current on their mortgage or is in a forbearance or deferment program with the mortgage lender. This requirement is effective regardless of whether the property owner is eligible for or participating in either the deferment program or the low interest rate program established under EO 7S.
· Validity of Tax Liens
Any tax liens which have been or will be filed, recorded, continued or released shall remain valid, as such tax obligations may be affected by EO 7S.
· Non-Judicial Tax Sales
Section 11 of EO 7S prohibits a municipality or other entity from conducting a tax sale until at least thirty (30) days after the end of the declaration of emergency. Tax sales for which notices had been filed prior to March 10, 2020 are to be adjourned by the tax collector to a date to be determined by the tax collector. The adjournment shall be to a date no earlier than thirty (30) days after the end of the declaration of emergency. If a tax sale had been conducted prior to March 10, 2020, the six month redemption period is extended by the number of days during which the public health emergency exists. Redemption interest during the pendency of the public health emergency shall accrue at three percent (3%) per annum.
Suspension of In-Person Voting Requirements for Critical and Time-Sensitive Municipal Financial Deadlines
Section 7 of Executive Order 7S allows certain municipal financial actions to be taken without complying with any town meeting or referendum requirements that may be imposed by statute, charter, ordinance or otherwise. As with the previous executive orders addressing the budget adoption process, the intent is to eliminate the need for large numbers of individuals to gather in order to satisfy those town meeting or referendum requirements.
· Supplemental, Special or Additional Appropriations in Amounts Less than 1% of the Current Municipal Budget
EO 7S permits the legislative body of the municipality or, if the legislative body is the town meeting, the Board of Selectmen, together with the budget-making authority of the municipality, by a majority vote of each such body, to authorize any supplemental, special or additional appropriation in an amount less than one percent (1%) of the current year’s total municipal budget under CGS 7-348 or any comparable provisions of any special act, charter or ordinance without a town meeting or referendum if one or both of those would otherwise be required. All otherwise necessary conditions precedent to any such appropriation would still have to be satisfied and any meetings at which these actions are to be taken would be required to comply with the open meeting requirements set forth in Executive Order 7B.
· Issuance of Tax Anticipation Notes, Bonds, Notes Issued in Anticipation of Bonding and Supplemental, Special or Additional Appropriations in Amounts in Excess of 1% of the Current Municipal Budget
EO 7S permits the legislative body of the municipality or, if the legislative body is the town meeting, the Board of Selectmen, together with the budget-making authority of the municipality, by a majority vote of each such body, to authorize (i) any supplemental, special or additional appropriation in an amount in excess of one percent (1%) of the current year’s total municipal budget under CGS 7-348 or any comparable provisions of any special act, charter or ordinance, (ii) issuance of tax anticipation notes, or (iii) issuance of municipal general obligation bonds or notes to be issued in anticipation of such bonds without a town meeting or referendum if one or both of those would otherwise be required.
For these actions, additional conditions must be satisfied. Both the legislative body (or Board of Selectmen) and the budget-making authority (if different), must make specific findings that such actions are necessary to permit the orderly operation of the municipality and that there is a need to act immediately and during the duration of the public health and civil preparedness emergency in order to avoid endangering public health and welfare, prevent significant financial loss, or that such action is otherwise necessary for the protection of persons and property within the municipality.
All otherwise necessary conditions precedent to any such appropriation would still have to be satisfied and any meetings at which these actions are to be taken would be required to comply with the open meeting requirements set forth in Executive Order 7B.
· Safe Harbor Provision for Conducting In-Person Meeting, Approval Process or Referendum
Unlike previous executive orders, EO 7S specifically provides that “[n]othing in this order shall be constructed to prohibit a municipality from conducting any in-person meeting, approval process or referendum, provided such municipality first consults with local or state public health officials and conducts such meeting, approval process or referendum in a way that significantly reduces the risk of transmission of COVID-19.” This may be seen as an implicit ratification of such procedures as the drive-through town meeting conducted recently in one town to authorize a special appropriation.
It does not appear that this provision applies to the budget adoption process since that subject was covered in Executive Orders 7C and 7I, although there may be clarification of this point in the near future.
Tax Assessment Provisions
· Elderly/Disabled Circuit Breaker Tax Relief and Elderly/Disabled Freeze Tax Relief Programs
Section 8 of Executive Order 7S suspends the requirement of recertification for Grand List Year 2019 for those taxpayers who were granted the benefit for Grand List Year 2017. They automatically retain the benefit until the cycle ending in Grand List Year 2021.
· Full Inspection Requirements for October 1, 2020 Grand List Revaluations
Section 9 of Executive Order 7S suspends the requirement of full interior inspections of properties in conjunction with the October 1, 2020 revaluations. A questionnaire to the owner in accordance with CGS 12-62(b)(4) can be used instead.
· Deadline for Filing Income and Expense Statements
The filing deadline for income and expense statements under CGS 12-63c is extended from June 1, 2020 to August 15, 2020.
For more information or if you have any specific questions, please contact us.
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