At the PPRTA, we strive to provide relevant background and information for part-time residents of Provincetown to understand current local, regional, and state news regarding residential taxes, residential tax exemptions or news that directly impacts Provincetown's part-time residents.
Update on Harbor Hill, March 2020
Residential Tax Analysis
Several years ago the Board of Selectmen adopted a 20 percent Residential Tax Exemption that lowers the tax on homes owned by full-timers. The exemption pays for this tax break for full-timers by imposing a higher tax on part-time resident homeowners. The Assessor’s page on the Town’s website points out that in FY 2018, because of the existing 20 percent exemption, a part-time resident owner of a home assessed at $500,000 pays 30 percent more in taxes than a full-time resident pays for a home assessed at $500,000 – a tax of $3,725 for the part-time resident homeowner vs. a tax of $2,863 for the full-time resident homeowner.
The Town has just made the part-time resident homeowner’s tax burden even more disproportionate by getting the Massachusetts legislature to approve the expansion of the Town’s Residential Tax Exemption to landlords who rent a unit to a full-time resident who uses it as a principal residence. Even though part-time resident homeowners already pay at least about 85 percent of all residential real estate taxes, this new legislation will force part-time resident homeowners to pay an even greater, disproportionate share of the Town’s tax burden. Moreover, many town officials are already speaking in favor of raising the Residential Tax Exemption from its current level of 20 percent to as high as 35 percent.
The PPRTA opposes the Residential Tax Exemption in all its forms because it unfairly and disproportionately taxes part-time residents who have no vote over budgets.
Even with this additional tax subsidy for full-timers, a number of them view part-time resident homeowners as part of the summer tourist crowd, so we should pay more for the added infrastructure that the Town needs to support the summer crowds. However, we are not tourists; we are full-time taxpayers. Moreover, we number only about 2,500 and are not the cause of the added infrastructure needed for the 55,000+ tourists.
Part-time residents already pay more than our proportionate share due to the existing Residential Tax Exemption. The Town lives off the summer tourists and the cost of the infrastructure needed for 55,000+ tourists is merely the investment that the Town needs to make to support its largest industry. Full-timers and part-timers alike should all pay their fair and proportional share of this investment. We urge registered voters to reject the exemption in all its forms.
Related Facebook posts by town officials:
Tom Donegan, Selectman
“Great news! Thanks to the efforts of Sarah Peake and Julian Cyr, the residential exemption in Provincetown has been extended to property owners who rent homes to year-round residents. David B. Panagore will post details on how and when property owners may apply in the next week or two. (H 3860 signed by Gov Baker)”
Mark Hatch, Finance Committee Member:
“Hi everyone! The third Article the Finance Committee has placed on the Warrant is an advisory Article to direct the Board of Selectmen, at their next tax rate setting session, to raise the Resident Exemption to 23% from the current 20%. Why 23%, you ask? While individual tax bills may vary, an analysis was done on current borrowing commitments and if we raise the exemption by 3% it should give the residents, and now people who rent to year-round tenants, no impact on the average tax bill. One of the points we feel strongly about is cost allocation, and making sure projects we're taking on primarily for the summer season, are not disproportionately borne by the year-round residents. Please help us support this Article, and help us to stabilize taxes for the full-time population and also provide an assist to the year-round rental market. Thanks!”
Our analysis of the Provincetown Assessor’s data shows that 83 percent of homes in Provincetown are owned by part-time residents – the majority of these homes being condominium units. Part-time residents pay 85 percent of residential real estate taxes and yet have no voice or vote over budgets. Please support the PPRTA with your membership dues and encourage your friends and neighbors to do the same as we work to gain representation in local government.
Make Your Voice Heard
1. Attend local town meetings and make your voice heard. Traditionally, part-time residents have virtually no voice at town meetings.
2. Join the PPRTA. Every member counts.
3. Tell your part-time resident neighbors and friends to join.
4. Educate your full-time neighbors on why this unfair Residential Tax Exemption policy must change. Explain that part-time residents seek to vote on budget-related matters.
5. Follow PPRTA on Facebook and share our page with your friends.
6. Donate to our Action Fund.
7. Consider joining our Board or volunteering with our organization to help mobilize support.
The Year-Round Market Rate Rental Housing Trust (Trust) was created at Town Meeting (TM) in April 2016. This group assured the town that the annual town subsidy to HH would be $150k. They said this $150k annual subsidy could be paid – at least for the first 5 years - from the $1.5 million gift the town already gave the Trust.
Sadly, everything the Trust told the town about HH has been wrong. The timing was wrong. The construction costs were wrong. The rents that HH could generate were wrong. And, all of that means the town’s $150k annual subsidy has proven to be way wrong.
How wrong? Well, at a Special TM last summer the town was forced to approve $492k to keep HH financially afloat through June of 2020.
Now we are told the subsidy for FY20 was not enough. In addition, a subsidy for FY21 is also being requested. But the Trust cannot identify the size of the additional subsidy needed for FY20 or for FY21 and they cannot quantify a subsidy for FY22 and forward. This is because the Trustees do not know the cost of operating HH. They say they are working with the Finance Department to come up with a number before TM takes place in April. So, “stay tuned” is the best they can offer.
As we understand it, this is the financial posture of HH:
Ptown issued $10.4 million in debt to purchase/renovate HH, representing 22% of the town’s debt as of 2019-12-31. Payments on the debt should be paid by rent generated by HH tenants. Thus far, either the town or the Trust made all debt payments.
Ptown contributed $1.5 million to the Trust prior to the purchase of HH.
Ptown contributed $492k in the current fiscal year (FY20) to subsidize HH as the cost to renovate exceeded their pro forma, the time to renovate was longer than predicted, the time to occupy the property was way longer than projected and the rents they could actually achieve were well below the rents included in the pro forma.
Ptown will apparently be asked to contribute even more for FY20 as the $492k previously approved was not enough.
Ptown will be asked to contribute another subsidy for FY21. Our guess is the requested subsidy will be well above the $150k figure used to sell this project.
Ptown has no guidance from the Trust as to the cost to subsidize this project beyond FY20 and FY21. What will be the annual subsidy thereafter?
Ptown could be asked by the Trust to permanently divert revenue from either the ST Rental tax or Marijuana tax – or both – to subsidize HH…forever.
Ptown’s documented capital needs over the next 5-10 years include police station, fire station, DPW facility, airport, build-out of the sewer system, replacement of asbestos-cement pipes, normal capital needs and yet-to-be-determined additional subsidized housing projects. Diverting this much money for 28 housing units at HH seems, to us at least, fiscally irresponsible.