PROVINCETOWN — “We just all want to be treated fairly,” said Patricia Miller during the open comment segment of the Provincetown select board meeting on July 12. Miller, who is president of the Provincetown Part-Time Resident Taxpayers Association (PPRTA), was objecting to the residential tax exemption (RTE) in Provincetown, which offers year-round resident home owners a property tax benefit, while increasing the property tax paid by others.
The policy is unpopular with part-time residents who object to paying more based on their status. The RTE doesn’t distinguish between a year-round resident who “actually needs a tax break” and one who could afford to pay, Miller said.
The effect of the RTE is weighted, however, with the greatest benefit going to those with the least valuable properties. The formula is complicated, and many residents — and even town officials — don’t understand how it works.
The exemption isn’t automatic. Full-time residents must apply for the benefit, and not all do.
The RTE is revenue neutral, that is, it doesn’t change the total amount of property taxes collected by the town. This means that home owners who don’t get an exemption, including part-time residents, must pay more. To make up for the lost revenue, the overall tax rate goes up.
Provincetown’s property tax rate for fiscal 2021 was $7.08 per thousand. Without the RTE, it would have been $6.77. The exemption amount for that year was $175,221 — which is 25 percent of the average value of all residential properties. Under Massachusetts state law, the RTE can be set as high as 35 percent.
According to the Mass. Dept. of Revenue’s Division of Local Services, the RTE “shifts the tax burden within the residential class from owners of moderately valued residential properties to the owners of vacation homes, higher valued homes, and residential properties not occupied by the owner.”
Although several people spoke on the RTE during the open comments section of the select board meeting, it was not actually an agenda item. “It was a part of our packet the meeting before,” said board member Louise Venden, and came out of a discussion about town goals.
But the RTE was “not something being presented for the select board to review” at the July 12 meeting, said Venden.
The official tax classification hearing by the select board will be on Aug. 23, said Principal Assessor Scott Fahle. Each year, the select board must vote on whether to adopt the RTE and, if so, at what percentage.
Sixteen municipalities in Massachusetts have adopted the RTE, including Truro and Wellfleet.
The PPRTA opposes the RTE, arguing that part-timers already pay nearly 85 percent of residential property taxes. “They pay more taxes because the total value of real estate owned by nonresidents” is so much greater — “85 percent,” said Venden in rebuttal.
Venden plans to request an analysis showing how many homes of residents and nonresidents are valued within certain ranges, she said. “I think it will be revealing and clearly show why nonresident taxpayers pay 85 percent of the taxes,” said Venden.
As of 2019, only 28.6 percent of Provincetown homes were owned and lived in by year-round residents, while 59.6 percent were owned by seasonal residents, according to the Cape Cod Commission. During the select board meeting, the PPRTA’s Miller spoke about the “division” created by the RTE, “pitting neighbors against neighbors.”
According to its website, the PPRTA is a “volunteer-run organization of concerned taxpayers” offering membership levels ranging from $35 for individuals to $1,000+ for patrons. Separate from membership on the website is a donor list, sorted into tiers by amount. One of the part-time residents and Provincetown taxpayers who spoke during the public comment portion of the select board meeting is a patron of the group, having made a donation of at least $1,000, and several other speakers are “friends” of PPRTA — having donated between $200 and $499.
The difference that the RTE makes in the taxes paid by nonresidents is modest. Last year, as noted above, it was 31 cents per thousand dollars of valuation. So the owner of a house valued at $500,000 paid an extra $155 in property tax last year under the RTE. The owner of a million-dollar house paid an extra $310.
Venden, too, sees division in the community, but the solution, she said, isn’t just to do away with the RTE.
“There is a growing divide here, as there has been in the country, between rich and poor,” she said, but “as a community, we have a lot of money,” and that can be used to find solutions.
Much of that money is held by nonresident taxpayers, and “they should have a place at the table,” said Venden, who’s in favor of allowing them to serve on the finance committee, an idea that Town Moderator Mary-Jo Avellar has opposed.
A criticism of the RTE is that it doesn’t create affordable housing. But the value of the RTE “is not to create more housing,” said Venden. Rather, it’s meant to “help preserve modestly-priced housing.”
A nonresident home owner in Provincetown for 15 years before moving here full-time, Venden said the additional cost to nonresident taxpayers is “not a lot of money. It’s not taxation without representation. It is simply preserving the homes and dwelling places of people who have more modestly priced homes here.”
The bottom line for Venden: “The RTE is not unfair and it does have a purpose” — and she’s in favor of leaving it where it is at 25 percent — not increasing the exemption amount.