By Chris Paul
The Londonderry Town Council held a Public Hearing on an ordinance that would create a Commercial and Industrial Property Tax Incentive Program, and after nearly an hour of discussing the pros and cons, decided to have the Town Manager rework the plan slightly to better benefit the taxpayers.
The program was brought to the Town Council a number of months ago by the former Town Manager, Kevin Smith, and it was designed specifically to benefit an area on east side of Woodmont Commons.
The latest rendition of the ordinance, presented by Town Manager Mike Malaguti, would encompass the entire town, he felt it would be more equitable to the taxpayers.
According to Malaguti, the purpose of the program is to attract commercial and industrial businesses through allowing tax exemptions.
It was explained that the Town Council could grant businesses up to a 50 percent tax exemption as long as the public benefit outweighs the costs and detriments associated with the project being proposed. This exemption could last as long as 10-years, according to Malaguti.
The Town Manager stressed that the tax benefit would only be given to the part of the project that is new construction, any existing taxes being paid on the property would still be paid.
The latest rendition of the Tax Incentive Program will have an 18-month trail period.
In the plan, the tax relief program would consist of three tiers of business. Those that have a new construction estimate of over $30 million would be considered a “Tier One” project. Tier Two projects would be an anticipated increase of over $15 million, and Tier Three projects would need to be $2.5 million or more.
Each tier would be granted up to a 50 percent tax exemption in the first year the project is completed.
In tier one that amount would be stepped down by 10 percent each year for a five year plan or four percent each year for a ten year plan.
For Tier Two projects, the maximum discount would be between 30 and 40 percent and would step down by 7.5 percent for four years.
Tier Three projects would be allowed a 20 to 30 percent reduction in taxes the first year and that amount would step down in five percent increments for the four years following.
The Town Council would determine how much of a percentage projects in each tier would get.
Malaguti gave an example of how the plan would benefit the town comparing two properties in town, one residential and one commercial, both worth $100,000.
In the example he showed that the two properties would appreciate at different rates. The commercial would show a much slower appreciation.
After the presentation, Councilor Joe Green asked Malaguti if he could put together a variety of examples of how giving businesses a discount on their taxes would benefit the community.
Malaguti responded that in his first month as Town Manager he as received calls from developers about what kind of incentive programs are available. He noted that Derry has incentives for businesses, but we do not.
He also said that he had been contacted by a commercial real estate agent that was inquiring about a potential project that is worth as much as $90 million.
Malaguti and Town Assessor Steve Hamilton both said that it would be difficult to project without a real project.
Green also suggested reaching out to Derry to find out how the program has benefited them.
Councilor Deb Paul wasn’t comfortable voting on it and thought the town should put the idea to the voters on a Warrant Article.
Councilor Chad Franz verified that the tax exemption would be on property value that the town is not currently getting, so it would be tax-positive even with the discount.
Resident Robert LeBreux spoke on the idea and felt it wasn’t a good idea for Londonderry. He thought the amount beking given was excessive and the length of time was too long. He also felt that the town shouldn’t giving things away feeling businesses could be attracted to town with other incentives.
Resident Christine Perez was in favor of the program cautioning that there may be things in the works at the state house that may take away these opportunities in the near future.
In the end, the council decided to have Malaguti to continue working on the ordinance, lowering the incentives and the timeframe.