Select Board Defends Residential Tax Exemption

CHATHAM – Members of the select board defended their support for a property tax exemption for year-round residents, pushing back against accusations that they had not considered all of the implications of the policy.

 The board was reacting to a citizen petition that calls for them to take a number of steps, including considering alternatives and evaluating the benefits and costs, before implementing state laws that they have the discretion to adopt, such as the residential real estate tax exemption (RTE). 

 That’s something they already do, board members said in voting unanimously not to support the petition at the May 11 annual town meeting.

 “I think this is overreaching and it's unnecessary,” said board member Shareen Davis.

 The petition was submitted by resident Christopher Wray, who opposes the RTE. He said the board failed to adequately consider the impact of the exemption on renters as well as those who own property through a trust or limited liability company. He did not dispute the board’s ability to vote to implement the RTE. 

 “I just think it’s a fair and reasonable thing to ask that that’s explained,” he said at the March 17 select board meeting.

 Wray’s proposal would be cumbersome and unworkable and likely runs counter to the town’s charter and state law, said Chair Dean Nicastro. Although he does not support the RTE, he voted against Wray’s article, saying that while it may not have conformed with the process Wray suggests, the board did a “reasonable analysis” of the RTE.

Board member Jeffrey Dykens said the petition was “nettlesome and bothersome” and disputed the assertion that the board did not adequately research the RTE or know who it was designed to benefit.

 The finance committee made similar assertions when proposing a town meeting article that called for delaying implementation of the RTE for at least one year. On May 11 the select board voted 3-2 not to support that measure.

 The RTE is meant to provide some financial relief to year-round residents in the face of the region’s high cost of living, according to select board members.

 “Our year-round residents are increasingly challenged, are incredibly challenged, to maintain their households in what has become one of the wealthiest communities on the Cape,” Dykens said. With “the overwhelming seasonal market forces driving up the cost of land and buildings, coupled with the attractiveness of short-term rentals…the prospect of getting a year-round foothold in the community for young people have entirely vanished or diminished markedly.”

 A split board — with Nicastro and Cory Metters in opposition — voted last year to support a 20 percent exemption for property owners who are year-round residents. The board will have to vote to implement the discount at a tax classification hearing in the fall. Nonresident owners and properties owned by limited liability companies and some of the 1,764 property trusts will not qualify for the exemption. The result will be a higher tax rate for nonresident owners.

With the exemption, a year-round resident owning a home valued at $900,000 will save approximately $1,000 in property taxes, Dykens said.

 “For many, that represents a welcome and material savings,” he said.

Board members have explained why they support the RTE over and over, added Davis. “For somebody to say I’m not doing my due diligence, it’s not right,” she said.

Wray’s article stipulates that the board, with assistance from town staff, prepare a regulatory analysis before adopting a state law, consisting of three steps: a statement of need supported by quantitative data; an examination of alternatives; and an evaluation of the pros, cons, benefits and costs. It calls for the analysis to be reviewed by the finance committee for its recommendation.

Nicastro said the process would be cumbersome and would infringe on the select board’s authority and make the finance committee into a “shadow” select board.

Wray said he was not surprised by the board’s position, but said that if officials are concerned with residents who are struggling, they should look more closely at how the RTE will impact renters. He suggested that if nonresident owners’ property taxes increase, those who rent will pass the hike on to tenants. There is other legislation that could provide some help for renters, he said, adding that the fact that some residents whose property is in a trust might not qualify for the exemption tells him the select board did “a pretty appalling job” of research.

In order to qualify for the exemption, a year-round resident whose property is in a trust must be both the trustee and beneficiary of the trust. That language must be in place by Jan. 1.

Board members said they are supporting renters by proposing a “lease to locals” program, under which landlords who rent to income-qualified year-round residents can obtain a subsidy from the town. A town meeting article seeks $312,500 to fund the program’s first year.

Resident Brian Phillips has also submitted a petition article asking voters to adopt a local option that provides a tax exemption for residential property owners who rent to income-qualified year-round residents.

 Those are tools the board is trying to use to ease the challenges many residents face, said Davis.

 “We’re not going to be perfect with everything,” she said. “That’s not possible when you’re taking care of a town with 6,000 people in it.”