EASTHAM — While the select board once again decided not to adopt a residential tax exemption (RTE) this year, the controversial measure will be back on the table for 2022, as the board searches for tools to help local families caught in the economic wreckage of the Covid-19 pandemic.
“If we have to use it, we will,” board chair Jamie Rivers said following last month’s annual tax classification hearing.
As the board considered the pros and cons of the exemption, Town Administrator Jacqui Beebe cautioned that granting the RTE this late in the current tax year would cause a delay in the mailing of tax bills that would force the town to borrow money.
“It’s a huge process the first year,” said Beebe. “If you were to want to move towards this, you really should do it for next year, not this year.”
Of the 16 municipalities in the state that have adopted the RTE, three are on the Outer Cape: Wellfleet, Truro, and Provincetown. First enacted in 1979, the RTE allows “domiciled” residential property owners to reduce the taxable value of their principal residences by a fixed amount set by the select board, not to exceed 35 percent of the town’s average single-family residential property value.
Select boards must vote annually to grant the RTE and set the percentage to be used in calculating the exempted amount.
Provincetown’s board voted on Aug. 24 to maintain its existing exemption, with a 25-percent exemption rate.
Wellfleet had a 20-percent exemption for fiscal year 2020, and its board will hold its tax classification hearing for 2021 on September 8. Truro also had a 20-percent exemption rate for fiscal year 2020. Its tax classification hearing is expected to take place later this month, according to Principal Truro Assessor Jon Nahas.
The residential exemption does not reduce the tax levy; it is “revenue neutral.” The tax rate is set across the combined value of all the Class 1 residential properties, which would be the sum of the reduced value of the exempted properties plus the full values of the nonexempt properties.
Towns may petition the Mass. General Court to expand the exemption, as Provincetown successfully did in 2018, to include non-domiciled taxpayers who rent their properties year-round to qualified tenants. Truro town meeting voters last year approved submitting a similar bill, which is now pending in the House Steering, Policy and Scheduling Committee.
Eastham Select Board member Jared Collins initially advocated reversing last year’s decision on the RTE.
“Things have changed a lot since then,” Collins said. “I think if there’s any way to provide any additional support at all for people who live here and work here year-round, we should do it.” He said residents could save a couple of hundred dollars a year, while those who can afford a second home and second mortgage and who may be profiting from those homes “can afford to chip in to help out everyone else.”
By the board meeting’s end, however, Collins called the RTE “a really crappy exemption that is way too complicated and doesn’t help enough people.”
Board member Aimee Eckman argued that not all second-home owners could afford additional taxes, as some homes are acquired through inheritance or other circumstances.
“A second home isn’t necessarily a luxury,” said Eckman. “It still can be somewhat of a burden to people. Maybe they hoped to retire here and they’re kind of trying to hold it and rent it out until they can use it.”
Chair Jamie Rivers acknowledged there were outliers, but said, for the majority of second-home owners, those homes were a luxury.
“To be able to profit off that second home is an even greater luxury that people who are living and working here in the only home that they can own don’t have,” she said. “It’s a disservice of this board to not acknowledge that.”
Addressing the Provincetown Select Board’s Aug. 24 tax classification hearing, Pat Miller, president of the Provincetown Part-time Resident Taxpayers Association, spoke against granting the exemption. “Other communities on the Cape did not adopt this because it is so divisive,” said Miller. “It pits neighbor against neighbor.”
Miller noted the exemption shifted the tax burden with no way of measuring who can afford the additional tax or who needed the exemption.
“You have people that are part-timers that have had homes in this community for years,” she said. “Any little increase at this point may be the end of their having a home. I’m not talking about second-home owners. I’m talking about people that have their only home in Provincetown.”
In a Jan. 12, 2020 letter to the Eastham Select Board, the Eastham Part-time Resident Taxpayers Association asked the board not to adopt the RTE, outlining numerous reasons including the close split of full-time to part-time residential parcels (48 percent versus 52 percent), the town’s already high tax rate compared to other Outer Cape towns, the fixed amount of the exemption not being based on income or need, and the potential to make Eastham less desirable, “fueling a downward spiral of little demand for houses where a rising tax burden is shared by a dwindling non-resident base, which would only further increase taxes.”