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Foreclosure Expert: Taveras’ Tax Hike Puts Homeowner’s Over the Edge

Saturday, April 27, 2013

 

The proposed Fiscal Year 2014 budget submitted to the Providence City Council by Mayor Angel Taveras had local housing advocates and real estate experts in agreement on the issue of taxes. The Mayor’s proposed six percent tax increase for residential homeowner’s was not an option for residents and property owners who spoke to GoLocalProv less than 24 hours later.

People can't give anymore.

Attorney George Babcock, foreclosure expert and housing advocate was clear that Providence residents could not absorb the Mayor’s tax increase that averaged six percent, but increased proportionately for individual homeowners based on decreases in property values during the most recent valuation.

“Obviously, it’s an impediment for people already strapped with mortgages that they can’t afford now and probably shouldn’t have had in the first place, ” said Babcock.

“This is going to push people over the edge on what they can afford. They cannot continue to take and expect that there won’t be a break somewhere. This cannot go on forever. People cannot afford any more taxes,” he said. “They can’t give anymore. You can only take and take for so long before there is a breakdown.”

Babcock represents more than eight hundred (800) clients in the City of Providence and spoke of the toll increased housing costs, taxes, high mortgages and limited funding affects more than the individual seeking help.

“This is about families, Multiply that number by four and you have 3,200 people. And I’m not alone," he said.

"There are many lawyers representing families who are losing their homes. We only represent about twenty percent of the people in foreclosure situations. There is another eighty percent that just walk away, They are termed zombie foreclosures. They just walk away from it all."

"I don’t know where these people are going to go, said Babcock.”

The real estate market locally was just starting to recover.

Nelson Taylor, principal Broker at Taylor & Company was concerned with the ill effects the timing and announcement of the tax could have on a real estate market that had barely begun to recover.

“It’s unfortunate that this is happening now,” Taylor said. “This spring is the first time in the last six years that the housing market saw significant interest in properties. The trend across the country is good. The National association of realtors met recently and made three interesting points in their forecast.

• Interest rates wil increase by 5.5% up from 3.5% by 2015;
• property prices will increase by approximately 15% by 2015; and
• Inventory is going to remain low for the next 12-14 months.”

"Each of those factors shows improvement in the market," said Taylor.“More people are buying now due to the worry that rates will go up. Locally, with the extra 6%, it will be difficult,” he said. “The tax rate on the owner occupied side versus the investment side (multi-use, mixed use, businesses) is just starting to see a little growth. It is a tough time coming back into the market. An extra tax on that market is going to kill that market. “

Ed Bishop of E F Bishop Realty, who sits on the board of the College Hill Neighborhood Association and the Providence Apartment Association was concerned with the ill effects the timing and announcement of the tax could have on a real estate market that had barely begun to recover.

"Theoretically, the tax is supposed to be fair to rental owners because they are getting rid of the homestead tax and increasing the taxes to the homeowner,” said Bishop."The tax is supposed to balance it out some, and ease some of the burden to rental property owners. That is what we are hoping for but we haven't had a chance to look at the numbers and the proposal.

The Providence Apartment Association released the following statement late Friday evening.

After review of the Mayor's budget proposal, Bishop and the Providence Apartment Association released the following statement. 

“The Providence Apartment Association is very concerned about the effect the proposed tax rate will have on property values and rental rates, which have already been severely impacted as a result of the last two major major increases that landlords and tenants are still struggling to absorb. Having the highest tax rates on rental property in New England will continue to discourage investment in the city and the availability of affordable housing, thereby impacting the residents that can least afford it.”

Participate in GoLocalProv's poll regarding the tax increase here.

 

 

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Comments:

It is time to start a new political party in Little Rhody to lower taxes in the state.That will be the only issue they will consider. Any politician that votes for tax increases will be voted out of office on that fact alone. All other matters will not be in there political agenda. What do you think?

Comment #1 by Howard Miller on 2013 04 27

message to golocal prov.

we have the seen the salaries of all state employees online
we have seen the pensions of alls stae retirees.

how about posting the salaries of all city of providence employees online. i think people would be shocked at the salries of clerical staff, secretariesa dn middle managers. and not only the slaries but what do all these people do.

there are tons of patronage jobs in providence.

tavares is going to run for governor and get out of prov and just wnats to make sure the books look good before he leaves...

Comment #2 by jon paycheck on 2013 04 27

I feel badly for homeowners in Providence. They are now sunk for two reasons. 1) Taxes are going up dramatically on their homes while any good jobs and salary increases are very hard to find (unless you work for the government. 2) Those Providence homes are now going to be much more difficult to sell, now that City Hall has shown it will raise taxes on homeowners as often as it pleases, regardless of the economic climate.

Of course, the government does not really care about the middle-class working tax paying homeowner. It cares mostly about protecting the jobs and salaries of their fellow government workers and their fat benefits packages, and it cares about giving entitlements to the lower class, non-working city residents who take all the entitlements and show their appreciation by votiing for the politians who keep that gravy train alive.

