Commission to explore revaluation tax relief

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A new city commission will explore ways to hopefully provide a fair means of tax relief to residents who were hit hardest following this year’s property revaluation – which inordinately affected lower- and middle-class families and resulted in many peoples’ property taxes increasing by as much as 25 percent, and in some cases even more.

The so-called Tax Relief Commission was put forth by Ward 2 Councilman Jeremy Rix during the Warwick City Council meeting on Oct. 7, which was unanimously approved by the full council. The commission will include 16 individuals, including the nine city council members, State Rep. David Bennett, State Senator Mark McKenney, Bill DePasquale (city planning director), Brian Silvia (city finance director) and two members of the public. Each elected official on the commission may also appoint a designee to serve in their place.

Rix said on Monday that the ultimate goal of the commission is to have conversations with members of the public who have been affected by increasing property taxes due to the revaluation, which will hopefully lead to the city enacting legislation to put in place a property tax exemption that will help rebalance the property tax burden among the city’s residents.

“This is an issue we’re seeing across the state and across the country for houses in this price range jumping dramatically as a result of the economy and the housing stock,” Rix said. “It’s not a matter of questioning whether prices for these houses in this range have risen, it’s a question of what can we do about it? because it’s now putting the burden on a group of people who are least able to afford it, while at the same time giving a break to others.”

To quickly recap the situation, the city conducted its mandated property revaluation process this past spring, which occurs once every three years, and due to the high demand and sales of houses in the aforementioned “sweet spot” range of $150,000 to $250,000 – particularly houses around $180,000 to $225,000 – saw a dramatic increase in their assessed valuation.

As a result, for example, property owners that had been paying property taxes on a house valued at $150,000 in 2010 were now facing a tax bill based on that same house – which may not have changed much at all – but now the house was being taxed as though it were worth $200,000 – and in some cases residents experienced more dramatic increases than that.

And although the tax rate actually decreased in Warwick for the new fiscal year that began on July 1, those property owners of the highly valued homes were suddenly beset with much larger tax bills, while those with more expensive homes – which have been in far lower demand – saw either no significant increase in their bills or even saw a tax cut.

Rix clarified that the commission isn’t seeking to adjust the valuation process, which is mandated by the state, but rather is looking to “smooth out” inequities in how the revaluation affected Warwick residents.

He envisions that could be done in multiple ways, but the prevailing method will likely be some form of property tax exemption – where a certain amount of a homeowner’s property value will be exempt from paying taxes. The amount of this exemption would be uniform for all properties in Warwick, which would cushion the tax blow for those with homes of lesser value and rebalance the property tax burden on those who are more able to afford it.

Rix stressed that the exemption must be carefully calibrated so that it is revenue neutral.

“The city is not in any position to cut taxes in general,” he said. “I don’t know if that number would be $25,000 or $50,000. That’s something where we would have to get the numbers from the tax assessor and finance director to figure out what exactly this would look like to figure out what would be fair here and what would achieve the best result.”

Rix also said it would be important that any such exemption was automatic and required no steps to be taken by residents, and no paperwork be filed by the city.

“The goal of this is to have something that is simple and is straightforward and accomplishes the goals without creating some new complicated system that requires additional work on anyone’s part,” he said.

Rix also mentioned that public input is crucial to the whole process, so the public is encouraged to attend the meetings, which could begin as early as mid-November in the City Council Chambers at City Hall. Rix said that the goal for the commission would be to wrap up its work within six months, so any enabling legislation required by the general assembly could be passed in time for the city’s next budget cycle.

“One of the most important things this commission can do is make sure to be transparent and accessible to the public,” Rix said. “So, we’re going to announce our meetings well in advance and set aside at least one full hour, if that much time is needed, at each meeting, for public comment.”

