HADLEY — The town’s Finance Committee has opposed creating a higher tax rate on commercial and industrial properties, so homeowners would get a break on property tax bills that are expected to rise by an average of around $400.
The finance panel Tuesday voted 3-1 against recommending the Select Board implement a split tax rate.
“I think it’s a bad precedent and I think it’s really unfair for the businesses right now,” said committee member Paul Benjamin.
The possibility of having separate tax rates for different classes of properties will be considered by the Select Board at its Nov. 17 meeting, when it completes the mandated tax classification hearing that began Nov. 3.
The Board of Assessors, though, is recommending the split rate, prompted by the 10% to 15 % dip in commercial property values, which means more of the tax burden will be borne by residents. Assessor Dan Zdonek said this is the first time a split rate has been recommended.
Benjamin was joined by Chairwoman Amy Fyden and member Valerie Hood in opposing a split tax rate. Committee member Dylan Manz supports the concept.
Current projections by Zdonek show that the average residential assessment is going from $350,200 to $366,800 and the average bill from $4,202 to $4,611. The average commercial bill, though, will drop from $9,191 to $8,633, triggered by the average assessment falling from $765,900 to $686,800.
Zdonek said the approximately $400 per home increase would be the single largest jump in tax bills in Hadley history.
But Benjamin observed that residents last year got a break with no increase in property taxes.
Fyden said she understands that not doing a split tax rate will mean a bigger hit for residents. But she worries about losing businesses.
“I just feel that I can’t support the split tax rate,” Fyden said.
“I want to encourage the businesses,” Fyden said. “They’re our bread and butter, they’re the reason why what we pay in taxes is what we pay in taxes.”
Manz said COVID-19 has created unusual circumstances, and agrees with assessors that this oddity has caused the full valuation of commercial properties to plummet from $352 million to $323 million. “I just think the spit tax rate is the way to go right now,” Manz said.
Zdonek said a lot of commercial properties experienced high vacancy rates and lost rental income. He pointed to Hampshire Mall where many of its venues, including the Cinemark movie theaters and Planet Fitness, had to close for long stretches.
Hotels and restaurants were also shut. “The values dropped significantly,” Zdonke said.
Zdonek said shifting back to a single tax rate in 2022 shouldn’t be hard.
“The values for the most part are back,” he said, pointing to recent commercial sales, such as the $1.6 million sale of the former bank building on South Maple Street.
Shardool Parmar, owner of the Pioneer Valley Hotel Group, said COVID-19 was an extinction-level event for hospitality venues that he owns in town, including the Hampton Inn, Homewood Suites and the since closed Rodeway Inn.
“We’re not expected to go back to pre-pandemic levels for another year,” Parmar said.
Parmar said the split tax rate would be against the values of the town he grew up in.
“You don’t burden someone who’s experienced loss by increasing that burden,” Parmar said.
Parmar also suggested that Hadley consider using American Rescue Plan Act money that it will receive to support small businesses.
Though this money can support the town operations, Zdonek said the $750,000 Hadley will receive is less than the $1 million in estimated revenue losses.
Scott Merzbach can be reached at smerzbach@gazettenet.com.
