Why I Am Voting NO on Article 9 of the Goffstown 2012 Town Ballot
If you attend any public meeting in town for a few times, sooner or later you will hear that we need more commercial/industrial land in town to improve the tax base. I'm going to explore this issue in detail, and try to answer the following question:
How much of a financial impact is new commercial/industrial development going to have on my tax bill?
The answer may surprise you. But first, let's look at some numbers....
Oh, what are the taxes in your neighborhood?
Here are some financial numbers for Goffstown and our surrounding communities:| Town | 2010 population | 2010 tax rate | Eq. assessed value | % Residential | % Commercial | % Utilities/other |
|---|---|---|---|---|---|---|
| Bedford | 21,203 | $20.23 | $3221M | 81.3% | 17.6% | 1.1% |
| Dunbarton | 2,758 | $21.21 | $281M | 91.1% | 1.5% | 7.5% |
| Goffstown | 17,651 | $23.66 | $1346M | 87.5% | 10.4% | 2.1% |
| Hooksett | 13,451 | $22.34 | $1541M | 69.8% | 26.6% | 3.5% |
| Manchester | 109,565 | $20.58 | $8283M | 64.3% | 33.9% | 1.8% |
| New Boston | 5,321 | $20.58 | $552M | 94.8% | 3.4% | 1.8% |
| Weare | 8,785 | $20.75 | $762M | 91.3% | 5.0% | 3.7% |
(Data from NH Community Profiles and a PDF document from the NH Department of Revenue Administration -- tax rate is "full value" or equalized tax rate, used by the NH DRA to allow comparisons between towns for equivalent-valued property: towns reassess their property only once every few years and this compensates for one town's property assessment being more out-of-date than another's. Percentages of residential/commercial/utilities are percentages of assessed values.)
You will note two things:
First, Goffstown has a slightly higher equalized tax rate than nearby communities -- if you have a house with an equalized assessed value of $200,000, you'd be paying $4732 for property taxes in Goffstown, but only $4116 in Manchester or New Boston.
Second, Goffstown has a smaller fraction of commercial property in its tax base than our more-developed neighbors Bedford, Hooksett, and Manchester, and a larger fraction of commercial property in our less-developed neighbors Dunbarton, New Boston, and Weare.
There is an argument that increasing our commercial tax base will lower our tax rate. It is a valid one, but rarely do people explain why. Let's look at it more closely:
Residential property and commercial property both pay equal tax rates. If someone has a business assessed at $500,000 in Goffstown, and someone else has a residence assessed at $200,000 in Goffstown, they'll both be taxed at the same rate. New Hampshire law does not allow one category of property in town to be taxed more heavily than another. (With one minor exception: a few people qualify for elderly or veterans' tax exemptions.)
But residential property uses all of town services -- including schools, which take up the majority of our property tax revenues -- whereas commercial and industrial property does not.
All other things being equal, if there were a 20-acre parcel of land in town, and we had the choice to allow it to be developed as a commercial business with an assessed value of $3 million, or a 10-lot residential subdivision with an asssessed value of $3 million, the two would bring in the same amount of tax receipts, but the subdivision would bring higher expenses to our town.
So if it's possible to force some development in town to be purely commercial or industrial rather than residential, and all you care about is increasing our net tax balance by every penny, then rezoning land from residential to commercial/industrial is something you'd want to do. Right?
There are two problems here.
One is that the zoning classification of a piece of property does not guarantee the way the property is developed. My house sits on land zoned Agricultural (A), but there are businesses in the A zone; similarly, our three major zones meant for nonresidential development (Commercial = C, Industrial = I, and Commercial/Industrial Flex Zone = CIFZ) all allow residential development.
The second is the question of numbers I brought up at the beginning:
How much of a financial impact is new commercial/industrial development going to have on my tax bill?
To answer this, we have to make some estimates.
Estimating tax contributions to residential and nonresidential property
(Before anyone accuses me of having phony math, l welcome any corrections to my estimates or arithmetic. I'm not interested in twisting the number to my own ends; I just want a reality check on the commercial/industrial question.)
In this estimate we're going to talk about Goffstown taxes in 2011, so we can forget this "equalized assessment" thing and go by our town's stated tax rates. The 2011 Town Report (p. 123) lists a total assessed value of $1337M and a nonresidential assessed value of $178.9M (13.3%), leaving a total residential assessed value of $1158M. The same numbers are on p. 112, broken down further by land/utilities, and the exemptions are factored into account. ($14.74M in residential exemptions)
After exemptions, total assessed value is $1322M: $1143M for residential assessed value, and $179M for nonresidential.
What do these two categories of property pay in local taxes? For that we turn to p. 89. The town tax rate is $9.71/thousand, and the the local school tax rate is $10.78/thousand. (The remaining components of our tax rate are county and state.)
