Providence City Council may cut taxes for rental property owners

Providence City Hall

PROVIDENCE, R.I. (WPRI) – The majority of the Providence City Council wants to lower tax rates for rental property owners and slightly increase rates for those who live in their homes beginning in the 2016 fiscal year, but council leadership is calling for a public hearing before another vote is taken.

The council is scheduled to vote on the ordinance for a second time Thursday night even though it has never been approved by the Ways and Means Committee, an unusual path to passage that has some council members asking for more time to discuss the law.

“I welcome the opportunity to hold a public hearing on the proposed legislation, and I look forward to hearing from property owners and renters on the matter, as well as receiving a fiscal analysis of the potential impact of the legislation on all property classes,” Councilman David Salvatore, who chairs the Ways and Means Committee, said in a prepared statement.

Under a revenue neutral scenario, the ordinance would reduce the city’s non-owner-occupied tax rate from $33.75 per $1,000 of assessed value to $32.22 while increasing rates for owner-occupied homes by 89 cents to $20.14 per $1,000 of assessed value starting in the 2015-16 fiscal year, according to a worksheet created by the city’s internal auditor. The goal, supporters say, is to ease some of the tax burden on those who rent to Providence residents, but do not live in the property they own.

In a rare move, the council approved the ordinance on May 1 – the same day it was introduced – and then sent it to the Ways and Means Committee for further discussion. No hearings have been held on the matter. Ordinances must be approved twice by the full council before taking effect.

Because the ordinance was not discussed in committee, 11 members of the all-Democratic council signed a letter asking for it to be discharged from the committee and placed on the agenda for Thursday’s City Council meeting for a vote.

The only members not signing the petition were Salvatore, City Council President Michael Solomon, Majority Leader Seth Yurdin and East Side Councilman Sam Zurier.

Councilman Luis Aponte, who serves as vice chairman of the Ways and Means Committee, said the four council members who oppose the ordinance have the option to lobby their colleagues on the matter or recommend that the Taveras administration exercise his veto power, but “the one thing you can’t do is capriciously lock it up in committee.”

“The vast majority of Providence residents are renters, so it becomes an equity issue,” Aponte told WPRI.com.

Meaghan McCabe,a spokeswoman for the Taveras administration, said the city law office believes a public hearing must be held before the vote.

“The city solicitor has advised that the proposed ordinance that would reduce the non-owner-occupied tax rate to 60 percent of the owner-occupied tax rate requires a public hearing before final action by the City Council according to the city charter,” McCabe told WPRI.com.

In 2013, the city eliminated its homestead exemption for owner-occupied homes, instead creating two separate tax rates for those who live in the home they own and those who don’t. At $33.75 per $1,000 of assessed value, non-owner-occupied tax rates are about 75% higher than the owner-occupied rate of $19.25 per $1,000 of assessed value. The ordinance would reduce the difference to 60%.

Asked why the council approved the ordinance the first time without allowing it to go through the committee process, Aponte said the changes have been in the works for several months and suggested “there isn’t much of a difference” between passing the ordinance once and sending it to committee and having to pass it twice in a short period of time once it is vetted in committee.

“When you have 11 of 15 council members, it’s not as if due diligence hasn’t already been done,” Aponte said.

Separately, the council is expected give first approval to the 2014-15 fiscal year budget that holds the line on taxes Thursday night. The budget also needs two votes.

This original version of this report incorrectly stated that the ordinance would be implemented over three years. The rate changes would occur for the 2016 fiscal year.

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan

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