Chatham Tax Rate Projected To Increase 5 Percent; Final Classification Hearing Before Residential Exemption

CHATHAM – For possibly the last time, the select board last week voted to tax all classes of property in town at the same rate.

 Three weeks ago the board voted to adopt a 35 percent property tax exemption for year-round homeowners starting with the next fiscal year, which begins in July. When that happens, while there will still be a single tax rate for all property, year-round homeowners will see a reduction in the overall taxable value of their property as compared to nonresident owners.

Tax classification hearings are held annually to determine the factor at which various classes of property in town — such as residential, commercial and industrial — are taxed. Traditionally, Chatham has adopted a factor of “1,” which means all classes are taxed at the same rate.

When it comes time to hold a classification hearing next September for the 2027 fiscal year, the board will have to vote again to adopt the 35 percent residential exemption and will have to do so annually for the exemption to be applied. The state allows towns to adopt the residential exemption up to 35 percent; that number increases to 50 percent for municipalities like Chatham that qualify for seasonal designations under last year’s Affordable Homes Act.

 Next year, year-round homeowners will have to apply for the exemption and provide tax returns to prove residency (applicants can redact financial information). Those who fail to apply before tax bills are issued can file for an abatement.

 The board voted 4-1 Aug. 19 to adopt the exemption next year. Chair Dean Nicastro, who cast the dissenting vote, once again criticized the exemption at the board’s Sept. 2 meeting. 

The reason other board members voted for the exemption was to provide year-round residents with a property tax break on the premise that it would help them better manage the town’s high cost of living. But Nicastro said there’s no evidence that the exemption will promote year-round home occupancy. He pointed out that on Nantucket, which has had the exemption since 1991, there has only been a 1 percent increase in the number of year-round owner-occupied homes. He said he continues to believe that the exemption is a “bad idea.”

 “I think as an elected member of this board, my responsibility is to represent everybody in this town, whether they voted for me or not, whether they are voters or not, whether they own a home or not, whether they are year-round homeowners or seasonal residents and taxpayers,” he said. 

 “I think sound tax policy should be premised on real numbers and empirical data,” he continued. “I don’t think you make tax policy on a lick and a prayer.”

 Vice Chair Jeff Dykens said he expects the first year of the exemption to be “noisy,” noting that the assessing department will have to hire additional staff and there will be legal costs associated with ensuring that properties that are under trusts qualify for the exemption. Yet he believes the tax break will be substantial enough to help year-round residents.

 “It’s time we gave the locals a break,” he said. “Other towns have done it. Chatham can do it, too.”

 On Aug. 26 the state department of revenue approved newly revised property assessments, increasing the overall value of property in town by 4.3 percent, said Assistant Assessor Candace Cook. Based on the average assessment of $1.6 million, the 35 percent exemption amounts to a $574,986 reduction in the value of year-round owner-occupied properties. There are about 3,000 such homes in town; the exemption only applies to properties occupied by the owner year-round, not to other residential properties owned by residents, such as rentals.

A year-round resident who owns a home assessed at the $1.6 million average, based on the latest valuations, will save $1,395, according to calculations by the assessing department. A nonresident owner will pay $1,101 more. The savings to year-round residents drops with higher valued properties; at about $3.7 million the savings would basically disappear.

The assessing department is projecting a tax rate for the current fiscal year (2026) of $3.67, said Cook. With the exemption, next year’s tax rate is projected at $4.34, since it will lower the overall taxable valuation of property. 

This year’s 20 cent tax rate increase covers the $62 million in spending, including debt payments, approved by town meeting in May, a 10 percent increase over last year’s budget, according to an assessing department memo. Even though property values increased, they were outpaced by spending, requiring the 20 cent property tax hike.

The town’s overall valuation has increased annually for the past decade, ranging from 1 percent in 2021 to 20 percent in 2023, according to assessing department data.