HAVERHILL — The owner of the average business property will see their taxes go up by $953 while the owner of the average home will see their bill increase by $57 under the tax program approved by City Council last night.
For commercial and industrial property owners, it’s the largest year-to-year increase in many years. For residential property owners, it’s one of the smallest annual increases since real estate values began plummeting six years ago.
The council set the tax rates by unanimously approving a classification factor of 1.50, which means businesses will continue to be taxed at a rate 50 percent higher than they would be if the rate was the same for all types of property — both homes and businesses.
The classification factor determines the split between what residential and commercial property owners pay. The idea behind the 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 more able to afford higher bills.
Prior to voting, Sven Amirian, president of the Greater Haverhill Chamber of Commerce, lobbied for a 1.47 factor on behalf of businesses. That would have lowered the average commercial/industrial tax bill by $300, but raised the average residential tax bill by another $27.
“It’s a very difficult business climate right now,” said Amirian, a former city councilor. “Taking two or three points off (the factor) would be a sign that Haverhill cares about businesses and their needs. Even one or two percent would be symbol, a gesture.”
David Van Dam, Mayor James Fiorentini’s aide, told the council the mayor favors the 1.50 factor. But Van Dam said Fiorentini would go along with the council if it decided to lower the factor by a few points to give businesses a small break. A few years ago Fiorentini vetoed an attempt by the council to lower the factor for businesses.
Despite that signal, the council quickly passed the 1.50 factor with little discussion. Only Councilor William Ryan commented publicly.
“This is always a difficult issue for the City Council,” Ryan said. “But we have to think about people who own homes and are struggling. Twenty-seven dollars is a lot for someone on a fixed income.”
The vote for the 1.50 factor was 8 to 0, with Councilor John Michitson absent. After the vote, a business owner with Armirian said he believed Michitson would have voted to lower the factor because Michitson has said he does intend to run for election next year.
“I was surprised there wasn’t even a discussion (about lowering the factor) after the mayor said he wouldn’t veto it,” Amirian said.
Under the new tax rates, the owner of the average commercial/industrial property will see their annual tax bill increase by $953 to $15,200. That’s more than twice as much as those taxes went up last year when they rose $427.
Meanwhile, the owner of the average residential property, which includes single-family homes, apartment buildings and condominiums, will see their bill increase by $57 to $3,268. This increase is much less than last year’s $130 hike.
City Assessor Stephen Gullo said the reason for the discrepancy is that commercial and industrial properties held their value better than residential properties.
Gullo also noted the average business property value of $579,053 is inflated by the inclusion of large businesses such as BJ’s and Target. Most businesses, he said, are smaller and have smaller values. Therefore, he said, those smaller businesses will see increases that are less than the average $953 hike.
This year’s tax levy — the amount of money the city must raise in property taxes — is $86 million, up from $83.7 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 approximately $156 million city budget. The rest of the budget is paid for with state and federal aid, grants and other sources.
Values for both residential and commercial properties in Haverhill have dropped for the fifth consecutive year, Gullo said. The value of the average Haverhill home fell from $255,995 to $244,700, he said. In the three years previous, home values fell from $293,847 to $272,262 to $262,853.
The current fiscal year runs from last July 1, 2012, to June 30, 2013. Gullo said this year’s actual tax bills, based on the new factor and rates, will be mailed Jan. 1. Previous bills sent this year have been estimates, he said.