Tax challenges in a resort town

Colonial era buildings in a Newport historic district.

— Photo by Daniel Case

Newport Tax Change

Adapted from Robert Whitcomb’s “Digital Diary,’’ in GoLocal24.com

Newport has adopted a new two-tier residential tax system that may cut taxes for many homeowners. The people who would get the break include owners of single-family homes who prove that they’re residents of the City by the Sea for more than seven months a year as well as owners of residential rental properties of three or fewer  units whose renters’ leases run for at least a year.

The tax rate will remain higher for non-owner-occupied housing.

Earlier this year, Rhode Island state Sen. Dawn Euer said of the state legislation authorizing the change:

“As we know, our whole state and Newport especially are deep in an affordable housing crisis, and residential property tax relief is one tool to help address affordability…. Vacation rentals and short-term rentals take away from year-round housing, and while they do provide revenue, they contribute to  our city’s housing crisis. Making a distinction between them will give residents the tax relief they need, and encourage property owners to create and maintain the permanent housing we desperately need.”

This arrangement should help stabilize housing in the city, which has long been destabilized by the high number of  financially alluring (for property owners) expensive short-term warm-weather or even weekend rentals. But it’s hard to know what the effect on total property-tax revenue for the city might be. It will probably take a year to find out.

In any event, some lessons for other communities will come out of the Newport program, especially those in coastal resort areas.