Proponents have argued that the destruction of the Lynch School and the erection of an 18,000 square foot shopping complex and a bank will lead to considerable tax savings for the commercial and residential taxpayers of Holyoke. THI IS NOT TRUE!
This document examines this assertion using existing tax assessments and making projections based on comparable structures in similar land valuation areas.
Two parts of the city with high property valuations are considered: the Northampton street corridor and Whiting Farms Road. These were chosen for the following reasons: Northampton Street is the proposed location of the new project and Whiting Farms Road has the most recently constructed commercial properties. The following is a chart showing properties by address, square footage, assessed value and tax based on the formula of $39.70 per thousand of assessed value.
(The figures for square footage and assessed value were found at PATRIOT PROPERTIES HOLYOKE WEBPRO.)
Assessed values are arrived at by taking into account numerous factors including land valuation, square footage of the structure, complexity of the structure (numerous rooms or one large room, etc.), the presence of special materials or equipment (type of vault for banks, sprinkler systems, flooring and roofing materials), construction materials (brick versus sheet metal, actual stone as opposed to faux stone facing, etc.), construction type, construction features (peaked roof versus flat roof), depreciation, etc.
There must be considerable margin for error in comparing assessments since the assessment process includes a degree of subjectivity. However we can conclude the following:
1. Assessment of the banks in the Northampton Street corridor is fairly uniform coming to an average of $567,000 and leading to a tax revenue of $22,100.
2. Even using the most expensive and newest property, The Fairfield Inn and Suites, as a base and projecting potential valuation based on size comparison alone, the 18,000 square foot shopping project proposed for the Lynch School site will lead to an assessed value of $1,452,821.50. This is possibly generous since the construction features that produce valuation undoubtedly are more elaborate and expensive for a hotel/motel than a shopping building without residential facilities. If this projection is even vaguely accurate the tax benefit from the retail phase of the Lynch project will be $57,684.
3. Total projected tax revenue from combined bank and retail project would be $79,785.
IMPACT ON TAXES IN HOLYOKE
The City of Holyoke raises approximately $52,400,000 in tax revenue annually. (of this $28.6 million comes from residential levy and $23.8 million from commercial levy.) The added revenue from the proposed Lynch School site project can be figured against the total tax levy to see what the actual reduction in taxes per thousand dollars levied will be for residential and commercial property. Dividing the new taxes by the total levy produces the proportion of contribution the new taxes will make to the overall levy. The proposition assumes that these new dollars will be used to reduce existing taxes.
Lynch Project Tax levy: $79,785 divided by Holyoke Tax Levy $52,400,000 = 0.0015226
Calculating tax savings: $1,000 x 0.0015226 = $1.527. For every $1,000 in a residential tax
bill there would be a savings of $1.57. For a $2,000 tax bill the savings would be $3.14. For a $5,000 tax bill the savings would be $7.85. For a $10,000 tax bill the savings would be $15.70.