Here's What I Think

Once again, I find our city giving tax preferences under the guise of tax base expansion. What can be wrong with that? There are a number of answers to that question. First and foremost we have seen that many of the recent major commercial and residential projects have failed to have tax revenues available to pay for city, county and school services. Even worse some of these projects pay no new taxes at all.

How is this possible? There are two mechanisms the city is currently using to defer tax payments for city services. First is the creation of a Tax Increment Finance District (TIF). This allows the city to sequester a portion of the city and have all new taxes from improvements to that District be returned to that District for improvements to that District. This money can be funneled back into the District for up to 20 years and there are no restrictions on the city expanding and perpetuating these Districts.

In some Districts the city has included properties that have nothing to do with the TIF District, in order to collect future tax revenues to help pay for the new projects. This erodes the city’s ability to pay for current and future projects and services. This limits the properties the city can collect taxes from, meaning as the city’s expenses and needs for services increase the burden to pay for these increased costs fall on you and me in the form of higher property taxes. 

The second mechanism for keeping taxes from paying for city, county and school services is even more insidious then the TIF Districts. It is RSA 79:E, a provision under the State’s laws and rules. It allows a developer to pay no taxes on the new value of the project for up to nine years. That’s not a misprint. If a project was valued at $100,000 before the project started and at the completion of the project it is valued at $4 million, the owner of the project only pays taxes on $100,000, the value of the project before it was improved. Increases in costs for services are again passed onto you and me.

Why should some not have to pay their fair share? While it is true that these special tax districts were set up to encourage redevelopment in blighted or contaminated sites, there is an inherent unfairness to the community as a whole. Why should  all the new tax revenues go back to the developer  for the costs associated with these projects? After all if a developer (or you or I) built a project outside one of these special districts we would be responsible for all infrastructure costs and impact fees and we would be responsible for paying taxes from day one.

Shouldn’t at least a portion of these new taxes come to the community to pay for services and to help to limit the increase in taxes we pay? In areas that are difficult to develop - because of disrepair, environmental pollutants or excessively high infrastructure upgrades - a case can be made for sharing costs. But giving away the baby with the bath water makes no sense for our community. I believe that by the time the city realizes tax payments from these special Districts, that the promise of an expanded tax base will ring hollow. By the time we see revenues from these projects the costs to the community from these projects will outstrip any potential benefit we were promised.

Here’s what I think: Any new development in a TIF District and any development falling under the guidelines of RSA 79:E should have to pay at least 50% of their taxes - on the total value of the project - for city, county and school services from day one.