How to lower your taxes – a twofer

Be rich, live on the shoreline and set up your own Fire District
Why aren't there more?

By Will Collette

"Thanks, son, that really quenches my fire."

Click here to read about the other ways you might actually be able to use to save on your Charlestown property taxes.

I read a long Letter to the Editor by James Angelo of Westerly in the May 24, 2014 Westerly Sun. His letter complains that residents of local fire districts, especially those fire districts that have no capacity to actually fight fires, get preferential tax treatment, both on property taxes and personal income taxes. 

They get breaks that are not available to members of condominium or residents’ associations, or for that matter, the average tax payer.

That inspired me to take a closer look at our own local fire districts – Charlestown has four – to see what they offer and what residents get. Some months back, I ran an article on the wide disparity in Fire District taxes among our local fire districts and wondered back then why there was such a disparity. Read on and you'll understand why.

What I found is that two out of Charlestown's four local fire districts aren’t really “fire” districts in the sense they actually fight fires. But they are very tidy tax shelters for the residents of Shady Harbor and Quonochontaug.

Owned by the Quonochontaug Central “Fire” District.
This plus 4.19 acres, assessed at $73,900. Photo from
Charlestown Tax Assessor database

Unlike the Charlestown Fire District and the Dunn’s Corner-Charlestown Fire District, the Shady Harbor and Quonochontaug Central “Fire” Districts have no fire trucks, no fire stations and no firefighters. 

However, they do own tennis courts, docking facilities, moorings, private beaches, public water systems and roads, and provide other amenities such as curbside trash pick-up.

Both contract with Dunn’s Corner for actual fire protection for District residents. Dunn’s Corner charges them the same rate they charge the rest of us who live in that Fire District.

Boat launch and parking lot owned by the Shady Harbor Fire District.
Tax-exempt.

According to a very interesting consultant’s report, the pseudo-fire districts have been trying to get a preferential rate from Dunn’s Corner, arguing that since their property values are higher, they should get a better deal than the schlubs who are not fortunate enough to live in Quonnie or Shady Harbor.

This consultant’s report is also a good read for the history and structure of our local fake “fire” districts.

The pseudo-fire districts then send out “Fire” District tax bills that include Dunn’s Corner’s standard mil rate, plus the shared costs of all the other amenities.

Residents in both “fire” districts may deduct their “fire” district property tax from their state and federal income tax just like their town property taxes. By contrast, condo and resident association members are not allowed to deduct their condo fees or association dues from their taxes even when local property tax is included in their association bill. 

And of course private homeowners cannot deduct their costs for beach passes, boat docking, water supply, trash pickup, tennis fees, etc. that “fire” district members can deduct from their income taxes.

The Shady Harbor and Quonochontaug Central “Fire” Districts own 15 parcels of property between them. 

Shady Harbor owns six pieces of property, none for fire-fighting and pays no property taxes under terms of their state charter.

Shady Harbor "Fire" District property in Charlestown (source: Charlestown Tax Assessor Ken Swain)

12.72 acres, tennis courts, patio, etc. Prime location in Quonnie. 
Valuation: $89,800

Quonochontaug Central owns nine pieces of property, none for fire-fighting, but does pay Charlestown property tax. They do not hold a tax-exempt state charter so they do pay Charlestown property tax but with a twist. 

For reasons that deserve a detailed explanation, their assessments on those prime beach properties are insanely low.

Here’s an example. Quonnie Central "Fire" District’s tennis courts, "shed" and patio, sitting on 12.72 acres of primo land is assessed at a grand total of $89,800. See photo, right.

I am not making this up and those numbers – 12.72 acres of Quonnie property plus the rest assessed at $89,800 – are right there on the Charlestown Tax Assessor’s database. The land is zoned R3A and not open space/recreational.

Here’s another: Quonnie Central "Fire" District owns a 2.51 acre vacant lot on Bay View Road that is assessed at $23,200 even though it is zoned R3A and the valuations of all the other properties on Bay View run way higher. 

By contrast, Cathy and I own a 2.54 acre vacant lot adjacent to our house on the moraine right on the north side of Route One, also zoned R3A. We are assessed at $142,400.

So, south of One in Quonnie, 2.51 acres is taxed at $23,200. North of One on the moraine, 2.54 acres is taxed at $142,200. Same size, same zoning, one North and the other South of One, with two different owners. Can somebody explain this disparity - why our North of One lot is assessed more than SIX times higher than the Quonnie lot? Is it the extra 0.03 acres?