Yes, RI needs a party that has tax reform as it's primary message, and target that message to the working middle class. It would result in changes, though hard to accomplish in a union-dominated, democratic party controlled state such as this.

Comment #3 by Captain Blacksocks on 2013 04 27

First Tavares says that the Providence finances are a mess. Next he supports Cicilline.When he runs for Governor I wonder who he will blame for 6% hike? We do not need a new party. We already have one. You should go to the Moderate Party's web site. All we need to do is encourage people to run as a Moderates. The platform is simple and concentrates on only the things that will encourage business and economic growth. One thing nobody should do is vote for an incumbent or somebody who has done nothing but work in public "service". We need to rid ourselves of one party rule and learn how to vote for individual candidates. YOU GET THE GOVERNMENT YOU DESERVE.

Comment #4 by Albert Romanowicz on 2013 04 27

http://www.change.org/petitions/providence-city-council-vote-no-on-any-property-tax-increases

sign the petition on chang.orgprovidence-city-council-vote-no-on-any-property-tax-increases

Comment #5 by anthony sionni on 2013 04 27

on top of that, they already pay 6 percent a year in car tax. Don't worry, Dems you'll still win by a landslide in the next election.

Retired union ticks have hit an artery and are going for the kill.

Comment #6 by Odd Job on 2013 04 27

This is outrageous! Maybe mayor Taveras should start by cutting spending and his staff salaries! Do we really need to pay a staff member $175,000 for a city job??? Do we really need to give out pay raises to people making over 100k a year??? Do we really need to have a $275,000 city cell phone bill??? Do we really need to pay for the mayors staff to park at the Biltmore parking garage to the tune of over 100k a year??? Do we really need to spend 500k a year to chauffeur mayor Taveras around with a police detail??? Are you getting the picture now????

Comment #7 by anthony sionni on 2013 04 27

I wonder if the city has studied the cost of forcing 1000 more Providence homeowners into forclosure. And the cost of having those properties sit vacant for many years because nobody will want to buy in a city with such high home and car taxes. Can you imagine what Tavares would do to RI home and car owners if he gets elected as governor. RI'ers are just stupid enough to fall for it.

Comment #8 by Katy Sloop on 2013 04 27

A 6% hike!?!?!?!? $663 million dollars to run that broken-down city for one measly year???? Taxpayers in Providence are getting COMPLETELY ripped off. And what happens when/if this guy becomes Governor?

Comment #9 by Dave Johnson on 2013 04 27

Anyone who didn't think that tax hikes were going to be necessary to balance the City's budget got some of that medical stuff before the rest of us. To bad there can't be other revenue streams that can be tapped into and a bit more job creation to increase the tax base would help.

Comment #10 by Kati Loreen on 2013 04 27

Kati,

Revenues are not the problem. Spending is the problem. You must have supported Obama and fallen for the same trick. How are you enjoying the new payroll tax and the new healthcare fees? Taxes and health costs were supposed to go DOWN for the middle class. Oooops! Voters for Taveres and Obama got hoodwinked. Gov Chafee too. You think he's done raising your taxes? RI voters will have to wake up some day. I've never seen a state that seems to love self-abuse as much as RI. You all must love getting ripped off, because it's the only way to explain voting for tax and spend liberals over and over and over again. If you voted for these people, you can only blame yourselves.

Comment #11 by Katy Sloop on 2013 04 27

Kati, you're right about the job creation - THAT would have been the best way to address revenue shortfall. But no, our 'leaders' like Tavares always take the easy path - increasing taxes and fees ad infinitum.

Comment #12 by Dave Johnson on 2013 04 27

Good question from Travis R. Tax increase will really be 22%. Just another example of how the government thinks you are all idiots and can't do basic math....

"During his budget presentation Taveras said, “We have increased the non-owner occupied residential tax rate in next year’s budget to $33.75 per thousand from effectively $27.11 per thousand.”

That’s a 24.5% tax increase.

“We have also increased the owner-occupied residential tax rate from effectively $15.95 per thousand to $19.50 per thousand."

That’s a 22.3% tax increase.

Where does Taveras get 6% from?"

Comment #13 by Katy Sloop on 2013 04 27

Do we really need to give out all these raises to the mayors staff, I mean $175,000 is not enough for one guy ,he needs another 3 percent raise, why we get screwed??? Oh ,and we have to pay for him to park at the Biltmore Parking garage, are you effin serious taveras?????

Comment #14 by anthony sionni on 2013 04 27

TAVERAS

SAME MAYOR PEOPLE WHO JUST PROPOSED A & YEAR

TAX FREEZE

FOR BUSINESS OWNERS AND THAT IS JUST FOR STARTERS

NOT A MAN OF THE PEOPLE
NOT A MAN FOR THE PEOPLE

TAVERAS IS FOR TAVERAS

GET OFF THE KOOL-AID and YOU WILL SEE JUST HOW BAD HE IS!

