EASTHAM — The select board is considering making Eastham the seventh Cape Cod and Islands town to implement a residential tax exemption [RTE] that could give an estimated 90 percent of year-round residents who own their homes a break on their property tax bills.

The RTE, which has been adopted in Provincetown, Truro, and Wellfleet, does not change the overall tax levy. That is, the amount of money raised by the town via property taxes remains the same. In order for some taxpayers to get relief, others must pay more.

Thus nonresident property owners, who account for 52 percent of the town’s total residential parcels, along with residents who choose not to apply for the exemption, would see an increase in their tax bills.

The idea was discussed at the Dec. 2 select board meeting with board of assessors chair Denise Kopasz and the town’s principal assessor, Belinda Eyestone.

The four-member board of assessors voted unanimously against adopting the exemption. The other members of the board are Maureen Fagan, Joanna Buffington, and W. Davis Hobbs.

The state offers towns the exemption as an optional tool for encouraging year-round residence. The policy is designed to make the property tax more progressive by giving the biggest benefits, proportionally, to owners of the most modest homes. Each year at a tax-classification hearing, select boards are required to decide whether to adopt it. The law allows it to range from 10 to 35 percent.

A presentation for the select board prepared by Eyestone estimated the likely effect of adopting a 20-percent RTE on different types of residences. Wellfleet and Truro each have a 20-percent RTE; Provincetown’s is 25 percent.

The percentage refers to the average value of class-1, single-family residential properties in the town, which in Eastham was $471,582 this year. A 20-percent RTE would allow year-round residents to exempt $94,316 (that is, 20 percent of $471,582) from their tax bills. So a resident’s $500,000 house would be taxed only on $405,684 of its value.

The practical effect of the policy, according to Eyestone’s analysis, would be that the resident owner of a property of average value would save $438 per year, while the nonresident owner of a similar property would pay $480 more.

In a Nov. 25 letter to the select board, the assessors wrote, “Research and feedback from other towns show that the RTE works best when 80 to 90 percent of residences are those of nonresident taxpayers. Nonresident taxpayers make up 52 percent of Eastham ownership.”

“It can affect a lot of people,” Kopasz told the Independent. “We voted no because we wanted to keep the tax rate the same for everyone.”

Eyestone reported that the percentage of nonresident owners in the other Outer Cape towns was significantly higher than in Eastham. She wrote that in Provincetown it was 63 percent, in Wellfleet 74 percent, and in Truro 86 percent.

Nonresidents in those towns pay more, “but not that much,” said Town Administrator Jacqui Beebe. “It’s not as dramatic as ours would be.”

Both Harwich and Orleans voted not to adopt the exemption earlier this year.

“Towns are doing this for different reasons,” Eyestone told the select board. “[Resort towns] are doing it because they have a very small year-round population and they’re trying to help the people that live there year-round.”

The board of assessors would use evidence like the census and voting lists to determine who is a resident and who is not. Those who own a second home in Eastham must pay a personal property tax as well; those who are domiciled in Eastham — that is, considered to be year-round residents — do not pay this tax.

Because the RTE has a progressive design, the tax benefit gets smaller as the value of the property increases. The “break-even point,” according to the assessors, would be at a value of about $1,000,000, above which residents would end up paying more property tax, not less.

“We have a tax rate that’s going to go up anyway because of the Nauset High School, Cape Cod Tech, and water project,” said Kopasz.

“I’m still sort of torn,” select board Chair Aimee Eckman told the Independent. “Roughly 90 percent [of our residents] would get some sort of relief but the other 10 percent would not.”

Kopasz said that residents with trusts must be both the trustee and beneficiary to qualify for the exemption. Those whose properties are owned by LLCs would not qualify. She added that residents who own multiple homes would get the exemption only for the one they claim as their year-round residence.

“It’s a difficult decision and probably would not be implemented for several years,” Eckman said.

Assistant Town Manager Mike Lorenco said the earliest the RTE could be adopted is to take effect in fiscal year 2022.

“The residential tax exemption has definitely been on my radar for a long time,” select board member Jamie Rivers told the Independent. “The more I learn about it the more interesting and complicated it is.”

Rivers said the town is looking at both the positives and negatives of the policy and when it would be best to implement it. She said she is interested in figuring out if a bylaw could be created that would trigger the exemption to go into effect once the town’s resident versus nonresident split became more pronounced, such as 35 to 65 percent, or 30 to 70 percent.

The town offers tax relief to veterans and seniors. But Rivers said she is also interested in looking at exemptions for working people who don’t necessarily qualify as low income but also don’t make enough money to easily afford to live in town.

“We’re taking multiple approaches,” Rivers said. “I’d rather see a more dynamic approach that has real change and hinder the town from becoming a 30-70 split [between residents and nonresidents],” she said.

Rivers said these types of exemptions won’t dramatically change things but could be a step to help keep people in town.

The select board asked Eyestone and Lorenco to review figures for 25-, 30-, and 35-percent tax exemptions and come back with numbers at an upcoming meeting. 

“We want to get some more info on other ranges to see what it looks like for the town,” Eckman said.

Town	Total residential parcels	Residents	Nonresidents	Percentage split
Provincetown	3,964	1,467	2,497	37/63
Truro	3,348	465	2,883	14/86
Wellfleet	4,479	1,165	3,314	26/74
Eastham	6,264	2,978	3,286	48/52
Orleans	5,387	2,263	3,124	42/58

Figure 1: This chart shows the number of parcels in each Outer Cape town and how many are split between residents and non-residents. (Source: Eastham Board of Assessors)