PILOT Agreement with New Balance Ok’d by Council

By Alex Malm

The Town Council was presented with a proposed Payment in lieu of Taxes (PILOT) agreement between the town and the New Balance company during the Aug. 14 meeting.
It was explained by Town Manager, Mike Malaguti, that New Balance received conditional site plan approval by the Planning Board. He added that the first phase of the project would be bringing in about 250 employees and the second phase would bring in 200 employees.
He stated that they are expected to invest about $60 million for property improvements, including having a “significant solar energy component.”
Malaguti added the project would be financed through the NH Business Finance Authority, who would own the property for 10-years and lease it to New Balance and would then buy it after 10-years.
Under state law, the town has to negotiate a PILOT since the NH Business Finance Authority is a government entity and doesn’t have to pay property taxes.
Malaguti explained that among other things, New Balance was attracted to Londonderry because of the newly created commercial and industrial tax incentive program. Under the PILOT agreement, New Balance would be receiving similar incentives as they could receive under the program.
“New Balance will pay full tax on the existing unimproved value of the property and will receive no incentive against the state education and county tax,” Malaguti said.
For year one and two, Malaguti explained that New Balance will pay the equivalent of the local municipal and education tax on the improved value of the property, but will receive an incentive that will reduce the amount by 5 and 10 percent.
In year three, when the building is expected to be at full value, New Balance would receive a 50 percent incentive, which would be reduced by five percent every year until New Balance pays full taxes when they own the property after 10-years.
“It’s fitting that the first user to take advantage of this program is a great American brand, which unlike too many companies that have been offshoring manufacturing jobs in recent years is leaning into US based manufacturing,” Malaguti said.
Malaguti said they would receive what they currently receive for the taxes at the property “plus a great bit more.”
Town Council Chair, John Farrell, noted that they have a PILOT agreement with Manchester Airport for a little under a million dollars a year.
He said non-profits aren’t obligated to pay property taxes and PILOT agreements protect the town by receiving some type of tax revenue.
“That’s the theory,” Malaguti said.
Malaguti said they do PILOTS for specific taxpayers who are exempt from paying taxes.
The Town Council approved the PILOT agreement with New Balance.

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