Comments

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bill123

City officials and the Beacon itself keep pushing the narrative that “the high demand and sales of houses” at the lower end of the price range caused a “dramatic increase in their assessed valuation.” This cause-effect is offered as fact, but it has not been substantiated. I question how it is known that high-demand translated into higher assessments. To talk meaningfully and answer that question, you have to talk about the Sales Ratio Study, but oddly no one is doing that. The company that did the mass appraisal has been doing them state wide. They would have produced the SRS report. Where’s Warwick’s report ? Please have a conversation on that, before asking the public.

Tuesday, October 15
wrkvoter

Bill, great post thank you! Are you saying that all or most of the other RI communities revaluated by that company also received that Sales Ratio Study as part of tHe reval?

Tuesday, October 15
bill123

It’s reasonable that should have happened. It is important to point out that “Sales Ratio Study” and “reval” (or whatever the substitute term is) are supposed to be the same thing, but city officials and these articles make it unclear. The former is specific and commonly understood. Look up the “Standard on Ratio Studies” by the International Association of Assessing Officers. I assume this is the governing standard. If you search the internet, some communities outside of RI have been open about the general procedure, and give a concise explanation. At around the time of Warwick’s most recent “reval”, Cranston had a Sales Ratio Study report available on their website, prepared by the same company (Vision Government Solutions) that serviced Warwick. Cranston’s report contained a narrative portion, and a data portion, 271 pages total. It wasn’t labeled “Sales Ratio Study”, but the data portion looked to be consistent with one, from my (non-expert) point of view. The report was available online a few months ago, but it now appears they took the link down or moved it. You could otherwise see what a report looks like. Someone should contact their assessor and ask they put it back up, and also contact Warwick, and ask they post Warwick’s recent report, and any prior reports as well.

Wednesday, October 16
Patient Man

Isn't shrinking of the wealth gap a good thing?

Wednesday, October 16
Apollo

I've been fhinking Stacia. What Warwick needs is more high value properies. Million dollar homes. Let me explain. Block Island and Charlestown have the lowest taxes in the state !!!!! why? the million dollar homes along the coast. Well Warwick has so much coast line !!! Yet we have shacks down in oakland beach. So after the next hurricane rips through RI and wipes out oakland beach for example lets be smart and do it right. Million dollar homes, gated communities, beautiful scenery. There is your long term fix. Be like Charlestown

Wednesday, October 16
Patient Man

More million dollar homes sounds good to me. Those people pay a lot in taxes.

Wednesday, October 16
FASTFRED WARD4

Some people are just so daaa/ . Go to Charlestown. No police or fire 4 highway no water you have to bring or pick up your throw outs . Please just your home ins would kill you. THen you be crying more.

Thursday, October 17
bill123

To my understanding, the way a Sales Ratio Study works is this: the selling-price for all recently-sold properties, and their property card data, are used to create a computer model. The end result is a model that predicts the “sold” price (which is already known) for each of those properties. The predicted price must not exceed the actual sold price for any of those properties. The model is statistically validated using IAAO rules, and (presumably) signed-off on by the city. A report should have been created on this. The model is then applied to all other properties, giving us our assessments. There is nothing in the model that would tell us anything relative to the prior assessment or so-called “demand” effect on high-low value properties. I am told Providence and East Providence had a “reval” at the same time as Warwick. Cranston was a year or two earlier.

Thursday, October 17
Rick

How is lowering the taxes of the richest people shrinking the wealth gap.

Thursday, October 17
Rick

this is pretty simple. The City raised overall taxes a certain amount say 5%. The average house say went up 15%. if your house went up 15% you r taxes would have gone up 5%. if you house went up 60% your taxes would have gone up by over 20%. The higher went up less than the average house so many of the higher value houses actually received a tax cut.

Thursday, October 17
Patient Man

Rick wrote,

"How is lowering the taxes of the richest people shrinking the wealth gap."

The increase value of $150k-$250k houses against the stagnant value of $1M homes shrinks the wealth gap.

The effect on the amount of taxes paid by either homeowner has nothing to do with the shrinking of the wealth gap.

Thursday, October 17