FinCom: Hold Off On RTE More Broad-based Response To Affordability Needed

CHATHAM – Problems of affordability and sustainability for year-round residents are broad based and won’t be solved with the “blunt instrument” of a residential property tax exemption. Rather, a “three-tier year-round community stability package” should be developed to ensure that help gets to those who need it the most.

 Those are among the conclusions of a 13-page report issued this week by a finance committee working group on resident affordability and stability in advance of a Sept. 1 public hearing by the select board on implementing a residential tax exemption (RTE).

“Chatham’s challenge is not only property taxes,” the report concludes. “It is the total cost of staying rooted in town.”

 The working group was convened after town meeting endorsed an advisory article urging the select board to delay implementation of the RTE pending further study. The fincom’s main concern was who, exactly, the exemption was meant to help, if it would be effective and whether there were more effective tools to address concerns about affordability and retention of residents.

 The select board voted earlier this year to implement a 20 percent RTE at the Sept. 1 tax classification hearing. The issue has garnered a strong response from both year-round and seasonal residents, the latter of whom would see higher property taxes if the RTE is implemented. Year-round resident homeowners would see the evaluation upon which their property taxes are based reduced by about $350,000. Properties in certain trusts, owned by limited liability companies or valued at more than about $3.5 million would not qualify for the exemption, even if owned by year-round residents.

 “We continue to think that the RTE is a blunt instrument, and I think our work has illustrated that there are substantially better directions the town can take,” finance committee chair Stephen Daniel said in a phone interview

 The report recommends that “a stronger Chatham model would combine housing production, rental conversion, lease-to-escrow incentives, childcare and preschool support, emergency housing stabilization senior and caregiver services and a clear resident-assistance navigator funded primarily through revenue the seasonal economy already generates.”

 That approach, the report concludes, “would be more precise than simply shifting taxes, and more honest about the underlying problem: Chatham’s challenge is not only property taxes. It is the total cost of staying rooted in town.”

 According to the report, the town, local nonprofits and regional agencies have at least 28 programs aimed at providing financial assistance to residents, but they are fragmented, have numerous gaps and are not “a full policy alternative.” The majority of programs, including property tax relief, apply to those over 65 or, through the town’s childcare subsidy program, to those with young children.

 Some of the report’s conclusions include:

Daniel said members of the working group did extensive research, communicating with town staff, the summer residents advisory committee (which opposes the RTE) and officials in Cape towns that have adopted the RTE.

 One surprising finding was that even though between 17 and 21 Massachusetts communities have adopted some form of the exemption in the 40 years since it was established, there are no formal studies of the effectiveness of the measure. There doesn’t appear to be any evidence that it has helped towns retain residents, “but it’s never been tested,” according to the report. Chatham is being asked to “adopt a mechanism for which the target population has never been defined and the outcome has never been measured — anywhere, by anyone, in more than four decades of use.” Daniel noted that adoption by only about 20 communities out of the 351 in Massachusetts “isn’t a big pickup rate.”

 The report recommends reframing the question of affordability and keeping residents rooted to town to not just focus on property taxes relief, which only focuses on one of the numerous financial pressure points for residents. 

 Among the existing programs providing financial assistance to residents are the Florence Seldin Family Support Program and Chatham Childcare voucher program, which subsidize pre-school and childcare; council on aging fuel assistance, food program and other programs for seniors; and agencies such as the Lower Cape Outreach Council, Chatham Ecumenical Council for the Homeless and other human services agencies.

 The town also has programs to help seniors defer or work off property taxes as well as a newly-funded program to provide financial incentives to landlords to rent year-round rather than seasonally. Some of those could be expanded, Daniel said.

 “We should be optimizing that stuff, and in some instances we’re not,” he said.

 The report recommends a three-tier “year-round community stability package.” The first tier, to implement immediately, includes promoting existing programs; publishing a “resident stability guide” to existing programs; and developing a baseline resident assistance dashboard. 

 The second tier, medium term recommendations include establishing a resident navigator to refer residents to services; expanding human services committee grants; design an all-ages, means-tested residential stability fund; and study a means-tested RTE for seniors. Third tier, longer-term recommendations include completing the two affordable housing developments on Main Street and Meetinghouse Road; scaling up the Marconi lease-to-escrow program; securing approval of a real estate transfer fee, the so-called “mansion tax” that has been approved by town meeting but is stalled at the state legislature; and make other recommendations, such as guide and navigator, a permanent part of the town’s infrastructure.

 Moving forward, the report recommends pausing RTE adoption; defining the actual goal; directing staff to design a year-round stability package; identifying seasonal impact revenues; request other legal pathways from town counsel; and provide the select board with “a clear alternative to ‘RTE or nothing.’”

 The finance committee was scheduled to vote to adopt the report and forward it to the select board Tuesday, after which it will be available on the panel’s web page, Daniel said.

 “To be very clear, we’re not going away on this,” Daniel said, noting that there appears to be a clear majority of the select board in favor of adopting the RTE. Even if that comes to pass, “We think there’s a lot of good ideas [in the report] that can do a lot of good for this town, and we’ll keep pushing it.”

 Select Board Chair Jeffrey Dykens said the board still intends to vote on the RTE Sept. 1.