PROVIDENCE PROPERTY OWNERS COULD FACE HUGE TAX INCREASE

City Council to Vote on July 26

Warwick, RI - July 21, 2010...The Rhode Island Association of Realtors and the Greater Providence Board of Realtors is working to spread the word about a significant tax hike facing Providence property owners that will be voted on by the Providence City Council on July 26th.  If passed, some property owners could see an 88 percent increase in their taxes.

On July 14th, the Providence City Council's Finance Committee voted to increase the property tax rates for residential and commercial property.  The residential property tax rate would increase from $24.21 per $1,000 of assessed value to $30.38, a 25.5 percent increase.  Additionally, the commercial tax rate would see a 17.8 percent increase from $28.60 per thousand to $33.70 per thousand.   Landlords may receive an even more significant blow if the repeal of the homestead exemption for non-owner occupied rental properties of 1 - 5 units is passed.  The exemption, which has been in place for decades, exempts the first 33% of assessment value from the tax, resulting in a discounted rate of $16.14 this year.  Loss of the exemption coupled with the tax increase could result in an 88 percent increase in taxes from year to year for some Providence property owners.  According to a July 16th report in the Providence Journal, property owners will receive revised tax bills next month.

According to Libby Isaacson, President of the Great Providence Board of Realtors, "Buyers made huge investment decisions based on tax laws that had been in place for years.  Then, just when the Providence multi-family market is struggling to get back on its feet, the City is looking to change the rules of the game.  This could drive the foreclosure market through the roof and that in turn will hurt the Providence rental market. The last thing we should be doing is driving people out of the city.  We need the economic base they provide."
 
Providence City Council Finance Committee Chair John Igliozzi was quoted in the July 20th Providence Journal as saying, "(Landlords) are business people, and they will probably not make as much profit as they are used to, and they are unhappy." 

"A lot of landlords have been struggling lately," commented Karl Martone, President of the Rhode Island Association of Realtors.  "More than 60 percent of multi-family sales are being sold through short sale or foreclosure. We should be working to get that number down, not increase it."    

RIAR is asking citizens to contact the Mayor at mayor@providenceri.com or 421-2489 and City Council members at council@providenceri.com or 521-7477 to oppose the property tax revisions, and to attend the Providence City Council hearing on July 26th.