Isabela mayor defends hike in property taxes

Isabela Mayor Miguel “Ricky” Méndez Pérez

By The Star Staff

After municipal assemblies in seven towns approved increased property taxes for homes, buildings and land, Isabela Mayor Miguel “Ricky” Méndez Pérez defended the decision, citing the absence of a municipal equalization fund.

The municipalities of Camuy, Corozal, Culebra, Isabela, Río Grande, Santa Isabel and Yauco have raised property taxes to obtain more income amid cuts from the central government. Some 36 out of 78 municipalities in Puerto Rico have budget deficits, putting 46% of the municipalities in financial stress. Towns face budget cuts and a fiscal crisis due to a combination of factors, including high debt, economic challenges and the impact of the Puerto Rico Oversight, Management and Economic Stability Act, better known as PROMESA, the federal law passed by Congress to guide Puerto Rico through bankruptcy and that created the Financial Oversight and Management Board.

Méndez said the municipalities have taken on responsibilities such as road maintenance and school upkeep. In Isabela, the town government also manages a landfill, a home for senior citizens, and a health center, in addition to providing subsidies for citizens to help with expenses like water and electricity bills.

“We’ve focused on Isabela, which has become a significant tourist destination in the western region of Puerto Rico,” the mayor said in a radio interview. “Additionally, we are facing a housing shortage due to the increase in short-term rentals and second homes. Therefore, we plan to raise the municipal property tax on real and personal property, effective July 1, by an additional percentage.”

Currently, owners of second homes pay a tax rate of 8.34%, which will increase to 9.34%. The adjustment aims to compensate for the approximately $50,000 loss following the elimination of the Equalization Fund, which would generate annual tax revenue of $500,000 to $600,000.

“CRIM [the Spanish acronym for Municipal Revenue Collections Center] appraisals are based on values from 1957. The appraised value of a property considered a safe home is $15,000 or less,” he added. “This new tax rate will apply to properties exceeding that appraised value. These properties are generally high-value or primarily used as second homes in our city.”

The mayor also disclosed that a previously approved measure to collect operating licenses for more than 1,000 short-term rentals in the municipality has generated $800,000 annually, surpassing the initial expectation of $300,000.

“The purpose of this initiative is not only to register all rental properties and maintain an inventory, but also to fund the municipal security project,” Méndez said. “With these funds, we have been able to increase the capacity of our municipal police.”