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Civic groups may have to pay up

December 4, 2013

Italian Workingmen's Club Treasurer Denis Jarry, President Mark Zagaglia and Board of Directors Chairman Mike Kind, from left, react to a letter they received from the City of Woonsocket regarding the tax status of the 85 year-old- tax exempt club. (Photo by Ernest A. Brown)

WOONSOCKET – When a knife attack left 74-year-old Donald Paterson paralyzed in 2010, the Italian Workingmen’s Club was instrumental in raising funds to help his family buy a vehicle equipped with a wheelchair lift.

Raising funds for victims of crime and calamity, the needy, academic scholarships and youth sports have become part of the club’s 85-year legacy.

But if the Budget Commission gets its way the IWC will be lucky if it can afford to keep the lights on, says club Chairman Mike Kind.

“For 85 years, we’ve always been considered tax exempt, but now they’re saying we’re taxable,” he says. “It will absolutely and positively end all of the outreach we do. We are basically going to be in self-preservation mode.”

The IWC isn’t alone. It’s one of 13 longstanding tax exempt organizations which were recently sent assessment notices for the first time, according to Tax Assessor Christopher Celeste.

They include fraternal organizations, civic groups, social service agencies and health care providers, including the Worcester-based Seven Hills Foundation. The organization owns several parcels in the city, including 30 Cumberland St., a large office building that would receive the single-biggest tax bill on the list, about $90,040.

The list is a who’s who of household names in the city’s roster of fraternal and civic groups, and then some. It includes the Cercle Laurier; Club Lafayette, Elks Lodge 850; Family Resources Community Action Program; Gateway Health Care; Haven of Grace Ministries; Head Start Development Association; Le Club Par X; St. Joseph’s Veterans Association; Woonsocket Masonic Temple Corporation; and the YWCA of Northern Rhode Island.

The commission envisions sending all of them a bill for the first time in July 2014, based on property values contained in assessment notices sent to them last week. The land and buildings represent a combined net worth of roughly $10.2 million and would be taxed a total of $382,040.

In addition to the entities that have already received assessment notices, the commission is still exploring the possibility of adding more, including Mt. St. Charles Academy and Beacon Charter School.

The plan is a repeat performance of actions that were initiated by a state-appointed Budget Commission in East Providence as a way to shore up the city’s tax base, according to Celeste. Taking its cue from the latter panel, the Woonsocket’s Budget Commission initiated an audit of the city’s tax-exempt entities to see if their status was justified several months ago.

The city commission examined the status of several dozen entities, but has so far identified only 13 that are in line for tax bills, according to Celeste.

Some, he acknowledged, have complained that the new burden will compromise their charitable work.

“Whoever they support, whether it’s the local little league or something else, those are going to be the people who get cut off first,” says Celeste.

Contrary to popular belief, shrinking the list of tax-exempt property owners won’t generate a dime’s worth of new revenue, he says. What it will do is broaden the tax base and allow tax rates to be reduced a little.

By billing the additional $382,040 forecast by the audit, the city could afford to reduce the average single-family homeowner’s bill by about $30 a year, according to Celeste.

The plan has actually been in the works for over a year. The commission pondered the possibility of initiating it in fiscal 2013, but Celeste lobbied for more time to assemble accurate assessments for the properties, many of which hadn’t had rigorous appraisals done for some time.

It began with a letter Celeste sent asking the tax-exempt organizations to prove why the city should not switch them to taxable status. Those who are to receive bills were unable to do so.

“The burden is on the property owner to prove that they are tax exempt,” according to Celeste.

Some of the organizations in line of fire took steps to get out of the way. After receiving the inquiries, the Stadium Theatre and the Boys & Girls Club of Greater Woonsocket, for example, both prevailed on members of the General Assembly to have special bills passed proclaiming themselves forever tax exempt under state law.

For the IWC, it’s a different story. The assessment notice the club received last week says the organization holds about $550,000 worth of land and buildings. Taxed as commercial assets, they would generate a bill in excess of $20,000 a year.

But Kind says the IWC is not a business and shouldn’t be taxed like one.

“This is the challenge we face,” he says. “The value of our buildings does not reflect our ability to pay.”

Follow Russ Olivo on Twitter @russolivo

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