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.
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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.
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“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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