Comment #15 by Donna Day on 2013 04 29

your right donna!

Comment #16 by anthony sionni on 2013 04 29

Anthony

So Are you!!

I saw your list of TAVERAS WASTED SPENDING.

KEEP AT IT AND MAYBE WE CAN START A GROUNDSWELL THAT HE HAS TO LISTEN TOO.

Thank you for the Shout-out

Comment #17 by Donna Day on 2013 04 29

I agree with Howard Miller's comments about electing a Politician
who's only job is to vote NO on any increase in taxes. The guy
working everyday is the one that needs the help now. I'm sick of
all the freebies this State offers.

It should be all about lowering taxes and let the chips fall as they may
and I don't mean ask for 6% and get 3% I mean if your paying
$5000 for taxes this year you pay LESS next year. Non of this
BS like they in Washington.


k

Comment #18 by Ken K on 2013 04 29

yes, donna I am running and will never vote to increase any property or car taxes!

Comment #19 by anthony sionni on 2013 04 29

Katy Sloop: you misunderstand my use of the term "revenue". I do not mean new taxes by revenue, what I mean is to figure out new ways to generate revenue other than the tax base or to defer existing costs to other revenue streams. I do not think its just decrease taxes and spend less, I am a supply-side advocate. The point is to think outside of the traditional box and generate new strategies for balancing the budget.

Comment #20 by Kati Loreen on 2013 04 29

Kati. Like what? Start a casino or two? That might help a bit. Have you seen RI come up with great ideas for revenue generation aside from raising taxes and adding gambling venues?

Most states have a strategy for building revenues, and those are very much focused on attracting large, successful businesses to locate in their states, bringing several thousand good-paying, private sector jobs with them.

RI has NO such economic development strategy, and thankfully the incompetent morons who structured the 38 Studios deal have left the crime scene for good. Can you tell me why a large company would study al the states in the US and decide that RI is best place to locate their successful business. They'd have to fools to do so. And that is why you have not seen one major employer join the RI economy in about 20 years. Though several have left.

What's your idea for building revenues aside from taxes and gambling?

Comment #21 by Katy Sloop on 2013 04 29

I agree with your point about attracting companies, as long as the educational system turns out people without the minimum skills needed in today's economy (see lester Thurow's Head to Head) they won't come.

All current and retired municipal employees should be forced into the new Health Exchange.

Sell City assets, like the Water Supply Board.

Redirect costs such as special education to Medicaid; privatize all non-educational services: nursing, mental health, etc.

A (a tax, yes) City Use tax on all non-city residents who work in Providence (a nominal amount such as 1/4 of 1%).

Comment #22 by Kati Loreen on 2013 04 29

And the neighborhoods need to be rid of crime to attract a more diversified community mixing low, moderate, and high income earners. This why the Praire Avenue Revitalization Project wen't no where, people won't move into neighborhoods where they don't feel safe.

Comment #23 by Kati Loreen on 2013 04 29

A City Use on non-residential employees? That is a great way to ensure that whatever successful businesses remain in Providence will start moving to other cities. It will also turn off all those knowledge worker companies who might be be moving into the Providence Knowledge District. More likely those vast tracts of land will site vacant for many years. Companies considering a move to Providence, or RI in general, do not need to hear that NEW taxes are being invented. There already is a City Use tax in a way. The cost of parking is crazy here, and that generates a lot of tax income for the city...so does the million parking meters. A City Use tax might work in Manhattan which is a giant hub of high-end jobs, with the high-end infrastructure to match. I don't see that working well in Providence. Try LOWERING taxes and making the city a NICER place to work, then see if some large businesses actually show interest in moving here?

Comment #24 by Katy Sloop on 2013 04 29

So, the only thing you focused on was my City Use Tax at 1/4 of 1%, which translates into $.25 every $100; $2.50 every thousand; $25 every $10,000. I have now changed my sway bars twice since January.

It would be nice if you could have actually adressed my other points.

Comment #25 by Kati Loreen on 2013 04 30

Kati,

I do agree with you that the city needs less crime and more privitization of services. Providence and Pawtucket could also be combined into one fire, police and school district to save many millions per year. I'm not a fan of raising revenues by asking working people to pay more, as with your Use Tax. The are already too many taxes and fees. The problem is spending and waste. The mayor does not need a full time chauffuer for example and nobody on his staff who earns over 100K needs a raise while the city is struggling. Your sway bars broke because the city has no money to fill potholes, because the money is going to pay lavish overtime benefits, city council perks and other silliness.

Comment #26 by Katy Sloop on 2013 04 30

In a civilized society, there is always going to be spending. Waste is in the eye of the beholder and I'm not convinced based on my experience that changing a culture is so easy. That being said, we need some different ideas about how to climb out of this morass.

Comment #27 by Kati Loreen on 2013 04 30




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