NH's new business development tax break takes effect, to little fanfare

Dover, Conway say they’re ready to give it a try, but word mostly remains to get out

A law that took effect Aug. 18 allows New Hampshire municipalities to offer up to a 10-year, 50 percent cut in property tax bills on commercial and industrial development. Now the question is: Will cities and towns take advantage of it?

A similar has already been in place in Coos County, but House Bill 316 would expand the offer throughout the state, but only if it was adopted by city councils and the town meetings.

Dover’s city council is likely to take it up and Conway selectmen will probably present a proposal at town meeting, but thus far there has not been much other interest.

“So far, not a peep,” said Cordell A. Johnston, general counsel at the NH Municipal Association

“There is one town that we know of that plans to put it on the warrant,” said Christopher Way, acting director at the NH Division of Economic Development. “I suspect others may follow. I hope they will.”

It is not an all-or-nothing decision. A municipality could just give the break to either industrial or commercial development, and the municipalities can define the kind of businesses each of those categories contain.

The tax exemption could be 50 percent of a tax bill or as little as 1 percent on new development, and the time frame it lasts can range from one to 10 years, or anywhere in between. It could be confined to a single industrial park or be anywhere in town. But once the rules are set, the municipalities would have to apply them equally to all similar projects.

“That’s the beauty of it,” said the bill’s sponsor, Rep. Frank McCarthy, R-Conway. “It is whatever the town wants.”

New business vs. tax revenue

McCarthy had been trying to get the measure through the Legislature for five years, though at first by just adding Carroll County to the existing law.

“We have an industrial park that once employed 500, He said. “Today it employs 47.”

He said he agreed to expand the program statewide in a bill proposed two years ago, and the town of Conway was so sure it would pass it drafted a warrant. But the bill failed in the Senate because of strong opposition from Coos County lawmakers who didn’t want to dilute the tax break its communities offer, being the least developed county in the state. Indeed, that argument that was the reason for the narrow 12-10 vote when it passed the Senate this year.

Conway officials will likely put the tax-cut measure on the April town meeting warrant, said Selectman Carl J. Thibodeau.

“Technically, there has been no decision, but a straw poll among the selectman said it’s likely to go to town meeting,” he said.

Conway has a strong tourist economy, but as a retiring developer, Thibodeau said, “the town could use a little diversity.”

Thibodeau and McCarthy both argued municipalities can’t lose, because the tax break was on new development, not existing land, which would be taxed at the same rate. But Johnson, of the Municipal Association, said that there was no way to know whether a developer would go ahead anyway.

“Towns are going to have to weigh whether attracting new business is worth forgoing tax revenue,” he said.

Economic development directors in Portsmouth and Claremont were not too familiar with the law and said they would have to look into it, but Dan Barufaldi, director of Dover’s Business & Industrial Development Authority, was well aware of it.

“We will be taking it up in the future,” he said. “This is something we would try to use. It’s incentive to new development, and I think that’s a good thing.”

But it will take a while, said Way.

“It certainly has value as a development tool, but communities have to be educated. Right now, there is not as much awareness as there could be.”

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