Updated 5 pm
The Oak Bluffs select board chose a 4 percent, or $34,036, residential exemption in a unanimous vote at a tax classification hearing Tuesday, becoming one of the few Massachusetts towns to offer such an exemption.
Based on principal assessor MacGregor Anderson’s calculations, 683 properties prequalified for the residential exemption, which will grant them a $231 exemption.
Each year the select board decides on the town’s tax classification status. Historically, the board has not implemented a split tax rate or a residential exemption — everyone pays the same tax rate. The town’s estimated FY22 tax rate is $6.76 per $1,000 valuation, down from $7.37 in FY21. Anderson said the drop is due to the increase in home values.
The residential exemption can be up to 35 percent of the average value of all residential class properties. The residential property class consists of owner-occupied single family or multi- family homes, residential condominiums, bare residential land, year-round rentals, second homes, and short-term rentals, and mixed-use units.
“Think of it as a coupon for a dollar amount, not a percentage. That 35 percent just tells us the maximum amount the select board can have people whose principal residence … how much they can remove from their assessment,” Anderson said. “Everyone who gets it gets the same tax break in dollars, not in percentage of property.”
The exemption is granted to the principal residence of the taxpayers in town. The exemption is a set dollar amount subtracted from the assessed value of the property. Anderson said he believes the 683 prequalified properties are less than half of the number of potentially qualifying properties.
Only those prequalified properties will be exempted. Prequalification was done by having property owners submit an application stating their property was their domicile since at least Jan. 1, along with documentation.
Those who qualify for residential exemptions, but have not yet filled out applications, have until April to receive the exemption benefit. Any money needed to make up for those who file later and are approved will come from the town’s overlay account, which has about $500,000 in it, according to Anderson. Anderson estimated that with a 5 percent exemption, the town could face up to a $312,000 impact on its overlay account if 1,000 more homes qualified for the residential exemption.
Tisbury is the only other Island town, and one of now 15 towns in Massachusetts that have a residential exemption. Oak Bluffs residential class properties make up 93 percent of its property tax base. Commercial at 5 percent and personal property at 2 percent round out the rest.
According to Anderson, the median single-family home value increased nearly 17 percent, based on 2020 home sales, from $651,200 to $759,950. The town’s total taxable property is $4.2 billion.
Anderson said, broadly speaking, the 15 other towns that have the residential exemptions are in the Boston area, or towns with lots of second homes.
To give the board more information, Anderson and the town’s assessors department conducted a survey of the town to see who would qualify for the residential exemption. There were 683 homes of the 4,628 residential properties that prequalified.
The town’s assessors classified all the town’s properties into four categories: residential, commercial, industrial, and personal property.
Some thought the decision should wait.
Select board member Gail Barmakian motioned to have the tax rate remain the same for the next year, but her motion was shot down by the four other board members.
Maura McGroarty, a member of the town’s finance and advisory committee, said seasonal residents are disconnected since they don’t use many of the services their taxes help pay for.
“They don’t use the schools, the police, the fire, in the magnitude we year-rounders use,” McGroarty said. “I think we, yes, should be looking at this, but at a different time be making a decision on this … I don’t think we need any more conflict amongst the population on actions that are being taken.”
Donna Brilliant said she was concerned about having to already pay taxes year-round residents don’t pay.
“I do oppose this,” Brilliant said. “The concern is also to divide the seasonal versus the residents. I think some letters were sent in as well that talked about how we’re paying for a lot of services we’re not receiving .. .We’re paying for the schools and education and other services. I just think it divides us and puts more of a burden on the seasonal and those who rent.”
Board of assessors member Jesse “Jack” Law III said he was in favor of the exemption.
“I think if we keep going up on the tax rate on people I think we need to give them something back,” he said. “$290 is not a lot of money .. .People that live here that are working and doing everything here living here year round and affording their homes and having a tough time, I think it will be a good thing for people … People working and living year round, it will be a good thing.”
“I always say whether you’re here a day or you’re here 365 days…we love you all the same,” select board member Brian Packish said. “We understand the challenges and we appreciate you and are grateful for any amount of time you spend in our community.”
The majority of homeowners in town will see lower total taxes due, but vacant land, non qualifying residential dwellings, and owner-occupied homes with a value greater than $5.7 million would pay more in taxes — while a small number of residents and other groups would be negatively affected, most homeowners would enjoy savings.
In an email to The Times, Anderson said the $5.7 million number is based on the 683 homes that were pre-qualified out of an estimated 1,400 to 1,700 properties that could qualify come April.
“In a future year, with most properties qualified going into an exemption (if there is one again) that breakeven number would fall, just as the cost of the exemption for non-qualified properties would rise from the very low numbers presented,” Anderson wrote.
With the select board’s approval the exemption will now head to the Department of Revenue for approval.
Updated with Anderson’s email and unanimous vote. — Ed.