Could A Residential Tax Exemption Help Orleans?

by Ryan Bray
Orleans Town Assessor Brad Hinote leads the select board through a tax classification hearing Nov. 15.  RYAN BRAY PHOTO Orleans Town Assessor Brad Hinote leads the select board through a tax classification hearing Nov. 15. RYAN BRAY PHOTO

ORLEANS – “It’s that time of year again,” Town Assessor Brad Hinote told the select board Nov. 15.

Hinote was before the board for the town’s annual property tax classification hearing, where it is decided how taxes will be levied across the community for the current fiscal year.

Typically, the board opts for a single tax rate for all residential and commercial properties, and this year was no exception. But there was some interest on the board in looking at how a residential tax exemption might help address the town’s growing affordability problem.

Orleans and other towns across the Cape are increasingly becoming harder to afford for many working residents and families. That trend has accelerated in recent years due to the COVID-19 pandemic, as an influx of new residents flocked to the region to get out of cities and more densely populated areas.

Hinote presented figures that show that while overall property sales are down 21 percent from 2022, the median sale price of a single family home has increased 15 percent to just over $1 million.

With that, some select board members said the residential exemption could ease the tax burden for those residents most in need of financial relief. The exemption allows a certain amount of assessed value to be shifted off of year-round property owners and onto those “non-domiciled” properties that are only inhabited part time.

“What you’re able to do is basically take a big chunk of what our domiciled year-round residents pay and shift it onto the folks who don’t live here year round,” Hinote said.

As an example, Hinote said a 25 percent exemption could knock an average of $275,000 off the assessed value of approximately 2,700 properties in town. The highest amount that can be exempted is 35 percent, he said.

Mefford Runyon of the select board said the idea of adopting the exemption has grown on him in recent years. He said the savings for owners of lower valued properties could help them cover their share of the cost for a number of proposed town projects, among them a new fire station, library and community center.

Wellfleet, Truro and Provincetown have each adopted a residential exemption, with Provincetown having since increased its exemption to the full 35 percent. But Hinote said the exemption is better suited to those communities, which have year-round occupancies of 20 to 30 percent. In Orleans, 56 percent of residential properties are lived in year round.

“I think it’s more important that we be looking at this as ‘How do we shift this tax burden,’ rather than ‘How do we compare with Truro, Wellfleet and Provincetown that are split between year-round and second homeowners,” Runyon said.

Kevin Galligan of the select board supported working toward providing that relief, but said that an exemption might not be the way to do it. Instead, he favored working toward the adoption of a real estate tax transfer fee that would direct a percentage of sales from high end properties back to the town.

A housing bond bill put forth by Governor Maura Helaey includes a local option for communities on the Cape to adopt the transfer fee. In Chatham, officials have petitioned the legislature to allow the town to adopt a fee of a half percent on all sales of $2 million or more. Galligan suggested that the town follow suit.

“As I read the legislation, it’s got some flexibility, meaning you can set whatever floor you want,” he said. “It’s got flexibility relative to the surcharge percentage.”

Select Board member Andrea Reed, meanwhile, advocated for creating more revenue streams in town to help lift the tax burden off of residents instead of shifting the tax rate.

Whichever way the town chooses to go, Cameron Hadfield, co-owner of The Rail and co-manager of the Barley Neck Inn, advised the select board to act sooner rather than later to protect its year-round population. He said the town shouldn’t wait for the population to fall to what currently exists on the Outer Cape.

“If you’re waiting potentially for the [year-round] portion to drop that low, you can only save a sinking ship up to a certain point,” he said.

But while overall property sales have dipped from last year, Hinote said he anticipates that more and more people will continue to move to town. Residential sales continue to grow steadily from year to year, he said, which he estimated will keep the town’s year-round occupancy around 60 percent.

“We’re on track to issue more excise bills than ever this year,” he said. He added that figures could be provided to the board showing what properties are being bought, be it lower valued homes or more high end ones.

“Because what kind of year-round population we’re growing into matters,” Runyon said.

With that year-round growth has come optimism on the commercial front, Hinote said. He said the $33 million sale of Skaket Corners last year is evidence that there’s confidence that people are ready to shop and spend money in Orleans in the future.

The select board voted 4-1 Nov. 15 to adopt the single tax rate, with Runyon voting in opposition. Hinote said if the town is considering adopting a residential exemption, that should happen before fiscal 2026.

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