12 things to know about Providence’s rising property values

This report is updated as of 4/22/2016.

PROVIDENCE, R.I. (WPRI) – From the West End to Wayland Square, property values are increasing in neighborhoods throughout Rhode Island’s capital city.

An analysis of the state-mandated property revaluation shows values grew between 6% and 17% in each of Providence’s 15 wards, but it remains unclear how taxpayers will be affected by the assessment changes.

So what do we know at this point? Here’s an overview.

1. Residential property values are up 9.5% on average.
It doesn’t matter where you own property in Providence; it is very likely your values are going up. (More on specific neighborhoods below.) Property values across the city are up about 9.45% on average, with multi-family homes seeing the biggest increases. For example, the average four-family property in the city saw a 26.59% increase. By comparison, single-family homes saw a 7.34% increase. As it stands now, there’s a good chance that the only real estate property you own that hasn’t seen a significant spike in value is your shed or garage. Those out-buildings saw a 3.48% reduction in values this year.

2. The revaluation is required by state law.
The review of property throughout the city isn’t just a ploy by city officials to grow tax revenue; it’s actually mandated by the state. Rhode Island law requires cities and towns to conduct statistical property revaluations every three years – that’s the kind we’re seeing right now – and full revaluations every nine years. (Statistical updates focus only on properties that have been sold in recent years. Full revaluations review every property.) Providence’s last statistical revaluation came during the 2012-13 fiscal year. Gov. Gina Raimondo has proposed changing the schedule to statistical revaluations every five years and full revaluations every 15 years.

3. Your tax rates will likely go down, but you’ll probably still pay more.
It’s important to know that a 9.45% average increase in property values doesn’t mean the city gets to increase its tax levy by that much. In fact, state law limits the amount a municipality can increase total taxes in any one year at 4% of the previous year’s levy, which includes real estate, tangible property and car taxes. Providence’s current levy is $351.8 million; a 4% increase would generate about $14 million in new revenue. The values have increased so much that Providence cannot keep the same tax rates if it wants to remain in compliance with the 4% property tax cap. That means that rates will likely go down, but certainly not enough for most people to find themselves paying less in taxes during the 2016-17 fiscal year than they are right now. Providence’s current owner-occupied rate $19.25 per $1,000 of assessed value and its non-owner-occupied rate is $33.10 per $1,000. The city’s commercial tax rate is $36.75 per $1,000 and the car tax rate is $60 per $1,000 of value, with the first $1,000 exempt.

4. There is a way for Providence to exceed the 4% cap.
While the vast majority of communities see their annual tax levies grow well under the 4% limit enacted by the state, there is a provision in the law that allows them to exceed the cap at certain times. In Providence’s case, city officials could seek an exemption from the cap by making the case that budget problems have created an “emergency situation.” (Remember, the city ended the 2014-15 fiscal year with a deficit.) Auditor General Dennis Hoyle would need to sign off on the request and at least 12 of Providence’s 15 City Council members would have to approve the increase.

Providence property values5. The East Side’s property values might surprise you.
This year’s revaluation is really the second one since the Great Recession and the first where the entire city saw a big increase in property values. Three years ago, a lot of owners on the East Side saw their values increase or at least hold steady compared with other neighborhoods, which resulted in a disproportionately large tax increase in Wards 1, 2 and 3. This year, Wards 1 (Fox Point and downtown) and 2 (Blackstone, College Hill and Wayland) saw total property value increases of 5.97% and 6.94%, respectively. In Ward 1, single-family homes only increased in value by 1.4%. Ward 3 (Mount Hope, Summit) saw a significantly larger increase of 10.22%, in part because “money was moving into that area,” according to David Quinn, the city’s tax assessor. He’s not kidding. The average single-family property in Ward 3 is now expected to be worth $373,826, up from $342,077 last year.

