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Date: 12/19/2022
HOLYOKE – Lower tax rates are coming to Holyoke in 2023 after the City Council voted 7-6 to set new tax rates for all property classifications during their Dec. 12 meeting. While the lower rate was set, homeowners will still face paying more in 2023 because of property values.
Residential property owners will pay $18.78 per $1,000 in valuation, while commercial industrial property owners will pay $40.20 per $1,000 in valuation. These are both reductions to 2022’s numbers which was $19.26 in residential and $40.60 in commercial.
Before discussion amongst the council, Mayor Joshua Garcia spoke to the body and recommended a larger reduction to the commercial-industrial tax rate. He said that doing so would help drive business growth for the future and create a more “sustainable course” for the city.
Garcia noted that the tax rate should drop and added that councilors could lower the rates for both tax classes. He also shared the budget would remain balanced even without factoring in federal American Rescue Plan Act funding.
“To add to the good news, you don’t have to use free cash or any reserves to reduce the levy amount. This means your budget remains balanced. Not only is it balanced, it’s left with $1.9 million on the table, uncommitted and unappropriated,” Garcia said.
Garcia also added that he could report multiple years of new growth and highest property values for the city, rising by $12 million in the current fiscal year. Additionally, the mayor shared that the city has collected more than they budgeted for, which “strengthened the city’s free cash potential” and allows for more planning ahead and investing in capital needs.
“You get what you plan for,” Garcia said, noting he uses the phrase for much of his work.
The process in choosing the rate works through councilors offering incremental percentage shifts in the commercial-industrial and residential factors. After much discussion and multiple votes on the suggested rates from councilors, Councilor Jose Maldonado-Velez proposed the rates that were ultimately voted on.
City assessor Deborah Brunelle informed the City Council about current values during the Nov. 22 annual tax classification hearing.
According to the assessors’ data, single-family home prices rose by 7 percent in 2022 and 20 percent in the past five years. Prices also increased for two-family, multi-family and apartment buildings, resulting in the average single-family home being valued at $219,000 in 2022.
For commercial properties, the assessed value increased slightly from last year to $553,813 without the inclusion of the Holyoke Mall at Ingleside. Holyoke’s combined property values totaled nearly $2.5 billion.
The assessor’s office noted the fiscal year 2023 levy ceiling at $63,459,900 or 2.5 percent of half the value. The latest levy’s maximum collection is $61,999,858. Under proposition 2 ½ the city has over $1.5 million in excess capacity.
Brunelle expects average single-family homes to be valued at $236,262 for 2023 but said an eventual cooling off of home prices should follow.
The mayor also stressed to the council the importance of setting the new tax rates and determining the city’s fiscal future. He said single-family home prices have doubled in the last 20 years while commercial real estate values remained the same over the same period.
Garcia added that the city must continue to grow the commercial tax base and suggested reducing the commercial-industrial rate as one way of doing so.
“For that reason, we need to correct the course,” Garcia said. “We have an opportunity to send a strong message to the business community.”
Garcia’s recommendation was seeking a commercial rate below $40 and assured homeowners would benefit in the long run in creating a “more equitable system” for all.
At-Large Councilor Kevin Jourdain said the city has one of the state’s highest residential tax burdens and noted the average Holyoke household pays $600 more than a Chicopee homeowner. He also disagreed with the mayor’s suggestion of a lower commercial-industrial rate due to inflation and the rise of costs challenging taxpayers in everyday life.
“I’m intrigued this council purports itself to be progressive, and give businesses breaks and put it on the backs of residents,” Jourdain said after the first failed votes for a new rate.
At-Large Councilor Israel Rivera agreed with Jourdain’s point about inflation and noted that residents could be facing continued higher utility bills. He also added that the city has “been taxing commercial at a higher rate than normal,” and it has led to no change.