HAVERHILL — The city’s annual meeting to inform property owners how much their taxes are going up has been described as an exercise in pitting businesses against homeowners.
This year’s tax classification hearing, set for Tuesday at 7 p.m. at City Hall, promises more division than ever.
Commercial and industrial property owners face one of the largest year-to-year tax increases in recent history, while residential owners — people who own single-family homes, apartment buildings and condominiums — are looking at one of the smallest hikes since home values began plummeting six years ago.
Haverhill has historically taxed businesses at the highest rates allowed by law, in order to give homeowners the largest break possible on their tax bills. If City Council follows that course and approves the tax program recommended by Mayor James Fiorentini, 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, would see their bill increase by $57 to $3,268 under the proposed tax program. 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 much 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.
The classification factor determines the split between what residential and commercial property owners pay. The current 1.50 classification factor means businesses are 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 idea behind the law that allows communities to set separate rates for homes and businesses is to give homeowners a break at the expense of business owners, who are considered by some to be more able to afford higher bills.
Fiorentini, who favors the 1.50 classification factor, has in the past vetoed attempts by the council to lower it for businesses.
“I believe that the rate should remain at the same level at 1.50,” the mayor said this week when asked to comment on Tuesday’s tax hearing. “We want to keep our tax rate steady, predictable and low.”
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 tax classification factor sets the formula by which residential and commercial property owners share the burden for paying for the majority of the spending plan. The rest of the budget is paid for with state and federal aid, grants and other sources. Sven Amirian, president of the Greater Haverhill Chamber of Commerce, said he will attend Tuesday’s hearing to give “the business perspective” on the tax program. But he said he is resigned to the classification factor remaining 1.50.
“If the council wants to give the businesses a percent or two back, we’ll certainly take it,” Amirian said of the tax rate. “But I don’t think there’s an appetite for that.”
Gullo said he will provide the council with tax factor options between 1.50 and 1. A factor of 1 would mean all types of property owners would pay the same rate.
In previous years, former Chamber president James Jajuga lobbied unsuccessfully for a factor more favorable to the businesses community.
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.