Or is it that in Charlestown, wealth has its privileges? 

Quonochontaug Central Beach "Fire" District Charlestown holdings (Charlestown Tax Assessor)

The Quonochontaug Central “Fire” District’s total Charlestown property tax bill will be $4,762 based on a total property valuation of $481,000 for nine prime location beach parcels.

Two of the lots owned by Shady Harbor and Quonochontaug Central “Fire” Districts are the sites of wells and pumps that supply public water to properties in those districts via service connections and water mains. They are defined as Community Water Systems.

Quonnie has two shallow wells, one hydrant and an 8,000 gallon reserve tank. All told, they can pump 100 gallons a minute. 

The Shady Harbor "Fire" District's well and pumping station. Tax exempt.

Their pump site also contains two additional shallow wells used by the East Beach Water Association to provide water to houses on the Quonochontaug peninsula.

Shady Harbor has four wells, one a deep well, but no storage tank.

Since the "fire" districts also have back-up generators, they could handle much of their own water needs with the need for minimal water brought in (ditto for Shady Harbor) during a storm emergency.

But as one of my colleagues noted, most other town residents had to go to Town Hall to get emergency water and did not have the privilege of having it delivered.

Quonochontaug and Shady Harbor could arguably have some claim to be converted into water districts, but they are total phonies when it comes to being legitimate fire districts. However, water district charges are considered utility bills and are not deductible on personal income tax. Rich people are just so clever at squeezing out the maximum tax benefit.

Click here to read the spring, 2014 newsletter from the Quonochontaug Central “Fire” District that describes all the amenities they offer. All the amenities that are rolled into the “fire” district tax are federal and state income tax-deductible.

Click here to read the last set of minutes (from July 2008) filed by the Shady Harbor "Fire" District on its annual meeting. At that meeting, they discussed the boat launch, beach passes and security, water pipe repair, road resurfacing and possible land acquisition. Not a word about actual fire-fighting or prevention.

One of four properties owned by Charlestown's actual Fire Districts.
How come no boat launch? Where's the spa?

Let’s compare Quonnie and Shady Harbor to Charlestown's  two actual, working Fire Districts – Charlestown FD and Dunn’s Corner/Charlestown (which is in desperate need of volunteers. So does CFD).

These two Fire Districts have three active fire houses, including the new brick Cross Mills fire house that Planning Commissar Ruth Platner tried to kill, plus the old, vacant Cross Mills fire house that is waiting for a good re-use proposal. 

That’s a total of four properties owned by these two working districts. They are, rightly so, tax-exempt.

But hey, how come they don’t offer tennis or trash pick-up like Quonnie Central? Or docks and a beach like Shady Harbor? Or public water?

Charlestown is not unique. There are several other enclaves of privilege along the Rhode Island coast that have discovered this elegant tax dodge, including the Shelter Harbor and Weekapaug “Fire” Districts in Westerly.

Is Herstein gritting his teeth because he's pissed
that he didn't think of the "fire" district scam?

All these phony “fire” districts were a surprise to me, and a tax hustle on a much grander scale than I had expected. They beat the towns, the state and the feds out of millions of dollars in taxes.

One puzzle I’d love to solve is why there aren’t more pseudo-fire districts. Why not a Sonquipaug “Fire” District? Or a Watchaug Heights “Fire” District?

Or a Sachem Passage “Fire” District? This would solve the perennial problem that SPA leaders and CCA patronage appointees Peter Herstein (left) and Ron Areglado have tussled with – that so few SPA residents pay membership dues to fund their various litigation adventures.

If SPA converted into a “Fire” District, it could levy a “fire” district tax. If anyone still resisted paying, they could slap a tax lien on the property and then put it up for auction to someone who is better behaved.

Something to consider at the up-coming SPA annual meeting.

I saw nothing that says your phony "fire" district has to be on the beach, although it does seem that way in practice.

One downside to setting up your own “Fire” District is that you are then subject to the kind of disclosure rules that some local leaders may not like. These include following the Open Meetings Act and posting notices of meetings and meeting minutes with the Secretary of State.

Yeah, right back at yah!

I noted that Quonochontaug Central “Fire” District has a meeting coming up on June 7 where the topics are going to be real estate and beaches and dunes. Then they meet again on June 28 to discuss special events and boating.

Then on June 29, the board of governors will meet to discuss the aforementioned topics, plus civic improvement, police protection, tennis & golf, ball field & playground, merchandise sales and finance.

Sorry, nothing on any of these five different meeting agendas has anything to do with firefighting or fire protection.