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Monday, April 9, 2012

How to get a tax break in Charlestown

Dance Marathon during the Depression - dance till you drop for money
to survive. The revival is coming to Charlestown soon
By Will Collette

On its Monday, April 9, agenda, the Charlestown Town Council will get its first introduction to a new tax break proposal. The proposal comes from the Budget Commission under the tutelage and guiding intellect of their Town Council liaison, Deputy Dan Slattery.

The proposal recommends that the town consider creating a new program by ordinance called “Resident Home Owner Tax Assistance Program.” RHOTAP is the snappy acronym.

You can read the two-page proposal by clicking here or at the end of this article.

There are two things I can tell you for sure that RHOTAP is not. It’s not Tap-dancing with the Stars. And it’s not the broad-based $1000 Homestead Tax Credit proposed by the Charlestown Democratic Town Committee and rejected by the Charlestown Citizen Alliance Town Council majority.

RHOTAP can be summed up in one word: BEG. If you are a hard-pressed Charlestown homeowner and you need a break, BEG. If you are facing foreclosure, BEG

RHOTAP will have you beg in public for all your friends and neighbors to see. RHOTAP would require applicants to submit documentation of their finances to a five-member volunteer citizen panel rather than to town employees.

This is precisely the scenario that Deputy Dan Slattery and others said they wanted to avoid during the discussion at the January Town Council meeting on alternatives to the proposed Homestead Tax Credit. They made a great show of not wanting private citizens having access to other citizens’ financial information if the town were to implement any sort of tax assistance program for homeowners in distress.

And if your begging strikes a chord of sympathy in the five-member panel who will judge your worthiness, the town will grant you tax relief. But if you are a person who does not have the verbal skills to write an essay or stand up and speak under extreme pressure to  “demonstrate” or “convince” the review panel, you may be SOL.,

Read the proposal for yourself and judge for yourself.

Here are the specifics provided in the proposal for how RHOTAP will work:
  • You must be a single-family homeowner in Charlestown for not less than three years;
  • You must write an essay explaining why you think you are worthy of help and make the case that receiving the town’s help will prevent you from losing your house;
  • You must “demonstrate” your need by providing documentation and a waiver that allows the town to look into your personal financial records;
  • You must convince the five-member citizen panel of your worthiness and that getting the tax relief will enable you to keep your house (i.e., you might be “worthy” but if you’re in too deep, tough luck);
  • It appears that you may be required to present your case to the panel in person and, under the state Open Meetings Act, probably in public;
  • There is no provision in the proposal for privacy, or for the protection of your confidential financial information – it’s a pretty certain bet that, at minimum, your identity as an impoverished home owner will become public record;
  • You may receive up to $5,000 a year in tax relief, up to a maximum of $15,000;
  • The amount of tax relief you receive will be the amount of the lien the town will put on your house;
  • If you manage to stay in your house until Fiscal Year 2015, your debt to the town will be forgiven.
Here’s my prediction: the only homeowners who will be desperate enough to apply and go through this humiliating public process will be too far gone, too deep in debt, to be able to prove that the tax break will help them keep their homes. 

It's classic Catch-22: if you're desperate enough to go through this process, you're too bad off to qualify. Except you also get to be humiliated.

The Budget Commission and Deputy Dan note that Charlestown had 14 foreclosures executed last year. They assume this might be the average number of people who are desperate enough to go through this degrading process to get help.

But looking at actual foreclosures only scratches the surface. The more relevant number is the number of people on the foreclosure track – it’s too late for those who have already lost their homes.

According to, perhaps the best up-to-the-minute source of information on distressed properties, we have 38 homes on that track right now.

RHOTAP is a “means tested” program with multiple - and contradictory - criteria. It will only help people who can not only prove their desperate need and their worthiness, but also that the aid will keep them in their homes.

You will have to literally plead your case as if you were a contestant on the popular old 1960s game show “Queen for a Day.” Those of you of a certain age will recall this disgusting program where four women came on the program and told their tales of woe in order to become “Queen for a Day.”

The winner was determined by an Applause-o-meter that registered the audience’s reaction to each person’s pathetic troubles.

The show's motto was "Every Woman should be Queen for
a Day." After that, good luck and goodbye.
If you won, you received a bouquet of roses, a washing machine, and a few other doodads, and got to wear a crown and a fur cape in a little walkabout around the stage. You did not get to keep the cape. I think they let you keep the crown.

If your story wasn’t horrible enough to win, you got something like a box of Chiclets and a “good luck” as they tossed you out on the street.

At least that’s how I remember it when I was home from school on sick days and watched the show with my mother.

I understand that a “means-tested” program is going to require applicants to produce documentation, but I am frankly disgusted by the whole package. The essay, the five-member panel, the lack of privacy, the probability that your problems will become public knowledge – what the hell are the Budget Commission members thinking? 

And this is so typical of Deputy Dan Slattery.

Another problem with RHOTAP, compared to other means-tested programs is that the other programs have actual eligibility criteria, which is the major justification for the requirements to produce documentation. RHOTAP does not appear to have any criteria other than how impressed the judges are with your performance. RHOTAP is subjective and, for a means-tested program, that is inherently unfair.

Last fall and through its defeat at the December Town Council meeting, Tom Ferrio and I wrote extensively about a better way to help middle-class Charlestown households make it through these hard economic times: a broad-based $1000 Homestead Tax Credit.

If you are a permanent Charlestown resident, you would have gotten $1000 off your 2013 taxes. We told you that roughly 2600 Charlestown homeowners would qualify, making the cost of the program roughly $2.6 million. To pay for this program, the tax rate would have to go up – it has to go up any time the town either cuts taxes or spends more money to make sure the budget is balanced.

We even provided a simple, plug-in-the-numbers Progressive Charlestown Magic Tax Calculator so you could see what the $1000 Homestead Tax Credit would mean to you.

We were honest and said up front that the Homestead Tax Credit would shift taxes onto non-residents, especially millionaire non-residents who got a huge tax break last July as a result of the town’s property reassessment.

The CCA and its big brother, the RI Statewide Coalition, thought this was terrible – to them, it was “class war” and was mean and discriminatory to all those nice people from out of state who own second (or third or fourth) homes in Charlestown. Shame on town Democrats for even suggesting such a thing.

After that defeat, the Charlestown Democrats asked the Council, since they were unwilling to grant tax relief to middle-class families, what they were willing to do to help.

Now we have the answer and it’s called “RHOTAP.”

RHOTAP is an empty, cruel and cynical gesture. It is designed to fail. It is beyond contempt.

RI-CAN Director Deb Nigrelli and Rep. Donna Walsh.
Extra funding for RI-CAN makes more sense than RHOTAP
The idea of helping Charlestown homeowners stay out of foreclosure is a good concept, but there is, I believe, another and better way to do this. Charlestown already provides a modest amount of funding to RI-CAN, and pays RI-CAN Director Deb Nigrelli a stipend to act as Town Public Assistance Director. RI-CAN is well-established and well-known.

I say increase the town’s payment to RI-CAN with the understanding that RI-CAN will help distressed homeowners deal with the cluster of problems that invariably accompany mortgage payment problems – foreclosures are not an isolated problem and usually come with trouble paying for heat and utilities, food, medicine, etc. These are all issues that RI-CAN addresses every day.

A Star Chamber of RHOTAP volunteer reviewers are simply not qualified to deal with the needs of distressed families or, more importantly, protect their confidentiality. But RI-CAN is. And they have been doing it for years.

I believe this is a far more humane and effective way help homeowners in need that creating the new RHOTAP Game Show.

Here's the actual RHOTAP proposal: