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Reappraisals Add Up to Trouble for Tenants

Local Matters


Published August 3, 2005 at 1:54 p.m.

BURLINGTON -- Mike Shea was stunned when he opened his tax bill a few weeks ago and discovered that the property taxes on his six-unit apartment building on Austin Drive had jumped $3550, an increase of nearly 40 percent over last year. "I can't absorb that," says Shea. "The place doesn't make that kind of money. I'm a little scared."

But Shea, who also owns the Spirit of Ethan Allen III, says the tax increase will hit his tenants even harder. The occupants of his two-bedroom apartments, which rent for about $900 per month, include a seasonal house painter, a pizza delivery driver, a waiter and an employee at Dobrá Tea.

"I'm not talking executives who can afford the $35-a-month increase from last year and a $50-a-month increase this year," Shea adds. "I know these people can't afford this. I can see it in their eyes when I tell them. Any increase they may have gotten in their wages this year is gone."

Shea isn't the only landlord in town being forced to raise rents when leases expire. An analysis of the city's recent property-tax reassessment shows that "residential-commercial properties," or rental apartment buildings, experienced the biggest percentage rise in their property taxes. In fact, more than 62 percent of all apartment buildings -- i.e., those with five units or more -- saw their taxes rise by more than 31 percent. Fewer than 6 percent of them saw their tax bill rise 10 percent or less; fewer than 9 percent saw their tax bills drop.

The trend was similar for two- to four-family dwellings; more than 46 percent of them saw their property taxes jump by more than 31 percent. In contrast, taxes on only about 22 percent of single-family homes rose that much. Commercial real estate fared better; nearly 36 percent of these properties have a lower tax bill than last year.

The trend wasn't entirely unexpected. For more than a year, Mayor Peter Clavelle has been warning residents that the state-mandated property reassessment would shift the city's tax burden from commercial to residential properties. (The state requires a reappraisal whenever the aggregate value of all property in the city falls below 80 percent of its true market value.) As anyone who has been watching Burlington's real estate market knows, the price of investment rental properties has been increasing even faster than that of single-family homes.

As Shea points out, the people who will bear the brunt of those tax hikes are the ones who are least able to afford it. "I'm not blaming the City of Burlington. I know it takes money to run the city," he says. "But it does seem that the apartments got hit hard, and nobody was representing the apartment dwellers."

Actually, city residents in all kinds of dwellings were floored when their tax bills arrived last month. Many assumed that because the reappraisal was supposed to be revenue neutral, their taxes wouldn't go up much, if at all.

Among them is William Folmar, who lives in the Old North End. Folmar says his taxes nearly doubled over last year's. And when he called the city, he was incensed to learn that the window for filing an appeal had already closed. "I said, 'What are you talking about? I'm just opening the mail today.'"

Brendan Keleher, Burlington's chief administrative officer, says that's been a common reaction. Many homeowners didn't realize that when their property values went up after the reappraisal, some would see their taxes rise, while others would stay the same or drop. "There's actually quite a bit of variation within the residential class," he notes.

Keleher can't say which neighborhoods experienced the greatest tax hikes -- a geographic analysis is still in the works -- but property values in the Hill Section and along the waterfront were among those that rose the most.

While the process for appealing the reassessment is over, Keleher emphasizes that the current tax bills -- which are due August 12 -- may not reflect a homeowner's true tax liability. Anyone who earns $47,000 or less can have their taxes capped at 5 percent of their income. Keleher recommends that residents contact the Vermont Department of Taxation and file a request for a tax rebate. A similar program also exists for low- and moderate-income renters.