NORTH ADAMS — Amid a rise in property values in the city and economic strain from the coronavirus pandemic, North Adams will lower the commercial and industrial property tax rate while bumping up the residential rate by 2 cents.
On Tuesday night, the City Council approved a split property tax rate of $18.64 per $1,000 for residential properties and $39.83 for commercial properties for the 2021 fiscal year, marking some relief for businesses while moving more of the tax burden onto residential real estate.
The decision decreased the city’s commercial tax shift from 1.71 to 1.67. The shift is a mechanism that allows municipalities to tax commercial and industrial real estate at a higher rate than residential properties, and a lower shift means businesses pay a smaller proportion of the tax levy.
The vote was 6-3. Councilors Jess Sweeney, Marie Harpin and Jason LaForest voted against the order.
The COVID-19 pandemic weighed heavily on the discussion of property taxes. Councilors disagreed on whether individuals or businesses had taken a bigger hit from the public health crisis and on how the city could use its tax rates to attract new businesses without straining the finances of its residents.
That 2-cent bump for residential properties, combined with increased valuations of those properties, will translate to an average tax hike of about $115 — from $2,779.98 last year to $2,895.02 this year, according to the city.
The new commercial rate marks a 2 percent decline from the previous fiscal year, when the rate was set at $40.66, the highest at the time in Massachusetts, according to the state Department of Revenue. The commercial tax rate now has fallen for two years in a row.
The decline means that the average commercial property will have its annual tax payment fall by $437, City Assessor Ross Vivori told the council.
Councilors pointed out that the total decrease would be much larger for major businesses in the city, such as Walmart and Big Y, by the nature of the rate.
LaForest called the change “unfair” for residents, who might be struggling to pay taxes.
Other councilors, including Keith Bona, argued that many businesses have been unable to access federal relief funding and need more support to continue to operate in the city.
“The bill for commercial [property] is getting on the high side,” he said. “As values start increasing, it’s really going to hit those commercial developers, and I’m really talking about the small businesses.”
Mayor Thomas Bernard, who proposed setting the commercial shift at 1.67, said pinning down the appropriate rates is “always a balancing act.”
“The determining factor for me was bringing the commercial rate under $40,” he said. “Because I do believe that gives us a competitive edge as we look to attract businesses to the city.”
The range of allowable shift values is based on a raft of data inputs, according to Vivori, including assessed property values, local receipts, budget issues and the tax shift in previous years. That range was much lower this year than last year. Any choice the council made would have resulted in an increase to the average residential tax payment of$103 to $138.
The total value of property in the city rose from $768 million last fiscal year to nearly $807 million. That marks an increase in value of more than 11 percent over the past two years, after several years of relatively stagnant growth.