PROVINCETOWN — At its annual tax classification hearing on Aug. 25, the select board discussed whether to increase the town’s residential tax exemption (RTE), which allows resident homeowners to exempt some of the assessed value of their homes from property taxes.
For the last two years, the exemption has been set at 35 percent of the value of the average residential property in town, which had been the maximum under state law. The Affordable Homes Act of 2024, however, created a seasonal communities designation that gives new legal tools to vacation communities on the Cape and Islands and in the Berkshires — including the right to raise the RTE to 50 percent of the average residential value.
After hearing public comments for and against an increase, select board member Austin Miller said he wanted the board to raise the exemption to 50 percent either immediately or over the course of two or three years.
Board members Leslie Sandberg and Erik Borg and chair David Abramson said they didn’t feel the time was right for a change, however, and the board ultimately voted 3 to 1 to keep the exemption at 35 percent for fiscal 2026.
Vice chair John Golden was absent from the meeting.
Public Comments
At the opening of the tax hearing, Jay Coburn, CEO of the Community Development Partnership and a Provincetown resident, spoke for an increase in the RTE percentage, while three officers of the Provincetown Part-Time Resident Taxpayers Association (PPRTA) spoke against it.
“Property taxes in Provincetown are generally cheap,” said Coburn. “Ask any second-home owner what they pay here in Provincetown versus what they pay in suburban Boston, Connecticut, New Jersey, or New York — this is a deal.
“The goal here is to incentivize year-round living in the community,” Coburn said. While some town residents struggle to make ends meet and others do not, he said, all of them are “spending money here year-round and contributing to the vibrancy of the community, and I see no negative impact of providing them with more resources to continue to invest in our community.”
PPRTA vice president Kevin Cronin told the board he owns two properties in Provincetown and lives in Atlanta and that he was glad to take the RTE on the property he rents to year-round residents through the Lease to Locals incentive program. Cronin also said the town should “means-test” its RTE to avoid “handing out across-the-board subsidies to the most affluent.”
“We all know that many year-round homeowners in town have substantial assets or incomes,” Cronin said. “They simply don’t need this kind of tax relief. A means test can demonstrate fairness.”
Pat Miller, president of the PPRTA, said that “the assessor’s average assessed value of homes is a little over $1.1 million. We would ask for any home above the assessor’s average to not qualify for the RTE.”
That would correct an “unintended consequence” of the RTE policy, Pat Miller said, in which “homes worth two, three, four, or five million that probably don’t need help with their property taxes” benefit from residential exemptions.
Board Discussion
After the public comments, Austin Miller said he thought the board should raise the RTE to 50 percent because “it’s one of the primary tools granted to seasonal communities through the Affordable Homes Act.”
Raising the exemption would help incentivize year-round residency, defray the cost of water and sewer infrastructure used primarily in the high season, and offset the high assessed values that result from “an influx of buyer competition from regions like Boston and New York City,” Miller, the select board member, said.
Adding a means test to the RTE would be complicated and is not allowed by current state law, he added.
Sandberg said she hadn’t expected a discussion about raising the RTE this year. “I was fine with where we were, but there were some compelling arguments made tonight to increase it,” she said, adding that she was “not exactly sure” what to do.
Borg said the board should “give ourselves a year to talk about this” and “potentially move it up next year.”
Abramson said he’d been planning on pushing across-the-board budget cuts rather than changing the exemption.
“I had not had any thoughts this year on raising the exemption,” Abramson said. “I was looking at us reducing the tax burden in other ways this year.”
Borg asked Town Assessor Scott Fahle to explain how a means test could work. Fahle said that adding income criteria to the RTE was not an option under existing state law.
A means test is “not part of Chapter 59 5C,” said Fahle. “It’s not an option. I can’t do it. If you want to do a means test, then that’s a separate entity,” meaning a home rule petition to the state legislature would be required.
The existing law is already structured to give the owners of more expensive homes a smaller benefit, Fahle said.
“As the property value increases, the exemption amount stays the same, but the weight of it decreases, so that a property of $817,000 sees a 46-percent decrease, while a $4-million property would see a decrease of about 5 percent,” Fahle said.
That is because one effect of the RTE is to create a higher residential tax rate than would otherwise have existed — and that higher rate washes away the benefit of the exemption amount for higher-value properties owned by residents.
“I don’t think we should be doing means testing — this is the law, this is what we have,” said Sandberg.
A 3-to-1 Vote
After Borg, Sandberg, and Abramson said they were against increasing the RTE to 50 percent, Austin Miller made a pitch for an “incremental” change to 40 percent. “This was a policy tool that our state delegation fought for,” Miller said, “in support of our year-round community.”
Borg said he was open to a larger increase later but wasn’t interested in a small increase “just for the sake of it.”
Abramson said that if the town had some “heavy override” votes in the works he might be interested, but that he hadn’t seen anything in the budget “to make me move that way.”
“At this point, I like the idea of taking a year, taking a hard look at what we’re doing for overrides, and then going back next year and looking at the possibility of increasing it,” Sandberg said.
With that, the board voted three to one to continue the current exemption rate, with Miller opposed.
