Summer Resident Group Rejects Residential Tax Exemption

By: Tim Wood

Topics: Summer residents

Chatham seal.

 CHATHAM — A residential tax exemption is not the solution to problems such as affordable housing and retaining young families, and may not even benefit those it is intended to help, according to the summer residents’ advisory committee.

“The only purpose it serves,” said Michael Waters, head of a subcommittee that studied the issue, “is to move money from one group of taxpayers, the summer residents, to another group of taxpayers, the full-time residents. Some of them will be deserving and need the help,” but because of technicalities, other year-round residents may not qualify for the tax break, he said at last week's annual summer town meeting.

Voters have twice rejected a residential property tax exemption, in line with opposition by a majority of the select board, finance committee and board of assessors. The summer residents’ advisory committee (SRAC), which advised the select board on town policies, concurs with that opposition.

SRAC endorsed the select board's goals of building more affordable and attainable housing and finding other ways to maintain a diverse community – especially helping younger families stay in town – as enumerated by board chair Jeffrey Dykens during the Aug. 9 session. But the way to do that is through “surgical solutions,” Waters said, by using the latitude in the current property tax system and not through a residential tax exemption, which he likened to using “a shotgun and blowing it into the system.”

Massachusetts communities can adopt a state law that allows a percentage reduction in property taxes for year-round residents. To make up for the reduced revenue, the tax rate for non-resident property owners increases. Fourteen Massachusetts communities, including four on the Cape and Nantucket, have adopted the local option, Waters said. It has failed at town meeting twice, most recently in May, when resident Seth Taylor's petition article to adopt the exemption went down to defeat.

Nonresidents already pay about 65 percent of the town's property taxes, Waters said, while year-round residents pay 35 percent.

“We're happy to do that under a fair tax system, where the money is being used to solve all the problems of the town,” Waters said.

Many year-round residents wouldn't see any benefit from the exemption, he said. A considerable amount of paperwork would need to be filed to prove year-round residency, which would also require that the town hire a half-time person to process at a cost of about $60,000 a year, he said. Properties owned by corporations would not qualify. For some properties, a reduced assessment could negate any savings. In those cases, year-round owners would have to pay the higher non-resident tax rate, Waters said.

“If you don't get the residential exemption, you get a tax increase, just like the summer residents,” he said.

While Dykens said the select board intended to study the exemption and look at how it has been implemented in Nantucket and the Cape towns, Waters said Chatham shouldn't pursue the exemption just because other Cape towns have adopted it.

“We should make our own decisions, and we shouldn't just treat it as a financial decision,” Waters said. “We should remember that it's a personal decision too, because people that are summer residents that are making a substantial contribution, many will be offended by being treated as second-tier taxpayers. I don't think that's the way to solve the problem.”

Last May, voters approved funds for a preschool support program and to increase childcare vouchers, Dykens said. But while those programs may make Chatham more attractive to younger folks, “there are not enough places for them to live in Chatham,” he said. While the town has done a good job in maintaining its infrastructure and implementing wastewater management measures, “we have perhaps been laggards in providing affordable and attainable housing,” he said.

Chatham has a solid financial foundation and should use those resources to address the goals and priorities of the select board and the town, SRAC members said. The town currently has three affordable and/or attainable projects in the works, on land on Meetinghouse Road, Stepping Stones Road and Main Street in West Chatham, according to Community Development Director Kathleen Donovan. Proposals for additional private land that might be suitable for affordable housing are due Aug. 26, she said.

While the town is, for the third year, maintaining a COVID financial plan that stresses resilient and sustainable services, “the local economy has rebounded” in the past year, as shown by significant increases in short-term rental, occupancy and meals tax receipts, said Finance Director Alix Heilala. Real estate values have risen an estimated 10 percent, which will mean a lower tax rate.

“Chatham values are very high and our tax rate is very low compared to other towns on the Cape,” she said; the tax rate is currently $4.62, compared to a Cape average of $8.09. SRAC Chair Jamie Meehan said Chatham property owners pay about the same amount of taxes are Harwich property owners, but the average assessed value in Chatham is more than 75 percent higher than in Harwich. Between 2017 and 2022, the total value of residential real estate in town increased by 29 percent to $7.7 billion.

SRAC, an official town committee, has sponsored the informal summer town meeting for about two decades, but the tradition goes back 76 years, said Moderator William Litchfield. The SRAC provides “summer residents with a voice” on town policies, he said.

