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Allan Herschlag: Let’s take a fair approach to tannery taxes



For the Monitor
Wednesday, November 07, 2018

The Caleb Tannery apartment project has received final approval from the N.H. Housing Finance Authority’s board of directors to be able to apply for tax credits to fund the project.

This is important because without the tax credits the project would not have the financing to be able to move forward.

I have opposed this project from the start for a variety of reasons. When uses for the vacant tannery site were being discussed, consideration was proposed (as found in the Penacook Vision Plan) to allow for up to six stories at the tannery site. This was done because of how important it was to maximize the potential assessed value of the property to generate the highest possible return from property taxes for the community.

It was also understood by the community that a project on the tannery site would have a commercial component to it. This project neither maximizes the value of the site nor has a commercial component to it.

For years we have seen the social costs of segregating housing and neighborhoods by income. A better model is to integrate workforce, low-income and market-rate housing, both in multi-family mixed-unit developments and in neighborhoods.

This project continues the failed model of segregating housing by income.

The tannery site is in a TIF (tax increment financing) district. In addition to paying back city funds that were used to clean up the property and make it marketable, the city council last year voted to place the construction of a riverfront park on the site in the CIP (capital improvement program), with an anticipated cost of over $1 million. It is quite possible that the new taxes from this project won’t be available to provide funding for city-wide, school district and county costs for 20 years.

There is no argument that there is a huge demand in our city, county and state for more housing – housing for all income levels. The question that needs to be answered is how do we develop housing and attract businesses using a model that makes sense for all parties – developers, homeowners and businesses – and generate the income necessary to provide community services without continuing to place a larger and larger share of the property tax burden on those who are currently paying property taxes.

The tannery project is a done deal. The question to ask now is how do we move forward to make the best of this project and to support the costs of services that are provided by the city, school district and county through our property taxes.

So here’s what I think. At least 50 percent of the new property taxes that will be collected from the tannery apartment project must be used (from day one) to pay for the same services and costs your property taxes pay for – city-wide services, Merrimack Valley School District costs and services provided by the county. The remainder of the taxes can go to pay back bonds and city funds that were used to make the project possible and for any other costs or improvements to the site.

Delaying new revenue from property-tax revenue means that although the value of assessments in Penacook will have increased, the pot (those contributing property taxes to pay for services outside the TIF district) has remained the same. There is a difference between tax base expansion (growth) and tax rate stabilization (increasing the number of properties that pay for the services your taxes currently support).

True tax base expansion should not come at the cost of neglecting the importance of tax rate stabilization. It isn’t fair that some projects in special tax districts are able to direct all their new property taxes to pay for the improvements that made their projects possible, at the expense of paying their fair share for community-wide costs and services.

At a time when a major business in Penacook is closing and other commercial properties have had their abatement requests to reduce their assessed value approved, resulting in lower property taxes for them, no property owners should be exempt from contributing to the common good. We are all in this together, and we should all be paying our fair share to support the costs of city-wide, school district and county services.

(Allan Herschlag represents Ward 2 on the Concord City Council.)