The Town’s TIF (Tax Increment Financing) Districts are working as planned, according to Town Manager Kevin Smith.
A Tax Increment Financing (TIF) District diverts tax income from town, school and county use, with the money generated in taxes used to pay off debts and infrastructure associated with creating the district before those funds become available for other needs.
In a phone interview Friday, Smith said the first phase of the TIF District has generated close to $1 million in income. The first phase includes businesses and industries such as Pratt & Whitney, FedX and UPS, all located in the development-fertile land around the Manchester-Boston Regional Airport.
The first Londonderry TIF District was approved by the Council in October 2013 for the Airport Area Infrastructure District, encompassing the then-undeveloped Pettengill Road. The taxes from the district could be used to improve sewer, water and utilities, rights of way, intersections, lights, sidewalks and trail updates, with the caveat that any money raised within the TIF District must be used to benefit that district.
That first district included roughly 1,202 acres between the Manchester town line and Route 28. The district was amended and expanded in fall of 2015, according to Smith.
The second TIF District is also in the area of Pettengill Road, and covers 202 acres with an assessed value of $607,053.
It was created with the stipulation that it be dissolved upon the town’s meeting its obligations for roadway infrastructure improvements.
This included the creation of North and South Loop Road. The roads were planned to improve access to the airport area. The district encompasses EFI and F.W. Webb, among other companies, and is also on target to generate $1 million.
For the second district, the town is still “on the hook” for $130,000 of the $250,000 it was obligated for, with $120,000 spent to improve the intersection of North Loop and South Loop, Smith said.
The rest of the money will be spent when EFI goes into the district, Smith said.
“Nobody will get reimbursed until both EFI and F.W. Webb are officially open,” Smith said. “We won’t reimburse the developers until we get tax revenue from those developers.” He said F.W. Webb is “shooting to open” in fall of 2017, while EFI has a target date of 2018.
With a TIF, there is no bonded indebtedness to a town, county or school tax rate.
Any money raised within a TIF district must be spent to benefit the same TIF District.
The Town Council is in control of how TIF money is administered and it must be spent consistent with the official plan for the district.
There is no limit to the number of TIF districts a community can have, but the total acreage in any one district cannot exceed 5 percent of the total acreage in a municipality or more than 8 percent of a community’s assessed value. Furthermore, all TIF districts combined cannot exceed 10 percent of the total acreage of the community or more than 16 percent of a community’s assessed value.
Each TIF District must have an Advisory Committee established from within the District to oversee activity and make suggestions and recommendations to the Council to ensure fulfillment of the District purpose.
The districts are important to the Londonderry taxpayer, Smith said, because “the town has never gone into the red” to improve these areas.
No further TIF districts are planned at this time, Smith said.