Hadley mulls splitting tax rate as commercial property values drop

  • Hadley Town Hall GAZETTE FILE PHOTO

Staf Writer
Published: 9/6/2021 9:26:09 AM

HADLEY — A decline in the values of large-scale commercial properties, largely due to the COVID-19 pandemic and factors such as reduced rents and fewer visits to hotels and restaurants, is likely to put a greater burden on residential taxpayers.

To confront the potential spike in property tax bills, the Board of Assessors and Assessor Daniel Zdonek are investigating whether to recommend enacting a so-called split tax rate in which the tax rate would be higher for commercial properties.

Under a possible plan presented last week, in which a 10% shift would be used, Zdonek told the Select Board and Finance Committee that increasing the commercial rate from $12 per $1,000 valuation to $14 per $1,000 valuation would allow the likely residential tax rate to dip to $11.85 per $1,000 valuation, with an average bill of $4,357. That would be a $155 increase for someone living in a typical home valued at $367,700.

This year, the tax of $12 per $1,000 valuation for a typical home valued at $350,200 produces an average bill of $4,202. Without a shift, that tax rate would be $12.50 per $1,000 valuation and a typical home valued at $367,700 would see the tax bill rise to $4,596, for a $394 increase.

Zdonek cautioned that the figures provided are estimates until the tax classification hearing in November, at which time a recommendation will be made.

Any shift will not increase revenue for the town.

There has been about a 10% decline in the value of commercial properties due to the rental income being hit hard, especially at the large malls and shopping centers. Zdonek said the total commercial value is dropping from $352 million to $322 million.

“That 10% that would have been paid by commercial is going to be shifted over to the residential class,” Zdonek said.

In most recent years, about two-thirds of the taxes are paid by residents, but now residential taxes make up 69.4% of the burden.

Any split of the tax rate could be temporary and readjusted when commercial sales rebound, Zdonek said.

No Hampshire County towns split their tax rate, though cities with a large commercial base do. Zdonek said Hadley’s commercial base is so large that it is taking more of a hit than other communities. He said he expects some communities to split their rates that have not done so previously.

Select Board member John Waskiewicz said Hadley officials have discussed the idea for many years, but his view is it’s not worth doing.

“You’re just looking for trouble by splitting it,” Waskiewicz said.

With businesses doing better as people get vaccinated against COVID-19, it wouldn’t be fair to the commercial sector to put this burden on them, Select Board member Joyce Chunglo said.

“We are trying to help the businesses stay in town, and if you’re trying to increase their taxes just to offset people’s home taxes, that’s not really fair,” Chunglo said.

Homeowners also are making good money when they sell their homes, Chunglo noted. “There’s been price wars on all of the homes that are being sold,” Chunglo said.

Finance Committee Chairwoman Amy Fyden said she won’t be easily persuaded to support a split tax rate.

“We look at this every year — there’s reason after reason why we don’t want a split tax rate,” Fyden said.

Scott Merzbach can be reached at smerzbach@gazettenet.com.


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