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Town staff lays out costs and choices for a potential homestead tax exemption
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Summary
Town Manager Jim Mahaney presented scenarios showing a 5% homestead exemption or targeted senior credits would reduce bills for eligible homeowners but shift substantial revenue to other taxpayers; councilors asked for more refined data and continued the item to April for follow-up.
Town Manager Jim Mahaney presented a detailed set of options for a possible homestead tax exemption during a work session on March 23, telling the Town Council the analysis was based on the certified 2025 tax roll (year end 12/31/2024) and that final calculations will change after the town's statistical revaluation is reconciled on June 15, 2026. He said staff convened a multi-discipline team and had run multiple scenarios to show the budget and distributional effects.
The most prominent option staff studied was a 5% exemption applied to the first portion of assessed value, using three caps: $400,000, $500,000 and $600,000. Mahaney said those three caps would produce estimated revenue losses of $1,490,954 (400k cap), $1,780,592 (500k) and $1,994,377 (600k). Using last year's tax rate of $8.94 as a baseline, staff estimated the 400k-cap, 5% proposal would require about an $0.18 increase in the tax rate to maintain revenue neutrality, which would shift burden onto the roughly 20% of nonresident or commercial parcels that would not receive the exemption.
The presentation also ran senior-targeted options: a flat credit for residents 65 and older of $150, $175 or $200 would produce estimated revenue losses of $1,054,000; $1,230,000; and $1,400,000 respectively, with corresponding upward pressure on the town's tax rate. Mahaney showed a combined approach that embeds annual adjustments into the ordinance (by cost-of-living adjustments or by HUD AMI increases) and noted the higher eligible population under a HUD-indexed threshold.
Councilors focused their questions on the underlying assumptions. Council members asked why staff used an 80/20 eligible split for single-family properties, how owner-occupation was established (by where tax bills are mailed), and whether the 2023 census data understates the current number of seniors. Mahaney acknowledged the figures are estimates and said staff modeled different scenarios and would refine numbers after the town completes registration efforts, the rental-registration data, and the 2024 statistical revaluation.
Several council members urged the manager to prepare clearer 'delta' figures: program cost with the change (the "Delta"), a tentative tax rate that includes the town's proposed rate for next year, and more visible tables showing how many more households would become eligible under HUD vs COLA indexing. Councilors also asked staff to show impacts on nonresident owners and commercial parcels and to provide the slides with a clear breakdown of assumptions.
The council did not vote on a policy at the meeting. Mahaney said staff would return with refined scenarios and recommended continuing the discussion at the second meeting in April to allow time to reconcile the tax roll and test targeted scenarios. The manager also noted pending state legislation that would allow property-tax deferral for certain seniors and veterans and said the council might want to consider interim steps pending any state action.
