The administration says the resolution approved Monday night by the City Council, allowing for an alteration in the ratio of between residential and commercial taxes, is a “tool” to stabilize taxes.

Small business owners, who turned out to oppose the resolution, however, view the provision, if approved by the General Assembly, as a means of offsetting residential taxes at their expense.

The faceoff over the ratio between the residential and commercial rates – currently the commercial rate is 50 percent higher than the residential rate – comes as the city prepares to implement a citywide revaluation as of Dec. 31, 2022. By state statute the city was to have implemented a revaluation last year, but citing an unstable real estate market where home prices skyrocketed, the city won legislative approval of a year’s delay.

Although the market has softened because of rising interest rates, prices haven’t declined due to lack inventory of properties for sale. Mayor Frank Picozzi favors implementing the revaluation this year, pointing out that legislative approval of another delay is not a guarantee. Additionally, the city has its back against the wall in implementing the revaluation in time to approve the 2023-24 budget and tax rates.

While City Tax Assessor Neal Dupuis hedged on projections of how much residential valuations would increase with a revaluation, pointing out that percentage shouldn’t be applied to this year’s tax bill, he said he wouldn’t be surprised if overall residential values were up 30 to 40 percent. He wasn’t asked for estimates on increases in commercial valuations, but with the pandemic and the increase on online shopping and working from home, demand for office and retail space has dropped. Values have increased since pre-pandemic but not at the rates seen in residential according to a local commercial real estate broker.

Revaluation notices in May

Dupuis said revaluation notices are projected to go out the first week of May. Hearings on contested valuations will follow.

Echoing what Dupuis told the council the night before, Picozzi said Tuesday, “the taxes will be status quo.” He sees the ability to alter the commercial and residential ratio, should it be approved, as affecting the tangible property taxes only. He sees it as impacting the big box stores and Rhode Island, but not small businesses.

He accused the Central Rhode Island Chamber of Commerce of “completely misrepresenting” the issue. “This is just on tangibles,” he said.

This is not the way the chamber or business owners saw it Monday night.

The single “not” vote, Ward 5 Councilman Ed Ladouceur, likewise was opposed to the resolution. Ladouceur questioned the resolution as soon as it was posted on the Secretary of State website Thursday inquiring of its meaning and posing 14 questions that Dupuis answered during the weekend. Ladouceur read the questions and answers into the record.

“I’m glad to hear we’re not looking to do what Providence did,” he said of commercial tax rates there. Nonetheless, he said he is “very skeptical of this legislation” adding that it “looks to shift more of the (tax) burden.” A proponent of retired municipal employees co-paying for their health insurance, which has failed to gain council traction, Ladouceur said to applause that the best way to address higher taxes is “to stop the spending.”

With small business owners standing in support, Chamber President and CEO Lauren Slocum said, “While there may be no intent to increase the burden placed on businesses currently, if passed - this change would open the door to putting an undue burden on business at any given time in the future.”

Tamara McKenney of the Apponaug Brewing Company was skeptical of Dupuis’ characterization of the provision as a tool in the city tool box.

“That tool will eventually be a weapon,” she warned. She said she would not risk the investment of starting another business in the city if the resolution gains approval.

“It’s an open book,” Michael Penta, who owns several Warwick businesses, told the council. He urged the council to table a vote, allowing for more discussion and the administration to work with the business community. His wife, who co-owns Gel’s Kitchen with him, pointed to the audience observing that was comprised of small business owners – not large corporations - and they are the ones who support the youth teams and the activities of non profits and without them there wouldn’t be community.

Slocum sent out more than 400 emails to chamber members with Warwick businesses urging them to turnout for the meeting. In a follow up email Tuesday she wrote, “The business community shared their point of view and voiced their concern. We want to be clear, we do not want to burden residents, but we can't burden business either. It needs to be fair to all, together we are a community.”

‘Little or no impact”

City Council President Steve McAllister also turned to email following the meeting. In a report to constituents he wrote, “The major concern from the residents who attend last night was regarding the impact this would have on the business community. Regarding this question, the tax assessor stated “because we (the administration) are not looking to increase the tax levy for any class of property, there will be little to no impact on the small business community.” He also stated “no increase in the commercial tax levy is being suggested. Approving this proposal will only allow the City additional options in setting the tax rates.”

As described in the notice the chamber members: The resolution asks the General Assembly to “amend the property tax classification to change the ratio of property taxes paid by business - resulting in an increased percentage for business.

 "Class 1 property tax rates shall not be less than 57 percent (it is presently 75%) of 14 class two (2) property tax rates.

"(1) Class 1: residential real estate consisting of no more than five (5) dwelling units, land classified as open space, and dwellings on leased land including mobile homes.

(2) Class 2: commercial and industrial real estate, residential properties containing partial commercial or business uses and residential real estate of more than five (5) dwelling units."

In arguing for council approval of the resolution, Dupuis reasoned the city should have the flexibility to change the ratio but is not looking to do so this year. Picozzi reiterated Tuesday that if the city were to employ the ability to alter the rate ratio this year it would apply only to the tangible and personal property tax.