Except for three members of the Oak Bluffs financial advisory committee (FinCom), there were no members of the public in attendance at the annual public hearing to discuss possible changes in town taxation protocol Tuesday. Accordingly, the proceedings went swiftly, and selectmen, after a discussion of options with town assessor David Bailey, voted unanimously to keep the current tax structure for fiscal year (FY) ’15, which began July 1.
The proposed tax rate will be set at $7.96 per $1,000 of value across the board.
Major proposals on the table included a dual tax rate that would differentiate between residential and commercial property owners, and a tax exemption that would give year-round residents a break when compared with seasonal residents.
Selectmen unanimously voted, 5 to 0, not to make any changes in tax policy. The tax rate is contingent on Massachusetts Department of Revenue approval.
Residential exemption?
In his presentation on a split tax rate between residential and commercial properties, town assessor David Bailey told the selectmen that any relief for residential property owners would be minimal, given the small number of commercial properties when compared with residential. “We can increase the commercial tax burden by as much as 50 percent,” he said. “This has never been adopted in Oak Bluffs because of the incredible skew that already exists.”
Mr. Bailey explained that if the town were to increase the commercial rate by the maximum amount, for every $1 that came off a residential tax bill a commercial property owner would pay $13.
Mr. Bailey said a small-business exemption for companies with fewer than 10 people could be applied if the split residential-commercial rate was approved by selectmen.
The most potentially heated option is the residential exemption — offering an exemption to year-round residents who claim their Oak Bluffs home as their domicile. “That exemption can be as much as 20 percent of the average residential value in town,” Mr. Bailey said. “This year, the 20 percent exemption would total about $104,000.”
The savings for residential properties on the low end of the valuation scale are considerable — the tax on a property assessed at $200,000 would go from $1,592 to $838, according to a handout sheet. The owner of a house appraised at $500,000 would save $523.
Conversely, property taxes on a $200,000 nondomicile/seasonal home and a $500,000 one would go up from $1,592 to $1,746 and $3,980 to $4,365, respectively. Savings for year-round homes diminish as assessed values increase, until the assessed value reaches $1.2 million, and year-round residents would pay more taxes, regardless of whether there were an exemption.
Currently, Tisbury is the only town on the Island with a residential exemption. Nantucket also has one. “There are very few towns that do it,” Mr. Bailey said. “I worked in Falmouth and Mashpee for a combined 29 years. It comes up every year, and sometimes gets very heated. It’s worth talking about. My suggestion is, if people are serious about doing this, is to form a small committee and come up with impact studies, and have public hearings other than this hearing, where the seasonal homeowners can come in and talk.”
“This came up as a somewhat serious discussion around 2009, when the town was really down and people were fearful they couldn’t pay their taxes,” chairman of the selectmen Greg Coogan said. “It’s difficult right now to think about doing that.” Mr. Coogan said the burden on Mr. Bailey to make such a change for FY ’15 was much too severe.
“Logistically it’s a tough thing,” Mr. Bailey said.
“The argument can be made, and has been made in the past, that the second homeowner uses much less of the year-round services and therefore this would be a double whammy, because they’re already paying to our benefit now; to charge them more I think is unfair,” selectman Kathy Burton said.
“It gets complicated because the state formula for reimbursement takes into consideration these vacation homes, so we’re penalized for them as well,” Mr. Bailey said. State reimbursements for education are particularly punitive for the town, since expensive vacation homes skew the state assessment and reduce or, in the case of Oak Bluffs, eliminate state aid for education.
“I think it would really affect the real estate market,” Ms. Burton said, drawing on her 22 years of experience in the field. “I can hear it now.”
“They had a serious proposal in Mashpee this year and it was almost a lynch mob,” Mr. Bailey said.
“Let’s get some sand on our beaches before we consider anything like this,” selectman Michael Santoro said.
FinCom chairman Steve Auerbach recommended considering the exemption in the future. “On the face of it, it seems to be a progressive way of allocating taxes,” he said. “People with lower valued homes would benefit more than people presumably more able to pay their tax burden.”
Selectman Gail Barmakian agreed that the residential exemption is worth exploring: “Not that I can tell you I agree with it, but it does have its merits,” she said.
