The town’s two TIF (Tax Increment Financing) districts are working as intended and will bring both new business in and the money to pay for infrastructure improvements. That’s the opinion of Chief Financial Officer Frank Childs, who said that in a TIF district, the tax revenue from a property goes directly to paying for improvements to the area where the property is located. The Derry TIF districts are on Ash Street Extension and Route 28 (Manchester Road).
Neighboring Londonderry is considering a TIF district for the Pettengill Road area.
Childs said the first TIF district, the Ash Street Corporate Park, was established in March 2004. The town acquired property on Ash Street Extension, made site improvements and sold the property to a developer, who divided it into four parcels.
The bond for Ash Street was issued in April 2004 for $2,000,000. Childs said, and the balance as of June 30, 2013 is $1,600,000. He said the Ash Street bond is expected to be paid off in 2015.
Route 28/Manchester Road was a more “mature” area, Childs said, with several businesses and industries already in place. The companies already in place continued to add their tax revenue to the tax base, while new businesses such as the Walmart Supercenter, Panera, Woof Meow and Goodwill became part of the TIF District. This applies to potential new construction too, Childs said, such as the old Sanmina site, the Pinkerton Tavern site and the land across from the movie theater.
Also, he said, any improvements to the properties will be assigned to the TIF district. TIF District tax revenues will be assigned to repay the bond for the expansion of Route 28, which was completed this past November. The Route 28 TIF District was established in August 2006 and a bond for $3,400,000 was issued in November 2011. The bond balance is still $3,400,000, but Childs expects this one to pay off too.
“We obviously have enough development to pay for the improvements,” Childs said.
The Ash Street project has a 30-year bond, while the Route 28 project has a 20-year bond. “With a more mature area, the Council felt we didn’t need as much lead time,” Childs explained.
According to Town Assessor David Gomez. there are 23 parcels in the Ash Street TIF District and 71 in the Route28 TIF District, for a total of 94.
Childs explained that the bonds are structured so there is no principal for the first five years. After 10 years, the town is allowed to “pay down” on the bond, and that’s when the savings will be seen. Right now Walmart alone fully pays for the bond. The tax income from the other businesses is placed in a special fund, and after 10 years, the town can use it to make extra payments without a penalty.
The standards for the TIF District are spelled out in RSA 162-K. It is the only RSA mechanism New Hampshire has for economic development, Childs said. “It’s a way to undertake a project and not have it impact taxpayers,” Childs said. And in the long run, those taxpayers benefit too, he added. “When the bond in a TIF district gets paid off, the property tax revenue can then go to the general fund,” he concluded.