Newport City Council Opposes Extra Tax on High Home Sales

News Summary

The Newport City Council has unanimously opposed two proposed bills that would introduce an additional conveyance tax on home sales exceeding $900,000. The council argues that the proposed tax, aimed at funding affordable housing projects, could unduly burden homeowners in a city where the median home price is approximately $1.3 million. With nearly 38% of residences surpassing the $900,000 threshold, the council’s decision reflects concerns over financial impacts on the community and challenges to local housing needs.

Rhode Island – The Newport City Council has firmly opposed two proposed bills that would introduce an extra conveyance tax on home sales exceeding $900,000. Senate Bill 0037 and House Bill 5756, currently under consideration, aim to allow cities and towns in the state to levy an additional tax of $10 for every $500 over the $900,000 threshold. This opposition from Newport’s City Council comes as the median home listing price in the city stands at approximately $1.3 million, indicating that a typical home sale could be burdened with an extra $8,000 tax if the measures pass.

During a recent council meeting, the unanimous vote against the proposed tax reflects the city’s concern over the financial impacts on homeowners in a community where nearly 38% of residences exceed the $900,000 mark. This percentage is expected to rise, as data reveals an 18% increase in the number of homes valued over $900,000 in the last year.

The initiative to implement this extra tax is suggested as a funding mechanism for affordable housing projects. However, Newport’s City Council challenged the restrictive nature of how the generated funds could be utilized. The proposed tax stipulates that the money must either be used for affordable housing initiatives within two years or be directed into the state’s affordable housing budget, leaving little flexibility for local needs.

Newport has already surpassed the state requirement of having 10% of its housing stock classified as affordable, with 15.6% of its homes meeting this standard. Despite this achievement, the local government argues that there is a significant disparity between the average income of Newport residents and the financial thresholds set for affordable housing. The current area median income (AMI) in Newport is around $72,900; however, the average income for workers in the city is approximately $55,098, falling below 60% of the AMI, making it difficult for many to afford housing.

In addition to the local bills, a competing proposal from Rhode Island Governor Dan McKee is also in the pipeline. This proposal would enforce a statewide conveyance tax on home sales above $800,000. Unlike the city-level taxes that offer municipalities the option to opt-out, Governor McKee’s plan mandates the tax, which could impose an additional $1,650 on median-priced home sales in Newport under the suggested tax framework.

While the funds raised from these proposed taxes are intended for affordable housing, Newport’s Mayor, Charles Holder, has expressed that restricting funds in such a manner undermines the city’s ability to address various pressing local needs. Mayor Holder emphasizes that the financial implications of such taxes could further strain residents and potential buyers, making Newport less accessible.

As the discussion around these proposed taxes unfolds, Newport’s leaders remain committed to advocating for the community’s interests, highlighting the need for a holistic approach to housing issues rather than relying on punitive tax measures. The debate over how best to fund affordable housing continues, as Newport City Council seeks to protect the interests of its residents from proposals that could disproportionately affect them.

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