HADLEY — Commercial properties will be taxed at a higher rate than residential properties in Hadley for the first time, an adjustment aimed at reducing the property tax burden for homeowners after taxes were kept artificially low a year ago.
The Select Board on Wednesday, in a 3-2 vote, with board members Joyce Chunglo and John Waskiewicz in the minority, agreed with a recommendation from the Board of Assessors to split the tax rate.
“I am definitely for the split tax rate because we have seniors who are on truly fixed incomes, and it helps them somewhat,” said board member Jane Nevinsmith.
Nevinsmith said with 1,800 residential units and 360 properties in the commercial and open space categories, a greater number of people would benefit from the lower residential taxes. Nevinsmith was joined in support of a 7% shift in the tax rate by Chairman David J. Fill II and board member Amy Parsons.
Chunglo, though, said businesses supported town services throughout the pandemic and forcing them to pay a higher tax rate would penalize them for all they do for the community.
“I don’t think splitting the tax rate is a good thing for us at this point,” Chunglo said.
Under the adjustment, a homeowner living in the average assessed property at $366,800 would still pay $265 more than this year’s $4,202 tax bill, when homes were assessed on average at $350,200. Had the board chosen to keep the tax rate identical for both residential and commercial properties, that average tax increase for homeowners would have gone up by $408, to $4,610.
The 7% shift in the tax rate brings the rate to $12.18 per $1,000 valuation for residential properties, lower than the $12.57 per $1,000 valuation it would have been. But in doing so the rate for commercial properties rises to $13.45 per $1,000 valuation.
The change was opposed by the Finance Committee in a 3-1 vote.
Committee member Paul Benjamin, who owns a home and commercial property in town, said it sends the wrong message to businesses about fairness.
“To me this about standing with our businesses,” Benjamin said. “We’re a commonwealth. We’re all supposed to pull together here.”
Finance Committee Chairwoman Amy Fyden, who also opposed the split rate, said if it was easy to do and logical, more communities would have done it. All other Hampshire County towns apply the same tax rate to commercial and residential properties.
Hampshire Mall representative Lynn Gray said once in place there could be a financial hardship on commercial properties. “It would put a really great strain on commercial and small businesses in Hadley,” Gray said.
Randy Izer, who is the town moderator and also owns commercial property on Route 9, said smaller businesses are going to be impacted by, and the decision is like saying, “we’re down, give us a kick and let us see where we can go from there.”
In examples provided by Assessor Dan Zdonek, one commercial property assessed at $474,900 paid $5,988 in property taxes this year and would have seen a drop by $19 without the split tax rate. Instead, that property’s bill will go up by $399, to $6,387.
Similarly, another commercial site assessed at $940,100 is paying $12,535 in property taxes this year and would have seen a $718 drop in the bill without the adjustment, to $11,817. Instead, the tax bill will go up by $109.
Zdonek also presented a chart showing that even at $13.45 per $1,000 valuation, the commercial tax burden would remain lower in Hadley than the $17.37 per $1,000 rate in Northampton, $17.54 rate in Easthampton and $21.82 rate in Amherst. In addition, communities that have split tax rates, such as Holyoke, Westfield and West Springfield, have commercial rates that are much higher, ranging from $32.48 to $40.63 per $1,000 valuation.
One former official, Molly Keegan, who recently moved Curran and Keegan Financial to Hadley center, said that there is less concern for businesses if the adjustment is for one year only.
“There’s no question malls and hotels were harmed significantly,” by the pandemic, Keegan, said, but she noted there is evidence, based on town receipts of meals and hotel taxes, that many have largely recovered.
Treasurer Linda Sanderson, who joined the town’s financial team in support of the split tax rate. said those who rent and run businesses will instinctively be against splitting the rate, even though tax bills are dropping for many of them.
“The intention is not to go after businesses to make up for anything,” Sanderson said, noting it is instead to settle inequities between tax bills.
“I think it’s our intention to go back, and I think that’s what we’re going to do,” Sanderson said.
Scott Merzbach can be reached at smerzbach@gazettenet.com.