Was The Sweetbriar Town Council Vote Legal?

On December 2, 2008, the Barrington Town Council met in special session to decide one issue: Whether to provide the East Bay Community Development Corporation (EBCDC) with a special property assessment exemption for the Sweetbriar affordable development.  The vote was unanimous in favor of providing this special assessment exemption.  

This is relevant today since it appears EBCDC wants a repeat vote by the Barrington Town Council on behalf of the Palmer Pointe development. A question remains to this day whether the 2008 Sweetbriar vote was a legal action by the Town Council.

The exemption is found under Rhode Island General Laws § 44-5-13.11 which states that the assessment exemption can be applied to “[a]ny residential property … after substantial rehabilitation as defined by the U.S. Department of Housing and Urban Development and is encumbered by a covenant recorded in the land records in favor of a governmental unit…”    

You can find HUD’s definition of “substantial rehabilitation” under 24 CFR 235.1206(f) which reads:

 "Substantial Rehabilitation means “the improvement of a unit in substandard condition to a decent, safe and sanitary level, meeting FHA's standards for mortgage insurance. Units are in substandard condition when, while they may be structurally sound, they do not provide safe and adequate shelter, and in their present condition endanger the health, safety, or well-being of the occupants. Such housing has one or more defects, or a combination of potential defects in sufficient number or extent to require considerable repair or rebuilding, or is of inadequate original construction. The defects are either so critical or so widespread that the structure should be extensively repaired. The estimated cost of the rehabilitation should normally not be less than 25 percent of the value of the property (including land) after rehabilitation. The rehabilitation should be of such scope that, when completed, all the components in the house are operable and should not be anticipated to require any work or major expense over and above normal maintenance for the first one-fourth to one-third of the mortgage term.”

There is little doubt that Sweetbriar was new construction, not a rehabilitated building.  

To put into perspective why this is an important issue for Barrington, consider that in fiscal year 2012, the entire property tax bill for the 47 units at Sweetbriar was $35,024, or an average annual property tax bill of $745 per unit.  The average tax bill in town for a modest home, in a modest area, and of similar size as a Sweetbriar apartment, is approximately $5000 per year.

Rhode Island General Law § 44-5-12 contains only two ways to assess residential property:  

1) “at full and fair cash value”, and

2) “…after substantial rehabilitation as defined by the U.S. Department of Housing and Urban Development and is encumbered by a covenant recorded in the land records in favor of a governmental unit…”

Should Sweetbriar be assessed at "full and fair cash value"?

In 2012, the RI Senate attempted to clarify the lawful way to do assessments of affordable properties via Senate Bill 2701.  The bill was not acted upon, leaving the current laws intact.  

The question today is whether the December 2, 2008 Town Council vote to allow a special assessment exemption for Sweetbriar was a legal action by the Town Council, and whether the Town Council can repeat that action again for Palmer Pointe.  Who exactly is empowered to make assessment policy, the Barrington Town Council, or Barrington’s Tax Assessor?

I trust the sitting Town Council will be more thoughtful on this matter during the next review.