HAVERHILL — For the first time in five years, single-family homes, condominiums and apartment buildings increased in value over the previous year.
How that will impact this year’s tax bills will be decided Tuesday night, when the City Council sets new tax rates for residential, commercial and industrial property at Haverhill’s annual tax classification hearing.
The hearing and council vote will determine the difference between what homeowners and business owners pay. The hearing is at 7 p.m. in City Hall.
Haverhill has historically taxed businesses at the highest rates allowed by law, in order to give homeowners the biggest break possible on their bills.
If the council adopts the same tax program as it did a year ago, taxes for the owner of the average residential property will increase by $127 in the coming year, while the jump for the average business will be $240.
Residential properties include single-family homes, apartment buildings and condominiums.
The bill for the average single-family home will increase by $131 if the council adopts the same tax program. During the past year, taxes increased $57 for the average single-family home and $953 for the average business.
The average single-family home’s value increased this year from $244,700 to $245,586 — the first year-over-year increase in five years, City Assessor Stephen Gullo said. The new values are based on an analysis of recent real estate sales, Gullo said.
The owner of the average industrial property can expect to see an annual tax bill increase of $963, from $23,319 to $24,282, Gullo said.
Mayor James Fiorentini is recommending the council adopt the current tax factor of 1.5 or go even higher. A factor of 1.5 means businesses would continue to be taxed at a rate 50 percent higher than they would be if the rate was the same for business and residential property. A factor higher than 1.5 means businesses would pay an even larger portion of the city’s total taxes. The council can set the factor as high as 1.75 this year, Gullo said.
In recent years, tax rules set by the state have prevented Haverhill from setting the tax factor any higher than 1.5. But Gullo said this year the city can adopt a tax rate even more advantageous to homeowners because residential values have increased at a faster clip than commercial values.
“Residential values have begun to show signs of life in the last year, while commercial and industrial property have remained stable,” Gullo said.
The idea behind the tax factor law is to allow communities to set separate rates for homes and businesses to give homeowners a break at the expense of business owners, who are considered by some to be better able to afford higher bills.
Some communities, such as Amesbury and Newburyport, don’t use a tax factor and tax all property at the same rate. Other communities, such Lowell and Lynn, use the maximum 1.75 split to give residential owners the largest break possible, at the expense of business owners. Lawrence’s tax factor is 1.72.
If the Haverhill council approves the 1.5 tax split, homeowners will pay at a rate of $16.13 per thousand dollars of assessed value. The new commercial/industrial rate will be $26.97. During the past year, rates were $15.65 for residential and $26.24 for business.
This year’s tax levy — the amount of money the city can raise in property taxes — is $88.8 million, up from $86 million last year, Gullo said. The increase represents the maximum 2.5 percent tax increase allowed under state law, plus new revenue from new homes and businesses in the city, Gullo said.
The levy increase, which triggered the property tax increases, was approved last summer when Fiorentini and the council passed this year’s city budget.
“The goal is to tax less and spend less,” Fiorentini said. “I’d love to get to the point someday where we don’t have to go up by the full 2.5 percent. But it’s almost impossible when we have fixed cost like electricity, gas, health care and pensions that go up every year.”
The tax classification factor sets the formula by which residential and commercial property owners share the burden for paying for the majority of the city’s budget. The rest of the budget is paid for with state and federal aid, grants and money from other sources.
Gullo said he will provide the council with tax factor options between 1.75 and 1 at Tuesday’s hearing. A factor of 1 means owners of all types of property would pay the same tax rate.
In previous years, business owners and the Greater Haverhill Chamber of Commerce have lobbied unsuccessfully for a factor more favorable to the businesses community.
The city will mail the next tax bills to property owners in January, Gullo said.