ARTICLE XI. - EXEMPTION FOR LIVE/WORK SPACE DEED RESTRICTED PROPERTIES

Sec. 16-100. - Authority and purpose.#

Pursuant to G.L. 1956, § 44-3-13.4, the city council of East Providence enacts this ordinance to promote affordable housing by providing a partial exemption from property taxation for qualifying mixed-use properties that include owner-occupied mixed-use live/work units that are also deed-restricted to low to moderate income occupancy.

The exemption credit ensures that qualifying low to moderate income deed restricted live/work space are not taxed entirely at the commercial property tax rate. Instead, the residential portion is taxed at the residential rate with applicable exemptions, reflecting its actual use as a live/work residence.

(Ch. 959, § I, 2-17-26)

Sec. 16-101. - Definitions.#

Assessed value means the most recent deed restricted sales price of the property pursuant to G.L. 1956, § 44-5-12(7).

Deed restriction means a legally recorded restriction, recorded with the city clerk, that limits occupancy or resale of the unit to low- or moderate-income households for a period of 30 years or more.

Owner-occupied means a unit that is owned by an individual person or persons which also serves as the person(s) primary residence of which the occupant is also the legal owner of the premises and the owner/operator of the business within the same unit.

Live/work space means a building or spaces within a building used for commercial activities and areas for residential/living purposes where at least two-thirds (67 percent) of the space is dedicated for residential use and the remainder for commercial/retail uses.

Low- or moderate-income housing means any housing whether built or operated by any public agency or by any non-profit organization or by any limited equity housing cooperative or any private developer, that is subsidized by a federal, state, or municipal government subsidy under any program to assist the construction or rehabilitation of affordable housing and that will remain affordable through a land lease and/or deed restriction for 99 years or such other period that is either agreed to by the applicant and town or prescribed by the federal, state, or municipal government subsidy program but that is not less than 30 years from initial occupancy, as defined in G.L. 1956, § 45-53-3, and a household whose income does not exceed 100 percent of the Area Median Income (AMI), as defined by HUD.

Mixed-use property/live work space means a property that includes both residential and commercial components, where both components must be occupied and operated by the legal owner. Neither the residential nor commercial component can be rented/leased or occupied by anyone other than the legal owner.

Max rate means the residential and commercial property tax rate as established by the city as a result of the adoption of the city's annual budget.

(Ch. 959, § I, 2-17-26)

Sec. 16-102. - Eligibility criteria.#

(a)

All live/work space that is owner-occupied and subject to a deed restriction is eligible for an exemption property tax credit as calculated under section 16-103 provided that:

(1)

An application is filed with the city tax assessor as of March 15 of each calendar year and,

(2)

Proof that the live/work space was owner-occupied as of December 31 of the previous calendar year and had an operating owner-occupied business within the same unit.

(Ch. 959, § I, 2-17-26)

Sec. 16-103. - Calculation steps.#

(a)

The city assessor shall calculate all eligible live/workspaces exemptions as follows:

Step 1: Calculate full commercial tax (also the gross tax).

Full commercial tax = (Total assessed value ÷ 1000) X Commercial rate.

Step 2: Calculate mixed classification tax.

Residential tax = (Residential assessed portion minus the applicable homestead exemption, if any ÷ 1000) x Residential rate.

Commercial tax = (Commercial assessed portion ÷ 1000) x Commercial rate.

Mixed classification tax = Residential tax + Commercial tax.

Step 3: Calculate exemption credit.

Exemption credit = Full commercial tax (step 1) - Mixed classification tax (step 2).

Step 4: Net taxable value: The exemption credit is then subtracted from the gross tax, and subtracting any additional owner eligible exemptions, to arrive at the net taxable property tax due.

(b)

The exemption credit will be recalculated annually based on the current tax rate.

(Ch. 959, § I, 2-17-26)

Sec. 16-104. - Exemption termination/transfer.#

(a)

The exemption will continue as long as the property remains owner-occupied and deed restricted for low or moderate income housing in full compliance with the eligibility criteria as set forth in section 16-102. Failure to maintain compliance shall result in immediate termination of the exemption and subject live/work property to its full property tax liability by using the commercial tax rate to the entire unit.

(b)

Upon transfer of ownership of the live/work space, the exemption shall automatically terminate. The new owner must submit a new application and meet all eligibility criteria outlined in this ordinance to qualify for the exemption. Failure to do so will result in the assessment of the live/work space unit at the full commercial tax rate.

Sec. 16-105. - Program administration.#

The office of the tax assessor shall administer the exemption program and may audit properties at any time to ensure compliance. The assessor shall create a live/work space exemption application and may adopt written guidelines to establish the necessary documentation needed to be eligible for the exemption.

(Ch. 959, § I, 2-17-26)

Sec. 16-106. - Effective date.#

This ordinance shall be retroactive as of January 1, 2026 and shall apply to all qualifying properties thereafter.

(Ch. 959, § I, 2-17-26)