Chatham Select Board Approves Residential Tax Exemption

CHATHAM – The select board Tuesday adopted a residential tax exemption which members said was aimed at helping struggling year-round homeowners.

The 20 percent residential tax exemption (RTE) approved by the board on a 4-1 vote during a tax classification hearing will shift some of the property tax burden to nonresident owners. And even though some year-round residents who may not need the financial assistance will see lower property taxes, the measure will provide meaningful relief to many homeowners, they said.

“The RTE is a way to put some money back in people’s pockets to help fight the rising cost of living in a seasonal community,” said board Chair Jeffrey Dykens.

Opponents have criticized the RTE as overly broad, divisive and unfair to nonresident owners. Many, including the town’s finance committee and summer residents advisory committee, called for the board to delay a vote for a year while other means of helping year-round residents in need are investigated. They favored a more targeted, means-tested approach to providing financial relief to residents struggling with the town’s high cost of living.

Ironically, because the town’s overall property valuation has increased significantly, the higher residential tax rate under the RTE will still be lower than last year’s tax rate.

The town’s overall property valuation increased by 7.8 percent between Jan. 1 2024 and Dec. 31, 2025 to $13,879,242,230, according to the assessing department (assessments are based on market values as of Jan. 1 of this year). Without a residential exemption, this year’s estimated tax rate would be $3.52 per $1,000 in assessed value, down from $3.67 last year. Last year’s rate was the sixth lowest in the state. With the 20 percent RTE, the new tax rate will be $3.64, still among the 10 lowest in the state.

 The RTE will not directly lower owners’ property taxes. Rather, the 20 percent exemption is applied to the averaged assessed residential value — currently $1,771,618 — and the resulting $354,324 amount is deducted from the assessed value of qualifying properties. For example, a property valued at the average assessed value of $1.7 million will see its taxable value lowered to $1,417,294 and pay a property tax of $5,159, according to the assessing department. Without the exemption, that $1.7 million property would pay $6,236 in property taxes.

Savings is highest for properties with lower assessments. A home valued at $750,000 will save $1,200 in property taxes under the RTE. A property valued at $5 million will save $690.

Properties that do not qualify for the RTE — those owned by nonresidents or in certain trusts or LLCs — would pay $90 more on a $750,000 property, while a $5 million home that does not qualify will be $600 more in property taxes. The “break-even point” where a primary residence would pay higher taxes even with the exemption kicks in at homes valued at $12 million or more, said Assessing Director Candace Cook.

She said 1,035 of the approximately 3,070 year-round property owners applied for the RTE and 1,022 qualified. Of that number, 378 are in trusts. Under the RTE, owners whose homes are in trusts must be both the trustee and beneficiary. She said 13 applications were denied, six because of the type of trust the property was in.

Select board vice chair Cory Metters, who cast the sole dissenting vote, said while he’s in favor of helping those in need, “I don’t think this is going to be the silver bullet to fix everything." He called on officials to continue to investigate other ways to help residents who are struggling financially, a number of which were outlined in a finance committee report calling for a delay in RTE implementation.

“I think we can do better,” Metters said.

The surprise of the evening came from board member Dean Nicastro, who had previously opposed the RTE. While he said he doesn’t accept the argument that the RTE will help struggling residents, he decided to support it, seeing it as a way to help restore “balance” between year-round and seasonal residents. Chiefly due to summer residents and visitors, year-round residents must endure traffic, congestion and safety issues, he said.

“You can’t even enjoy our charming downtown during two of the best months of the year,” he said. “We’re expected to just live with it.” The town must support infrastructure and municipal staffing to meet peak seasonal demand, even though the year-round population is about 6,000, he said. Fifty-nine percent of the town’s residential properties are owned by nonresidents, Cook said.

“I believe that every year-round residential property owner deserves a break, regardless of financial circumstances,” said Nicastro. He also called for expansion of the taxation aid fund approved by voters in May to include all residents in need; currently the fund can only provide assistance to disabled veterans and seniors.

Board member Randi Potash noted that while year-round residents who rent will not see any financial benefit from the RTE, the town recently adopted a “Lease to Locals” program that provides landlords with financial incentive to rent to year-round residents. That can offset any tax increase from the RTE, she noted.

Dykens agreed that the finance committee recommendations should be pursued, including a suggestion that there be a “navigator” to help residents identify and apply to programs that can provide financial assistance or relief. While some may see the $1,000 or so savings that many year-round residents will see under the RTE as not significant, “it’s a meaningful amount of money for a segment of this town,” he said.

One of those residents is 90-year-old Barbara Segal, former chair of the council on aging board and longtime town volunteer. Tax increases and other expenses have eaten into her retirement savings, and she will have to use a home equity line of credit to pay her real estate taxes, she said.

“I want to remain in my house,” she said, asking the select board to “please approve the tax reduction proposal.”

Resident Hannah Smith noted that the RTE has been the law in Massachusetts for 40 years and is not new, and that many nonresidents live in states that provide tax breaks for year-round residents. To someone without a lot of money, the savings from the RTE “means everything,” she said. Many of the RTE critics “just see numbers,” she added. “They don’t see people.”

Year-round resident Mary Galligan said she does not qualify for the RTE because of the structure of her property’s trust. She is facing high homeowners insurance bills and the cost of connecting to the town’s sewer. She urged a delay so that other means of helping year-round residents such as herself can be researched further.

Anne Timpson called the RTE a “radical, broad spectrum tax restructuring” that is “undemocratic and discriminatory.” She noted that May’s town meeting approved a nonbinding referendum sponsored by the finance committee calling for its delay. She complained that the RTE was not specifically targeted to those who need help the most.

“Instead, it gives to many property owners who are not in need of financial exemptions,” she said.

That’s part of the point, said former select board member David Whitcomb. Many people who grew up here have been priced out of the housing market, he said, because “we have managed the town too well” and made it a desirable spot for summer residents and real estate investors. “Primary residents keep the lights on year round,” he said, protecting the investments of nonresidents, whose property tax bills would be two, three or more times higher if their Chatham home was located where they have their primary residence.

The law does not allow means testing, said Karolyn McClelland, chair of the town’s housing partnership committee. That would not solve the problem anyway, she said, while the RTE will provide immediate relief to many people.

“Some people call the RTE a blunt instrument,” she said. “I see it as a necessary tool.”

Fifty-year resident John Connolly thanked the select board for taking up the RTE and called for solidarity. “There’s plenty of reasons to say no,” he said, but it took a measure of courage for the board to support the measure. “This is going to help a lot of people.”

Finance committee member Andrew Young noted that the RTE must be voted on annually, and he challenged board members to come up with metrics to measure its success.

Tax bills that will be issued in October will reflect the RTE, said Cook. Year-round residents can continue to apply for the RTE through April. 

“We recommend all primary residents apply,” Cook said. “It doesn’t matter the value of your property.”