Responding to concerns about the rising cost to live in the community, the Town Council approves a new split residential tax rate to help those who call Middletown their home.
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SPLIT TAX RATE APPROVED
BY TOWN COUNCIL TO HELP RESIDENTS
MIDDLETOWN, R.I. (DECEMBER 21, 2021) – The Town Council is giving residents a tax break.
Hearing continued concerns that the community is getting too expensive for some, the Town Council voted Monday night to implement a split residential tax rate to ease that burden under a state law that allows municipalities to adopt separate tax rates for owner occupied and non-owner occupied properties.
Although the numbers for who would pay what in taxes in the upcoming 2022-2023 Fiscal Year wasn’t finalized during a wide-ranging discussion from Town Hall, the process first suggested by Councilwoman Terri Flynn was. Before it goes into effect, the Town must get approval from the General Assembly to implement the split rate during a non property revaluation year.
To qualify for the lower owner occupied rate, applicants must: (a) be the legal owner of the property, (b) be a registered voter in Middletown, (c) reside at the property for more than six months per year, (d) not receive an owner-occupied rate, homestead exemption or other personal exemption for any other piece of real property, and (e) file a notarized application every three years. All other residential property owners would pay the higher non-owner occupied rate.
Town officials said the split residential tax rate would not generate any “new money” for the community, just shift who was paying what.
Hearing of one couple who purchased a trio of homes recently before turning around and renting them out nightly for thousands of dollars, council President Paul M. Rodrigues said that wasn’t the reality for most Middletowners.
“Do I feel bad about them paying more taxes? Absolutely not, because they can pass it on,” Rodrigues said. “The idea behind this is to help our residents, to be able to give them a break. They’re not passing it on.”
While the Town could charge up to 50 percent more in taxes on non-owner occupied properties, Flynn said the council would do the right thing. Prior to the vote, Councilman Dennis Turano said he still had concerns.
“I just don’t think we should create that division,” Turano said. “We have enough division in our world today and if we start saying we’re going to wait and see how much our tax burden is going to be and then we’re going to push the whole burden onto nonresidents, I don’t think that’s fair.”
In response, Flynn and others said that’s not what was going to happen with the split residential tax rate.
“When it comes to tax time and the calculations are going on by the Finance Department, we can safely say to our neighbors and residents who might not be owner occupied that it’s going to be reasonable,” Flynn said.
“We’re reasonable people,” Rodrigues added. “We’re not going to gouge people.”
All the new language is under Chapter 34 of the Town’s ordinances, which deal with taxes.
Under the rules, a taxpayer can claim the owner-occupied residential tax rate on only one piece of property in Town.
The new rate can apply to residential real estate with no more than five dwelling units, open space and dwellings on leased land including mobile homes. It also can include residential properties with partial commercial or business uses.
Notarized applications must be submitted to the Tax Assessor’s office between Jan. 1, 2022-May 1, 2022.
In its vote, the council also eliminated language in the proposal that would have made any rental property ineligible to be considered “owner occupied.”
To view a rough copy of the approved ordinance, visit https://mdl.town/SplitResidentialTaxRate online.
Council members have said the split residential tax rate would not generate new taxes for the community. Instead, they’ve said it would shift where the pool of residential tax dollars came from. In the current Fiscal 2022 budget, that amount is about $31 million.
Going back at least two decades, the Town has investigated options to lessen the tax burden on residents.
The last major change was in 2003, when a split residential-commercial tax rate was implemented. At the time, council members talked about the need for Middletown to capitalize more on its diverse business base to help residential homeowners.
Since then, there have been tweaks to the exemptions and other modest changes, but nothing as sweeping as the split residential tax rate.
The current council is mulling an increase to the exemptions for the eligible seniors, military veterans and the blind. Those proposals from Turano are expected to go to a second public hearing on Jan. 3, 2022 at 6 pm in Town Hall.
All told, the Town has about 6,200 taxable properties on the rolls. Overall, the taxable base was more than $3.8 billion in assessments.
Town staff said split tax rates are not uncommon in Rhode Island. For example, Tax Assessor George Durgin said in West Warwick, there are four different tax rates for real property: apartments with six plus units, commercial and industrial, two to five family homes and one family homes.
“We’ll set a fair and equitable rate,” Rodrigues said. “That’s what we’re doing.”