By RUSS OLIVO

WOONSOCKET — A fledgling taxpayer's advocacy group is taking credit for uncovering legal “flaws” in Mayor Susan D. Menard's proposed budget that prompted the City Council  to call for quashing the administration's plan to reclassify larger multifamily homes as commercial property.

“Our first victory was in getting the City Council to agree that, although there are conflicting laws, the mayor did not have the right to change the tax classification of  multi-family properties between 6 and 10 units to commercial,” Jeff Parenteau, president of the Woonsocket Taxpayers Coalition, said. “Small victories win the war.”
But it may be premature for Parenteau to hoist the coalition's flag above the multi-family classification issue. Despite some potent rhetoric from members of the City Council earlier this week in favor of the coalition's position, Menard said Wednesday the jury is still out on how the larger multi-families will be treated in her proposed $116.5 million budget. Contradicting the coalition, Menard said the city appears to have the legal authority to reclassify the homes as commercial property if it wants to.
Nevertheless, Menard said she was not necessarily opposed to classifying the real estate as residential. If the city can do so and still raise  enough revenue to fund the budget, she may leave the larger multi-families as they are.
“There's been no decision made yet,” said Menard. “We're still running the numbers.”
How the city chooses to classify the larger multi-families would have a dramatic impact on the pocketbooks of those who own them.
While figures are still in flux, the city is forecasting a tax rate for next fiscal year of roughly $24 per thousand for residential property, $36 per thousand for commercial. The Call has asked Finance Director Theodore Przybyla and Tax Assessor Arthur Bouchard how many dwellings of 6 to 10 units are on the tax rolls, but so far they have been unable to provide those figures.
At the heart of the classification dispute is a 2000 statute the General Assembly passed at the city's request which defined all Woonsocket property with 11 or fewer dwelling units as residential property. When the city unveiled its budget forecasts for next fiscal year several weeks ago, it cited a new statute indicating that the city has the authority to amend its classification plan after the revaluation of city property – a process that was just completed in April.
While officials initially suggested that the new law had compelled them to reclassify the larger multi-families as commercial property, the language of the law does not seem quite so inflexible. Section 44-5-11.8 of the Rhode Island General Laws says any city or town “may” adopt such a tax classification plan, but it does not say is shall. Nevertheless, Menard says the law appears to provide the city with the necessary authority to reclassify the property if it chooses to do so, so long as the City Council passes an ordinance endorsing the change.
The Woonsocket Taxpayer's Coalition also declared victory on yet another budgetary flank, claiming it had exposed a legal deficiency in the mayor's plans to exceed the state-mandated levy cap of 4.75 percent by $2.6 million. Although the state Office of Municipal Affairs has already notified the city that its application for a waiver of the cap has been granted, Parenteau said the research of the Rhode Island Statewide Coalition, an affiliated group, revealed that the waiver is invalid unless it is approved by at least six of the City Council's seven members. No vote has been taken on the matter to date.
“The bottom line is – we won that one, too!” Parenteau said in the statement. “The Council must now pass an ordinance approving the waiver by a four-fifths (6-1) majority or the waiver is nullified and the mayor must re-submit a budget that does not exceed the 4.75 percent increase in tax levies. In other words, if we can convince the City Council to say NO to the waiver request, the mayor is forced to trim $2.6 million from her municipal budget.”
On that issue, too, Menard said Parenteau was overstating the case. The mayor said it was no secret that the city requires at least six of the council's seven votes in favor of the waiver in order for it to stand. The state's letter confirming the approval of the waiver says as much, and a copy of it was distributed to members of the City Council.
The City Council is scheduled to pass a budget Monday night. Menard said that she will include an ordinance to accept the waiver on the docket of the same meeting. If the city chooses to reclassify the larger multi-families as commercial property, the council's endorsement would also be sought for that.
Whether the council embraces the mayor's proposals remains to be seen. On the issue of reclassifying the larger multi-families, Council President Leo T. Fontaine said he doubts the council will go along with putting them in the commercial category.
“Right now it appears from the state Office of Municipal Affairs is that they need to be residential,” said Fontaine. “We've been able to drastically reduce the impact on these multi-family properties and at the same time reduce the burden across the board.”
During a workshop earlier this week,  Councilman John Ward unveiled a plan similar to Menard's, with a slightly different blend of tax rates and homestead exemptions. The most notable difference was that it would provide the owners of three-family homes with a 5 percent homestead exemption next fiscal year, while the city would roll back the existing exemption of 8 percent to zero. Single-family homeowners would get 42 percent, two-families, 15. Four- and five-unit dwellings would also be excluded from the homestead exemption plan, as they have been since 2006.
Menard proposes tax rates of $23.24 per thousand for residential property and $35.01 for commercial, while the councilmen propose $24.05 and $36.08, respectively. The city says its version would result in tax hikes of 16 percent on the typical single-family home, or about $400 on a residence worth $240,000 prior to revaluation. Many property owners say the combined impact of revaluation and tax hikes will actually hit them much harder.