By Chris Paul
The Town Council held a public hearing at their meeting on Monday night, Dec. 6 on the merits of a proposed ordinance that would give tax incentives to businesses building in areas of the Woodmont Planned Unit Development.
No decision was made on the plan that night, and the discussion will continue at the council’s next meeting on Monday, Dec. 20.
Town Manager Kevin Smith and Town Solicitor Mike Malagutti presented the proposal to the board as a way to spur development in the section of town near Route 93.
Smith explained, “This is a property tax incentive program specifically designed for commercial and industrial development on all new construction. It’s to accelerate development in the Woodmont sub-areas WC1 and WC2 where we expect most of the commercial development to come from.”
He added that the tax incentive plan would not be available to all of Londonderry, just those specific areas in Woodmont, which would be on a smaller scale than some of the buildings near the airport.
He explained that with building material prices still very high and the competition by town’s to attract businesses in Southern New Hampshire this would help with the overall tax burden of homeowners.
He finished by saying that the tax benefit for businesses would only be for the first five to ten years after building, depending on the property value, and the maximum benefit would be a 50 percent deferment in the first year and would step down incrementally after that.
Malagutti added that any business looking for this benefit would need to come before the Town Council and prove that the business has a “public benefit.”
He defined that as being, “Something that enhances the economic vitality of the town, that promotes the development of municipal centers, providing for efficiency, safety and a greater sense of community, an increase in the commercial/industrial activity in town including job creation and an increase in the industrial or commercial tax base.”
Malagutti added that this would be done on a case-by-case basis and the Town Council would need to approve each project as applications come in.
The projects that will be able to take advantage of this program will be divided into three tiers; the first tier would be any property assessed over $5 million: the second over $2.5 million; and the third over $1 million.
For Tier One Projects there will be a 50 percent exemption in the first year after completion of the project. In the nine years after that, there will be a five percent decrease for each year. In year two it will be 45 percent, year three 40 percent and so on.
Tier Two Projects would start their first year with a 40 percent property tax savings. The following four years would have those savings drop 10 percent each year for the next four years.
For Tier Three Projects the percentage of savings is slightly lower. In the first tax year, there will be a 30 percent savings, year two will have a 20 percent break, 15 percent in year three, 10 percent in the fourth and five percent in the final year.
When asked by councilor Jim Butler if the program is being offered in other towns competing for the same projects, Smith said that Derry has had one, but he felt it was being under-utilized.
Councilor Deb Paul had a number of questions, and felt the council would need more time to digest the new ordinance and thought that more residents could add to the discussion if the public hearing was continued to the next meeting.
Paul asked if the length of time needed to be ten-years and thought that all tiers should have the same length of tax benefits.
Smith responded that the timeline could be adjusted.
Paul also asked about the process of granting a tax deferment to companies and how it would be done and it was explained that the entire council would make each determination as plans come in.
It was explained that no residential construction would be able to take advantage of this program and would also include revitalizing or rehabbing pre-existing structures.
Resident Ray Breslin added to the discussion asking, “What is the benefit to the citizens and taxpayers of Londonderry?” He added, the more that’s built, the more infrastructure would be needed such as water and sewer and was hoping that the town is looking for federal grants to help with that. He also didn’t feel that it was the town’s responsibility to support Woodmont as far as bringing in business.
Paul also asked how long the program would last and if there would be a cap on the number of projects that could take advantage of it.
It was explained that the program expires in five years and would need to be reinstated after that, but Malagutti felt that putting a cap on the number of projects would be unconstitutional.
The council voted to continue the ordinance public hearing to the Dec. 20 meeting.