6. Three neighborhoods saw at least 15% increases in value.
If you bought cheap on the South Side in recent years, you should be patting yourself on the back. In Ward 10 (Lower South Providence and Washington Park), values shot up 17.33%. (This is where Council President Luis Aponte lives, by the way.) Two-family and three-family properties in that ward jumped by 21.29% and 25.52%, respectively. Same goes in Ward 8 (South Elmwood, Reservoir Triangle), where values are up 17.14%. In Ward 11 (Upper South Providence, West End), values grew by 14.98%. Of course, these are all majority-minority neighborhoods that saw big spikes in foreclosures and vacancies when the housing market collapsed.

7. Renters could be ‘socked’ again.
Three-family property values are up 15.67% and four-families are up 26.59%. Who lives in those properties? Renters. And if landlords see large spikes in their actual property tax bills, you can bet that will trickle down to the tenants, according to Keith Fernandes, who heads up the Providence Apartment Association. Fernandes claims “Providence has one of the highest tax-rate differentials in the nation between owner-occupied and non-owner occupied homes” and the new assessments suggest renters “will be socked yet again.” Fernandes’s group is outspoken in its opposition to generous tax breaks for residential developments, particularly in downtown. “One way of ensuring residential tax rates remain fair is by having everyone pay their fair share,” he said. “Otherwise ‘One Providence’ remains just a pipe dream.” “One Providence” was Mayor Elorza’s campaign slogan in 2014.

8. Commercial property values are also on the rise.
Commercial properties – like the Superman building in downtown – are expected to increase in value by between 7% and 8%, which means the Elorza administration has a big decision to make. In 2013, former Mayor Angel Taveras and the City Council set a goal of freezing the $36.75 commercial tax rate for a period of seven years as part of an effort to provide predictability to developers and to improve the city’s ranking in the Lincoln Institute of Land Policy’s annual tax survey. But because the city pushed a rate freeze rather than a freeze on actual taxes, Providence now finds itself in a position to see a big boost in revenue on the backs of commercial property owners. In theory, keeping the $36.75 rate would limit the amount the city can raise on residential properties. But you can expect the commercial owners to advocate for a rate reduction.

9. Property owners received their new assessments in early April.
The city is planning to send impact notices to every property owner by the first week in April. This won’t be a tax bill, but it will give owners the chance to compare their previous assessment with the new one. Steve Ferreira, a project manager for Vision Government Solutions, the firm that conducted the revaluation, said the new values are based on an analysis of about 900 home sales in Providence over the last year. (The review doesn’t factor in short sales or foreclosures, Ferreira said.)

10. Very few residents disputed their property value.
Once owners received their assessments, they had two weeks to book an appointment with the city and VGS to discuss adjustments. A spokesperson for the city told Susan Campbell that of the 40,000 assessments mailed out, only 637 appeals were filed. (New assessments for those properties will be mailed by the middle of May.) Once tax bills go out later this summer, property owners also have the right to file an appeal with the tax assessor.

11. Providence’s revaluation firm knows Rhode Island well.
Vision Government Solutions (VGS) has been in business for more than 40 years and has worked on revaluations in nearly every city or town in Rhode Island. (The firm also works in Connecticut, Maine, Massachusetts, New Hampshire, New York, Pennsylvania, Virginia and Vermont.) In its bid to the city, the firm stated it has conducted 30 valuation projects in Rhode Island over the last five years. Ferreira, the project manager, has a degree from Stonehill College and has been with the firm since 1984, according to his resume. Providence is paying VGS $524,000 for the revaluation.

12. All eyes are on Mayor Elorza’s budget.
While the revaluation may be wrapping up, it will still be several months before anyone learns how much more (or less) they will have to pay the city in taxes. Mayor Elorza is expected to unveil his budget proposal April 27 and the City Council will be tasked with vetting the proposal in the weeks that follow. It’s a safe bet to assume that some (or all) tax rates will be lowered as a result of the new valuation. It’s also a safe bet to assume that most property owners will still end up paying more in overall taxes. What is less clear is whether the city will seek to exceed that 4% property tax cap in order to improve its fiscal situation.

Correction: The original version of this article stated that Ward 1 had the lowest increase in single-family property values. Ward 9 had the lowest.

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

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