More than half of Providence homeowners would see tax increase under Elorza’s plan

PROVIDENCE, R.I. (WPRI) — When Chalonda James opened her new tax assessment last week, she thought it had a typo.

“I looked at the address again to make sure it was mine,” James said. “Complete shock.”

The assessment said her three-family home in the West End, where she’s lived for 29 years, increased in value by nearly 60% — from $461,900 to $738,400.

James had expected her home value to rise, given the migration to Providence and high home sales during the pandemic. But she didn’t expect it to go up that much.

“It’s just the timing of it all,” James said. “It’s a time when the whole country is experiencing inflation of everything, and to have something like this to worry about is mind-boggling.”

James is appealing her new assessment. But she’s far from alone in feeling sticker shock from the recent revaluation, which is conducted every three years.

According to an analysis conducted by the Elorza administration, home values rose across the board in the city, though multi-family homes skyrocketed higher than single-family homes and condos.

As a result, Elorza earlier this week proposed to cut the residential tax rate from $24.56 per $1,000 to $18.50 per $1,000, something he’s required to do under state law to avoid raising taxes beyond 4% of the city’s current tax levy.

The mayor also proposed to increase the tax break for homeowners who live in their properties — called the homestead exemption — from 40% to 45%.

James lives in her property, but even with the lower tax rate and bigger homestead exemption, her tax bill would go up about $700 under Elorza’s plan, to $7,513.

Other multi-family homeowners are in a similar boat. The average tax bill for a three-family home in the city that’s eligible for a homestead exemption will be $300 higher, according to the city’s analysis.

That number jumps to an average of $1,200 higher for three-family homeowners who don’t live in their properties, raising concerns about higher rents for tenants.

“For people who live in their homes, many folks are going to see lower taxes and maybe some slight increases,” Elorza told 12 News earlier this week. “If you don’t live in your home, if it’s investment property, that’s a different story.”

The lower tax bills are most likely heading to single-family homeowners or condo owners, according to the analysis provided by Elorza’s office. About 37% of those single-family homeowners can expected a larger bill under this proposal, while 63% would get a tax decrease. (The numbers are subject to change, as homeowners appeal their assessments and the tax assessor determines homestead exemptions for the final tax rolls.)

Overall, 52% of owner-occupied residential homes can expect a higher tax bill under Elorza’s plan, while a whopping 87% of non-owner occupied property owners — landlords — should expect a higher bill.

Target 12 has requested the raw data from the new assessments to confirm the city’s analysis, but has not yet received it.

The city’s analysis also breaks down the average tax bill by City Council ward, showing that homeowners in Wards 1 and 2 on the East Side of Providence are the most likely to get a tax cut compared to other wards. The average single-family tax bill in those two wards would decrease by $1,300, according to the analysis.

The home assessments three years ago similarly resulted in a tax break to the East Side while raising taxes in the poorest neighborhoods, prompting a fierce debate about a two-tiered homestead exemption based on home value.

The idea was eventually scrapped, and Councilwoman Helen Anthony, D-Ward 2, hopes it doesn’t come back.

“Our values hold fairly steady on the East Side,” Anthony said, noting that East Side homes typically pay more in total taxes due to higher home values. “I think we should all be treated the same. We’re all taxed the same based on the value.”

Councilman John Goncalves, D-Ward 1, said he was concerned about rents going up for his constituents living in non-owner occupied multi-family homes, which are more likely to get a tax increase in his district than owner-occupied ones.

“I remain concerned and vigilant about these revaluations and proposed tax changes, Goncalves said in a statement. “As such, we continue to do our due diligence, are looking very closely at the revaluation data of residential properties in our ward that was provided to our office by the tax assessor, and will continue pressing the city administration and the vendor for answers to our pointed questions on behalf of our constituents.”

Single-family homeowners in Ward 10, one of the lowest-income districts that includes Washington Park and Lower South Providence, can expect an average tax increase of $178.

On the higher end, landlords with four or five units in their properties in Ward 11, which includes Upper South Providence and the West End, will see an average tax hike of more than $2,000, according to the analysis.

James said she hadn’t considered raising the rent at her Parade Street three-family, but after a tenant recently moved out of a studio apartment she had considered incorporating the unit into one of the other apartments, turning it into a two-family home.

“I’m reconsidering that now that we’ve got this new assessment,” she said. She added that she’d like to see more incentives for longtime Providence residents who stay in their homes, rather than those coming into Providence to flip properties.

Overall, Elorza’s plan would raise roughly $14 million more in taxes than the current fiscal year, the maximum amount he can raise before hitting the 4% cap.

The new tax proposal still needs to be vetted and approved by the City Council, which could decide to tweak the formula.

“Can we do more, can we create a little more tax relief?” said Council President John Igliozzi, D-Ward 7. “What can we do to make it a little bit better and lessen the impact?”

This year’s revaluation was just statistical — the assessors go to homes in person every nine years — and was conducted by Northeast Revaluation, a new vendor for Providence, which used to use Vision Appraisal.

Homeowners have until next week to appeal their new assessments. Tax bills typically go out around the start of the fiscal year, which is July 1.