Provides an 8% tax rate for those properties that are encumbered by a deed restriction for low-income housing set at 80% or 60% of adjusted median income established by HUD.
The bill is designed to stabilize the property tax burden for low-income housing developers and owners, thereby promoting the sustainability of affordable housing initiatives in the state. Under this new structure, properties converting from non-residential to residential use will be taxed at the same rate, providing predictability in tax expenses over the next thirty years. The legislation states that municipalities cannot set tax rates higher than the prescribed structure, ensuring state-level uniformity in tax assessments related to low-income properties.
House Bill H5688 aims to amend the existing laws regarding the taxation of low-income housing within Rhode Island. Specifically, the bill establishes an 8% tax rate for residential properties that meet certain qualifications, particularly those properties that have undergone substantial rehabilitation and are encumbered by deed restrictions limiting rent levels. This legislative change is intended to incentivize the creation and retention of affordable housing that serves households with incomes at or below 80% or 60% of the adjusted median income as defined by the U.S. Department of Housing and Urban Development (HUD).
While the bill generally enjoys support for its intention to enhance affordable housing availability, discussions may arise regarding the implications for municipal revenue loss due to the fixed tax rates. Some local officials may express concerns about the limiting of local governance over property taxation and potential adverse effects on funding for municipal services. The balance between fostering affordable housing and maintaining adequate local funding will likely fuel debates as the bill progresses through the legislative process.