Did Connecticut’s AG decide whether a marina was primarily rental property based on area or income?

Plain-English summary

In August 2000, Connecticut’s AG declined to answer how a local assessor should decide whether a commercial property was used “primarily” to produce rental income. The state budget secretary asked whether the test was more than half of the property’s area or more than half of its income, and, if income controlled, whether gross or net income mattered. A Groton marina assessment had already put those questions into pending Superior Court litigation.

The opinion explained why the classification mattered: for primarily rental commercial or industrial property, the assessment framework considered specified appraisal methods and allowed assessors to request rental income and expense information. The marina owner had refused the requested form, arguing that rentals accounted for less than half of total income. The AG did not endorse either side’s test. He noted the absence of legislative history and judicial decisions construing the phrase and suggested that the legislature could clarify it.

Assessors and property owners at the time

The opinion supplied no answer choosing area, gross income or net income as the measure. Its only disposition was to decline the legal opinion while litigation over the local assessment was pending.

Legislators at the time

The AG identified the undefined phrase as a possible subject for statutory clarification, without proposing a specific threshold.

Currency note

This opinion was issued in 2000. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the AG say a marina was rental property if more than half its area earned rent?
A: No. He declined the question because the Groton assessment was being litigated.

Q: Did the AG choose gross or net rental income as the test?
A: No. That conditional question also went unanswered.

Q: Why did the dispute matter for property tax records?
A: The opinion explained that the rental-property classification affected appraisal methods and the assessor’s request for rental income and expense information.

Background and statutory framework

The state budget secretary asked for an interpretation of “primarily” during an active local assessment dispute. The AG described the appraisal and disclosure statutes, then declined to resolve a question before the Superior Court. The page records that refusal rather than supplying a rule the opinion did not give.

Citations and references

Statute: Conn. Gen. Stat. §12-63c(a).

Source

• Landing page: https://portal.ct.gov/AG/Opinions
• Opinion page: https://portal.ct.gov/ag/opinions/2000-formal-opinions/marc-s-ryan-secretary-office-of-policy-and-management-2000026-formal-opinion-attorney-general-of-con

Original opinion text

Marc S. Ryan, Secretary, Office of Policy and Management, 2000-026 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

August 31, 2000

Marc S. Ryan, Secretary

Office of Policy and Management

450 Capitol Avenue

Hartford, CT 06106

Secretary Ryan:

You have written to this office seeking an interpretation of Conn. Gen. Stat. §12-63c(a), a statutory provision concerning the procedure local tax assessors are to employ in the valuation of commercial and industrial property used "primarily for purposes of producing rental income." Specifically, you ask whether the term "primarily" as used in this provision means "that more than 50% of the area of the structure is used for the purpose of producing rental income, or does 'primarily' mean that more than 50% of the income from the property is a result of rental income?" You posed a second question that stated: "If the second interpretation is correct, would gross or net income be used to determine the primary purpose?"

Each year, the local tax assessors must value commercial and industrial property at the ‘fair market value’. Conn. Gen. Stat. §12-63. As a guideline for determining fair market value for property used primarily for the purpose of producing rental income, the tax assessor must base his decision on an appraisal "which shall include to the extent applicable with respect to such property, consideration of each of the following methods of appraisal: (1) Replacement cost less depreciation, plus the market value of the land; (2) the gross income multiplier method as used for similar property and (3) capitalization of net income based on market rent for similar property". Conn. Gen. Stat. §12-63b. In 1984, the legislature provided tax assessors with the legal authority to demand that owners of property used primarily for purposes of producing rental income provide actual rental and rental-related income and operating expenses. Conn. Gen. Stat. §12-63c. This information is then used as an aid to calculate fair market value using one of the three criteria required under Conn. Gen. Stat. §12-63b.

According to the information supplied to this office, the Town of Groton valued and assessed a local marina as property used primarily for the purpose of producing rental income. The assessment was determined after the taxpayer did not return to the assessor the form described in §12-63c(a) that requires the taxpayer to provide the "best available information disclosing the actual rental and rental-related income and operating expenses applicable to such property". Without that information the assessor imposed an assessment on the basis of the area of the marina that produces rental income and concluded the property was used primarily for the purpose of producing rental income. The taxpayer refused to file the required form, claiming that the rental income from the marina was less than 50% of the total income received by the marina, including income from the sales of water craft and other merchandise. We also understand that the town attorney provided the Town with an opinion that was not favorable to the taxpayer and the Town tax assessor's determination has been appealed to the Superior Court.

While we sympathize with your desire to resolve this pending dispute, this case is a local issue that is the subject of ongoing litigation in the Superior Court. I must, therefore, decline to provide a legal opinion on this matter. I note, however, there is no legislative history and there are no judicial decisions interpreting the phrase “primarily for the purposes of producing rental income”. Perhaps, the legislature could clarify the application of this term in the next session.

Based upon the foregoing, I am sorry that I cannot provide you with the opinion that you have requested.

Very truly yours,

RICHARD BLUMENTHAL

ATTORNEY GENERAL