 

“It's not lost on the select board the incredible financial support that the summer residents provide to the town of Chatham,” Dykens said.  

CHATHAM — A residential tax exemption is not the solution to problems such as affordable housing and retaining young families, and may not even benefit those it is intended to help, according to the summer residents’ advisory committee.“The only purpose it serves,” said Michael Waters, head of a subcommittee that studied the issue, “is to move money from one group of taxpayers, the summer residents, to another group of taxpayers, the full-time residents. Some of them will be deserving and need the help,” but because of technicalities, other year-round residents may not qualify for the tax break, he said at last week's annual summer town meeting.Voters have twice rejected a residential property tax exemption, in line with opposition by a majority of the select board, finance committee and board of assessors. The summer residents’ advisory committee (SRAC), which advised the select board on town policies, concurs with that opposition.SRAC endorsed the select board's goals of building more affordable and attainable housing and finding other ways to maintain a diverse community – especially helping younger families stay in town – as enumerated by board chair Jeffrey Dykens during the Aug. 9 session. But the way to do that is through “surgical solutions,” Waters said, by using the latitude in the current property tax system and not through a residential tax exemption, which he likened to using “a shotgun and blowing it into the system.”Massachusetts communities can adopt a state law that allows a percentage reduction in property taxes for year-round residents. To make up for the reduced revenue, the tax rate for non-resident property owners increases. Fourteen Massachusetts communities, including four on the Cape and Nantucket, have adopted the local option, Waters said. It has failed at town meeting twice, most recently in May, when resident Seth Taylor's petition article to adopt the exemption went down to defeat.Nonresidents already pay about 65 percent of the town's property taxes, Waters said, while year-round residents pay 35 percent.“We're happy to do that under a fair tax system, where the money is being used to solve all the problems of the town,” Waters said.Many year-round residents wouldn't see any benefit from the exemption, he said. A considerable amount of paperwork would need to be filed to prove year-round residency, which would also require that the town hire a half-time person to process at a cost of about $60,000 a year, he said. Properties owned by corporations would not qualify. For some properties, a reduced assessment could negate any savings. In those cases, year-round owners would have to pay the higher non-resident tax rate, Waters said.“If you don't get the residential exemption, you get a tax increase, just like the summer residents,” he said.While Dykens said the select board intended to study the exemption and look at how it has been implemented in Nantucket and the Cape towns, Waters said Chatham shouldn't pursue the exemption just because other Cape towns have adopted it.“We should make our own decisions, and we shouldn't just treat it as a financial decision,” Waters said. “We should remember that it's a personal decision too, because people that are summer residents that are making a substantial contribution, many will be offended by being treated as second-tier taxpayers. I don't think that's the way to solve the problem.”Last May, voters approved funds for a preschool support program and to increase childcare vouchers, Dykens said. But while those programs may make Chatham more attractive to younger folks, “there are not enough places for them to live in Chatham,” he said. While the town has done a good job in maintaining its infrastructure and implementing wastewater management measures, “we have perhaps been laggards in providing affordable and attainable housing,” he said.Chatham has a solid financial foundation and should use those resources to address the goals and priorities of the select board and the town, SRAC members said. The town currently has three affordable and/or attainable projects in the works, on land on Meetinghouse Road, Stepping Stones Road and Main Street in West Chatham, according to Community Development Director Kathleen Donovan. Proposals for additional private land that might be suitable for affordable housing are due Aug. 26, she said.While the town is, for the third year, maintaining a COVID financial plan that stresses resilient and sustainable services, “the local economy has rebounded” in the past year, as shown by significant increases in short-term rental, occupancy and meals tax receipts, said Finance Director Alix Heilala. Real estate values have risen an estimated 10 percent, which will mean a lower tax rate.“Chatham values are very high and our tax rate is very low compared to other towns on the Cape,” she said; the tax rate is currently $4.62, compared to a Cape average of $8.09. SRAC Chair Jamie Meehan said Chatham property owners pay about the same amount of taxes are Harwich property owners, but the average assessed value in Chatham is more than 75 percent higher than in Harwich. Between 2017 and 2022, the total value of residential real estate in town increased by 29 percent to $7.7 billion.SRAC, an official town committee, has sponsored the informal summer town meeting for about two decades, but the tradition goes back 76 years, said Moderator William Litchfield. The SRAC provides “summer residents with a voice” on town policies, he said.“It's not lost on the select board the incredible financial support that the summer residents provide to the town of Chatham,” Dykens said.