The Mashpee Select Board voted to implement a 5 percent residential tax exemption, making Mashpee the 17th municipality in Massachusetts to implement such an exemption.
The Residential Tax Credit, or RX, as referred to by Director of Estimation Joseph A. Gibbons during the tax rating hearing on Monday21 November, will shift the housing burden from residential real estate to non-residential real estate. Depending on the percentage, the exemption amount is set at the average value of all residential properties in the city.
The council also voted to adopt the residential factor 1, which means there is no shift in the residential burden to commercial property. They also voted not to adopt an open space discount or a small business exemption, as the city had never voted to do so in the past.
The tax classification session lasted more than two hours, and board members heard concerns on both sides of the issue from both full-time and part-time residents.
In his presentation, Mr. Gibbons said that all figures used are estimates and any tax rates quoted are suggested, as they are subject to approval by the Massachusetts Department of Revenue.
For fiscal year 2024, Mashpee’s overall valuation total is just under $8 billion, of which 90 percent is residential. The remaining more than 9 percent, Gibbons said, is commercial, industrial and private property.
After state certification and approval, the average single-family home in FY23 was $770,395, up 22 percent from the previous year.
“That’s good or bad news depending on where you sit,” said Mr. Gibbons. The average single-family home tax bill is increasing based on the suggested tax rate of $6.94. [or] $196. So even with an average increase of 22 percent on single-family homes, the average tax bill that was $5,151 last year will be $5,347. An increase of $196, which is 3.8 percent or $16 per month if you provide mortgage security.”
With a 5 percent residential tax exemption, using the median value of all residential properties, $665,356, the proposed estimated residential exemption is $33,268. The proposed FY24 tax rate of $6.94 would result in a total tax rate of $7.01, Gibbons said. Total taxes would be $233.10 eligible for exemption per package.
The exemption’s tax rate has a revenue-neutral effect on tax collection, Gibbons said, and the city receives no additional revenue by implementing the exemption.
This higher rate creates a class shift that reduces taxes paid by homeowners with moderate value properties. Tax exempt is paid by owners of rental properties, second homes, and full-time residents with homes of higher value.
Those who are eligible to apply for a residential exemption have until April 1, 2023, to submit their information to the City. So far only 2,109 applicants have done so, Mr Gibbons said, and a few hundred applications still have to be screened.
And he reiterated the potential issues with implementing the exemption, since the city must submit already-vetted applications to the Department of Revenue for the calculation of the residential tax exemption once it’s passed on the selection board.
However, the town has already set the tax rate, Mr. Gibbons said. Because of this, Mashpee’s appraisal department increased the city’s overlay by more than $300,000. Mr. Gibbons said he believes the money will not be enough to cover the housing tax credit.
Three hundred thousand dollars doesn’t cover a lot of options. We’ll have to cover that shortfall in some other area or it will come right out of the FY24 budget because it will show up as a shortfall in next year’s summary paper,” he said.
Mashpee’s board of residents voted during its meeting last WednesdayNovember 16, To recommend that the elected council vote ‘no’ to change the tax rate and also to adopt the open space deduction and the small business exemption.
The Residents’ Council also recommended that if the housing tax exemption is passed, the selection committee sets the percentage as no more than 10 percent.
In the board’s talks about the exemption, Vice Chairman John G. Cotton asked Mr. Gibbons about year-round rents compared to short-term rents and if the appraisal department had the data on how many of each were in the city.
Mr. Gibbons said he did not have exact data on the numbers but had seen an increase in popularity among short-term rentals because of their attractiveness to landlords.
Board member Michaela A. Wyman Colombo said she was able to gather information about rents throughout the year from the 2020 US Census and the website www.datacapecod.org, which put Mashpee’s number at just under 10 percent. She can update this information with the census.
Chairman David W. Weeden said the most recent census is not entirely reliable because the COVID-19 pandemic has seen large influxes of year-round residents in the city as remote work becomes more prevalent.
Mr. Cotton also raised concerns about two mobile home parks in the city and how the residential tax credit would affect them. Mr Gibbons said the landlords would pass the cost of the tax onto the tenants by raising rents.
Board member Carol A. Sherman for those whose property is under a trust, of which Mr. Gibbons said in most cases those listed as trustees could qualify for an exemption.
City Manager Rodney C. Collins asked what the evaluation department found were the pros and cons of applying the exemption from other cities, particularly Provincetown.
Mr. Gibbons said Mashpee started the process “the right way” by funding the driver, vetting applications the previous year and hiring a part-time consultant with city support.
You can’t leave this out for six months or last year in a five-year re-audit. You have to stay on top of this and make it a part of everyday life in the evaluation department.”
For that reason, he said, his department is seeking to hire a part-time employee to focus on the residential tax credit.
Mr. Gibbons also said that Provincetown, as a resort community, is choosing to implement an expanded residential exemption. This allows landlords who rent annually to apply for an exemption, with the money returned to the landlord as an incentive to rent out to a resident throughout the year.
Mr. Cotton asked if the expanded residential tax credit was something Mashpee could consider for next year. He said he was reluctant to vote for the exemption because of the potential rent increase for tenants. He asked the appraisal department to determine the number of year-round tenants compared to short-term tenants to incentivize landlords to rent to the latter.
The extended exemption process is a one- to two-year process with the state legislature, Mr. Gibbons said.
“It’s just not something you can do easily,” he said.
“I find it difficult to think of this with the effects it could have on year-round rents,” Mr. Cotton said before the vote. “Just like Provincetown, if I were for that, I would like to see year-round rents included and maintained too, because without it I wonder about the impacts on mobile homes and rentals throughout the year.”
After the board discussion, about a dozen community members representing both sides of the tax credit argument came to the microphone to voice their opinions and concerns during the public comment period.
Opponents of the exemption spoke of its unfairness to summer residents, who still pay taxes and spend money in the town. Others have argued about the perception that those with a second home or summer residents in Mashpee are “wealthy or well off” enough to afford the increased taxes. Some of the year and summer residents in attendance described the vote as “taxing without representation”, asking the chosen council to be fair to all members of the community and “not just those who vote in the city”.
Others who opposed the vote talked about the economic benefits summer residents bring to the city and how the exemption could affect growth. Some sought to encourage the city not to stir up neighbors against neighbors by enacting the exemption.
I am also very concerned about the unintended consequences of the residential tax credit. People will choose not to build here at Mashpe. “We’re not going to have the new growth,” said Terry M. Cooke, a resident of the area. “It will impact a lot of our local businesses, not only with home building but also with the people who frequent all of our businesses in town.”
The city’s affordable housing crisis was mentioned several times by those who supported the housing tax credit. Some commenters urged board members to support the exemption to immediately make city housing affordable for year-round city residents, especially those who may be retired or on fixed incomes.
“Saying that only 30 percent of our housing is used seasonally is not trying to discredit anyone; it is what it is. Professional planners and consultants will come along and tell you this is a housing burden,” said resident Mary E. Wygan.
Ms. Wigan, who is the Chairperson of the Mashpee Planning Board, said the Residential Tax Credit is another tool to address the housing crisis that cannot be resolved through development alone. Others who supported the exemption spoke of the struggle of full-time residents to remain in the town, and one resident described the situation for those with a second home in town as “not comparable.”
Former board member Andrew Gottlieb said, “This is frankly the last good opportunity realistically within your control to do something that is in the best financial interest of people who are struggling to live and work here on a full-time basis.”