PROVIDENCE, R.I. (WPRI) — The Providence City Council is considering a move one of its leaders says would create more “balance” for property owners after a recent revaluation sent home values skyrocketing.
Council Finance Chairman John Igliozzi is looking to create a single rate for residential property, and also bring back the homestead exemption, a discount for owner-occupied properties based on value.
The city did away with the homestead exemption in 2013 during Mayor Angel Taveras’ administration, and moved instead to a system with two tax rates: An owner-occupied rate and a non-owner occupied rate, with people who live in their homes paying significantly less. The goal was to simplify the system, doing away with the added math of applying the homestead exemption percentage to the tax rate.
The rates for last year’s tax bills were $18.80 per $1,000 for owner-occupied properties, and $31.96 for non-owner occupied.
The full property revaluation, done every nine years under state law, significantly raised property values in some lower-income Providence neighborhoods this year, while only modestly raising home values on parts of the more affluent East Side. Mayor Jorge Elorza had to propose a cut to tax rates in order to avoid raising taxes more than the 4% cap allowed by law, which amounts to about a $12 million tax hike in his proposed budget.
The proposed rates are $15.35 per $1,000 for owner occupied and $24.56 per $1,000 for non-owner occupied properties. The proposal requires approval by the City Council, and tax bills are expected to be sent out as early as July.
Igliozzi, who represents the Hartford and Silver Lake neighborhoods, has expressed concerns from the day the tax-and-spending plan was proposed that the tax hike could be much bigger for homeowners in lower-income neighborhoods.
“The economically challenged are the ones that are getting the biggest tax increase,” Igliozzi told WPRI 12, citing South Providence and the West End as examples.
He said while the council is still in talks with Elorza’s administration, one proposal would be to bring back the homestead exemption with a tiered model. Under this plan, there would be one tax rate and then a system of exemptions for people who live in their homes, based on value.
He declined to say what rates or exemptions are being considered, but vociferously denied that the rates being sent around to an East Side email listserv were accurate, calling the rates in the email “way too high.”
“The idea is to go to one rate, and apply a homestead exemption based on value,” Igliozzi said. “We’re working collaboratively together to find the sweet spot where there’s a more balanced and equal approach city wide.”
At several recent Finance Committee meetings, Igliozzi sat at the head of the table in front of large poster boards with photos of multi-family homes he said were in the South and West areas of the city and will get tax hikes.
“What’s before the City Council is to help the ‘haves’ at the expense of the ‘have-nots’,” Igliozzi told the committee members.
One home found in the tax assessor’s database on Terrace Avenue in Silver Lake, for example, was assessed at $214,900 in the revaluation, up from $138,500 last year. The homeowner would owe $3,298 under Elorza’s proposal, up 21% from his tax bill last year.
In contrast, some more valuable homes would get tax cuts. One house on Morris Avenue, for example, increased in value by $5,300 to $431,100 in the revaluation this year. Because of the lower tax rate proposed, the homeowner would save $1,388 on his tax bill under Elorza’s plan, a 17% tax cut.
Still, the Morris Avenue homeowner would pay about double in taxes than the Terrace Ave homeowner.
Councilwoman Nirva LaFortune, who represents part of the East Side including the Mount Hope neighborhood, said she wants to make sure the proposal is “properly vetted” and gets a public hearing.
“Typically with something of this magnitude, I’m assuming you would put something in and we would have a public hearing and get community input,” LaFortune said.
She said she’s received calls from constituents who saw their home values rise and are concerned about the tiered homestead exemption amounting to a tax hike. She also said that while councilors were briefed on the proposal, “we didn’t have any numbers presented to us in a paper document.”
“We need to do the appropriate research and expert analysis,” LaFortune said. “I can’t support something that has not been properly vetted.”
Igliozzi said he anticipates owners of higher-valued homes still getting a tax cut under the new plan being crafted, but possibly a lesser cut than would happen under Elorza’s proposal.
Billy Kepner, the council’s spokesperson, said the details of the proposal could be released as soon as next week. He said there wouldn’t be another public hearing on the proposal, since the Finance Committee already held a public budget hearing last week. But he said Igliozzi welcomes any member of the public to testify at any of the committee’s regular meetings. (The next meeting of the committee is Thursday at 5 p.m.)
Mayor Elorza’s press secretary, Victor Morente, said in a statement about the proposal, “The City’s proposed budget for fiscal year 2020 is currently under consideration by the City Council. As part of the budget process, the administration is monitoring possible amendments and will consider impacts in its decision-making.”