Seeking to help struggling Vineyard Haven businesses, selectmen voted unanimously on Monday to shift the town’s tax burden away from commercial property owners. But a sharp drop in taxes for businesses will mean a slight uptick for resident and non-resident homeowners alike.
The action, taken at a special meeting following a public hearing on the matter, was intended to give an encouraging economic signal to current Tisbury business owners and make the town more attractive for prospective new businesses.
“You need to help your businesses. They’ve carried the burden for 25 years,” said Tisbury board of assessors member Angela Cywinski in a presentation before selectmen. “They really do need relief and I’d like to see more businesses open on Main street.”
Year-round residents currently benefit from a 20 per cent residential tax exemption, meaning they are able to subtract 20 per cent of the town’s average residential value, or $156,940, from their property before paying taxes. That difference had been made up by a “shift” to businesses, who have been paying taxes on 130 per cent of their property values.
Using a different commercial percentage represents an additional $1.2 million added tax burden on businesses. The size of the burden has varied since Tisbury split its commercial and residential rate in 1990, the only town on the Vineyard to do so. But on Monday selectmen got rid of the shift altogether.
While residents will still benefit from the 20 per cent exemption, they will now be taxed at a slightly higher residential tax rate, from $7.72 per thousand to $8.01. For the town’s average-priced $784,700 property, taxes will jump $182.05 for residents and $227.56 for non-residents and drop $1,749.88 for commercial property owners. For a $2 million property, taxes will jump $534.49 for residents, $580.00 for non-residents and drop $4,460.00 for commercial property owners.
“We’re lucky, number one, that we have a residential tax exemption at all and, number two, we’re lucky with the rates we pay on the residential tax,” said board of selectmen chairman Geoghan Coogan. “If I had a $2 million property, my tax bill will go up 500 bucks a year. [But] if I have a $2 million property, I can afford 500 bucks a year. Period.”
Businesses have had to pay as much as 175 per cent, in 2006, but the town has voted to lower the rate several times in the past few years.
Business owners appeared at the meeting to lobby to do away with the 130 per cent shift.
“These tax rates are unsustainable for us,” said Josh Goldstein of the Mansion House. “We were in a position last year where we were facing foreclosure. Our parents started this business in 1985 right before this started. In the heyday of the Clinton years in the 1990s, we could afford it fine. It’s not sustainable for us anymore. If you walk down Main Street you’ll see where we have retail space that has been vacant for the past three years.”
Mr. Goldstein noted that he had just bought a Vineyard Haven home and acknowledged he would be paying slightly more in property taxes. “But we’re [the Mansion House] creating 100 jobs,” he said. “We’re providing for the Island and we need a little help.”
Rainy Day owner Mike Fontes outlined Main street’s recent economic woes. “My family’s owned that building since 1967 and I can say that in ‘09, ‘10 and ‘11 I’ve never seen three worse business years in a row,” he said.
But selectmen were not entirely persuaded that shuttered Vineyard Haven storefronts were the result of high taxes. At one point selectman Jeffrey Kristal took offense to developer Sam Dunn’s assertion that the town had the reputation of being “unfriendly to business.”
“The only people who say we’re unfriendly to business don’t have their eyes open,” he said, pointing to, among other things, the town’s push for beer and wine in restaurants and a lowered commercial tax rate in recent years. “Whenever I hear ‘I don’t want to do business in Tisbury,’ it does not come from the high tax rate, it comes from the triple-net leases, it comes from the three [inch-thick] lease that some people have to sign, and it comes from the inability to put leases in potential tenants’ hands for their review. That’s what kills people and that’s what sends people flying other places. That’s why we have empty buildings downtown. We have a few people here that know that’s a fact.”
A triple-net lease is one in which the tenant pays not only rent but taxes, maintenance and insurance on the building as well.
Selectman Tristan Israel agreed. “We don’t have all boarded-up stores on Main street,” he said. “Some of that has just been circumstance, of the people who own businesses making the decision not to be open.”
Mr. Israel, who was wary of eliminating the shift altogether, was quick to remind his fellow selectmen of the town’s change of fortune in the commercial arena.
“All I’m saying is times change and I know we are in hard times right now,” he said. But it wasn’t long ago when “things were exactly the opposite and . . . people could not afford to live here because [property values] were going up.”
Before the vote, Mr. Coogan expressed concern that not all business owners would use the extra help to open up shop.
“Part of the problem that I see here with vacancies is that those people benefiting are not going to put it back into their building, they’re not going to lower their rents and those buildings are going to stay empty,” he said. “I guarantee you it’s just going to go into a pocket. I don’t think this is enough to fill vacancies; there’s more that landlords have to do. But it helps.”