PROVIDENCE, R.I. (WPRI) – Enrique Gonzalez isn’t sure how he’s going to pay his Providence property tax bill this year.
The 67-year-old retired machine operator, who has lived with his family in one unit of their Broad Street two-family home for eight years, was surprised to see his tax bill when it arrived late last month.
The bill climbed to $2,585, compared to $1,949 last year.
Gonzalez, who’s on a fixed income, said it’ll be difficult to come up with the extra $636, representing a 33% increase in his taxes.
“I don’t know what to do,” said Gonzalez, who rents out the second unit. “Maybe I’m going to increase the rent because that’s the only way I’m going to find the money.”
Gonzalez is hardly alone.
The first tax bill of fiscal 2019-20 is due Friday in Providence, and about 60% of homeowners will pay more than last year, according to a Target 12 analysis of more than 30,000 residential tax bills.
But the increases are not equal across Providence, which fueled a months-long debate leading up to the new fiscal year that pitted much of the East Side against the rest of the city.
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More than two-thirds of residential properties in the affluent 02906 ZIP code, which includes the Wayland and Blackstone neighborhoods on the East Side, will pay less in taxes compared to last year. The median household income in 02906 is about $77,000, Census data shows.
Homeowners in poorer areas are more likely to have a higher tax bill. In Gonzalez’s Washington Park neighborhood in ZIP code 02905, where median household income is about $41,000, about 63% of homeowners will pay more this year.
In 02909 — which includes Olneyville, Silver Lake and the West End, and where the median household income is about $34,000 — a whopping 75% of residential properties got a tax bill increase this summer.
The discrepancy stems largely from this year’s state-mandated citywide revaluation. The city’s independent assessor, Vision Appraisal, determined property values in some of the poorest neighborhoods had skyrocketed in recent years, while those in the richer neighborhoods remained fairly stable.
Dean deTonnancourt, president of the Rhode Island Association of Realtors, said the soaring values were partly fueled by the popularity of multifamily homes and starter homes for first-time homebuyers in neighborhoods outside of the East Side. The East Side real estate market, meanwhile, has remained relatively level.
“It’s all demand driven,” deTonnancourt said. “The market has rebounded since the Great Recession and values have come back up.”
The rising values could be good news for homeowners looking to sell their properties and recoup a profit off their original investment. But for long-time residents and those with no plans to move, rising tax bills can be a challenge.
The typical tax bill in the neighborhoods of 02904, 02905, 02907, 02908 and 02909 increased more than the median amount citywide. But in 02903 and 02906 — representing most of downtown and much of the East Side — the typical bill decreased.
Despite that, the typical East Side household is still paying a far bigger tax bill than residents in other parts of the city. The median 2019 property tax bill in 02906 is $6,744, while the median bill in 02909 is $3,006, less than half as much.
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Providence Tax Debate
The city’s tax rolls – obtained by Target 12 through a public records request – confirmed the concerns raised by many city councilors, who scrambled to try and address the shifting costs before the new fiscal year began July 1.
Council President Sabina Matos said Target 12’s analysis demonstrates why she pushed for a change in the city’s tax structure before the bills were sent out last month.
“We realized that this was not fair,” Matos said an interview. “It was insane the amount of how the taxes were going to go up in some neighborhoods … and the taxes were going to go down for others. We were trying to address that.”
Matos said she plans to form a commission after the council’s August break to study the tax structure and revaluation process. The commission would include financial experts, tax policy analysts and business leaders. The goal would be to issue a report by the end of the year, she said.
In June, council leadership championed a failed attempt to create a two-tiered tax structure, which would have given a a smaller tax break to homeowners living in more valuable homes.
But the change required state legislation, which was squashed by the General Assembly after House leaders said it was introduced too late in the process.
Target 12 requested the city’s revaluation data in June to try and calculate the would-be effect on each neighborhood of the various proposals. But the city denied the request, arguing the new values hadn’t been certified. The data was released after the tax bills went to homeowners last month.
Much of the opposition to the two-tiered tax proposal came from the East Side, where homeowners living in higher valued homes would have received a smaller tax break — known as a “homestead exemption.” Non-owner occupied properties, typically owned by landlords, don’t get an exemption.
“This is the first time in a very long time that we have seen a tax decrease on the East Side,” said Councilwoman Helen Anthony, who represents Ward 2. “The East Side has paid their fair share of taxes. Under our current tax structure we pay more of the burden because we should, we have higher valued properties.”
She said some of her constituents actually felt their taxes were reduced too much this year.
“They saw significant savings, more than they expected,” Anthony said. “They say, ‘We didn’t want that either. … We’re happy to contribute. We just want to be treated fairly and we want to be a part of the process.'”
Matos, who represents Ward 15 and lives in 02909, said she couldn’t believe the East Side outrage over the two-tiered tax structure.
“We wanted to balance this out,” she said.
Mayor Jorge Elorza strongly opposed the two-tiered plan during the budget fight with the council, which delayed the passage of the fiscal 2019-20 budget until eight days after the new fiscal year started on July 1.
The leaders compromised, setting one residential tax rate of $24.56 per $1,000 of assessed value with a 40% exemption on the value of owner-occupied homes.
Elorza said on a recent taping of WPRI 12’s Newsmakers that he does support a progressive tax structure, but didn’t like that the plan was announced by the council two weeks before the start of the fiscal year.
“You don’t do this at the last minute and also you don’t do it to single out one community,” Elorza said. “If you’re doing this because it’s good policy, then let’s do it because it’s good policy.”
If Matos is successful in setting up a commission to study the city’s tax structure, the debate surrounding Providence taxes is poised to continue.
Anthony said she’s not sure yet whether she would support a progressive tax structure, but strongly supports studying the revaluation process. Right now, state law mandates a full revaluation every nine years and statistical changes are made every three years.
“This has been devastating this year for a lot of our city, just this drastic change all of a sudden,” Anthony said. “It’s just too much for people to handle, they don’t have the additional income.”
She said if updates to property values were made every year, it could be “an easier pill to swallow.”
“If you have a full reval every nine years, it just shakes you to your roots in terms of the drastic change that people are experiencing,” Anthony said.
At the state level, the House passed a resolution this year urged by Lt. Gov. Dan McKee to create a joint commission to study how the revaluation process affects all Rhode Island municipalities, but it didn’t pass the Senate. A Senate spokesperson said the commission was proposed late in the session, and there was no companion bill.
In Providence, as city leaders try to figure out a path forward, homeowners like Gonzalez are left to deal with the immediate consequences. “I don’t understand where I’ll find the money,” he said.
Matos is worried that the rising tax bills could send longtime Providence families packing.
“There are people who love this neighborhood,” Matos said. “They want to stay here in Providence.”
A note about the data
This report compares the tax bills of most residential properties listed on the 2019 and 2018 city tax rolls.
The two data sets, provided by the city of Providence, were not perfect matches, as some 2019 properties did not exist in 2018, and vice versa. Target 12 removed such properties from its analysis, along with any duplication of properties found in the data.
The city also provided the tax data before discovering an accounting error that resulted in the overcharging of about 21,000 tax bills. The city estimates the average impact was $1.12 per tax bill.