Let's calculate income, and summarize this in a table:
| Assessed taxable value | Taxes for town $9.71/thousand | Taxes for school $10.78/thousand | Total local taxes $20.49/thousand | |
|---|---|---|---|---|
| Residential | $1143M | $11.10M | $12.32M | $23.42M |
| Nonresidential | $179M | $1.74M | $1.93M | $3.67M |
| Total | $1332M | $12.84M | $14.25M | $27.09M |
Of the tax bills that get sent out, $3.67 million in local tax revenues is billed to nonresidential property, and $23.63 million is billed to residential property. Nonresidential property pays 13.4% of our local taxes.
Now let's look at expenditures. The place to look is the town budget, starting on p. 104. This has several columns, but to compare apples to apples, we look at column 4 ("Appropriations prior year as approved by DRA") where the total of $19.991M matches the appropriations figure on p.89 used to calculate the tax rates that we just used in the preceding table.
We're going to estimate how much of our expenditures come from residential vs. nonresidential property.
It's pretty clear that school expenses are all incurred by residential property. On the municipal side, there are a few categories that come from residential properties only:
| Election, Reg & Vital Statistics | $238,912 |
| Cemeteries | $117,696 |
| Solid Waste Collection | $1,058,665 |
| Parks & Recreation | $392,070 |
| Library | $675,805 |
| Other Culture & Recreation | $62,983 |
| Total: | 2,546,131 |
Out of our town's budget expenses of $19.991 million, about $2.546 million (12.7%) comes from uses of residential property. The remaining $17.445 million in expenses comes from our town's services to all -- things like fire, police, road construction, tax assessing, etc. -- and although it's probably very difficult to figure out how much of this expense is due to our commercial land, it's probably fair to split this proportionally with assessed value: nonresidential's (13.3% of 2011 assessed value) share of this $17.445M shared expense is $2.320M.
In other words, we're estimating that nonresidential property is responsible for $2.320M of a total of $19.991M = 11.6% of our town expenses and 0% of our school expenses.
Okay, now we're ready to answer the question of how much taxes are affected by commercial development.
Calculating the tax rates with more commercial development
Let's say we get a big new business coming to town, and they construct some buildings assessed at $10 million. That would increase our nonresidential tax base by 5.6% (=10/178.9) and our total tax base by about 0.7% (=10/1337) to $1347M in assessed value before exemptions, $1332M after exemptions.
On the Town side of the budget:
A 5.6% increase in nonresidential tax base should increase non-residential expenses by 5.6%; $2.32M * 5.6% = $130,000. The town budget would go up by $130,000 to $20.121 million, for an increase of 0.65%.
For town taxes: our net town appropriation of $12.841M (see p. 89 of the town report) would go up about 0.65% to $12.924M, and our town tax rate would be $12.924M / $1332 assessed valuation = $9.70/thousand. (instead of $12.841/$1322 = $9.71/thousand) The town tax rate would decrease very slightly.
On the School side of the budget:
Expenses shouldn't change at all, since we'd have no new children, but the tax base increased, so the local tax rate will go down to $14.259M net school appropriation (see p.89 of the 2011 town report) divided by $1332M in assessed value after exemptions = $10.70/thousand instead of $10.78/thousand (=$14.259M/$1322).
Ooh, we're getting close. Now I'm going to plug in the numbers for my own tax bill. (Pull out your own property tax bill, and you can play along.) My house is assessed at $203,300.
| 2011 actual | with $10M more commercial tax base | ||||
|---|---|---|---|---|---|
| tax rate $/1000 | $ | tax rate $/1000 | $ | comments | |
| town | 9.71 | 1974.04 | 9.70 | 1972.01 | town tax rate went down slightly |
| county | 1.16 | 235.83 | 1.16 | 235.83 | no change -- rate depends on entire county |
| school | 10.78 | 2191.57 | 10.70 | 2175.31 | school tax rate went down because we had no new expenses but larger tax base |
| state ed | 2.52 | 512.32 | 2.52 | 512.32 | no change -- rate depends on entire state |
| total | 24.17 | 4913.76 | 24.08 | 4895.46 | |
Net estimated savings in my tax bill for $10M more commercial tax base: $18.30
That's right, I would save about $18.30.
What does $10M in commercial tax base look like?
To answer this, we have to look at our town's assessor database. (This used to be published yearly as a PDF document, but it looks like it has been taken down from the town's website.)
Here are some large commercial properties in Pinardville:
| Map/Lot | Location | Assessed Value | comments |
| 18/58B | 553 Mast Rd | $13,127,100 | The entire Shaw's plaza |
| 18/60 | 557 Mast Rd | $2,737,900 | The new Rite-Aid |
| 18/63 | 605 Mast Rd | $5,386,500 | Hannaford Supermarket |
| 17/179 | 679 Mast Rd | $1,353,500 | Center Pinard Plaza (small strip mall with Amazing Nails, D&D Cabinets, etc. |
Bottom line
So $10 million in commercial property is 77% of the Shaw's Plaza, about 3 1/2 Rite-Aids, slightly less than 2 Hannafords, or 7 new Center Pinard Plazas. For $10 million in new commercial property, our tax bills would go down by about 9 cents per $1000 of assessed value, which is $18.00 per year for a house with $200,000 assessed value.
You'll have to decide for yourself whether this tradeoff is worth it.
For me, this kind of savings is fine if it's going to occur on its own. But it's not enough of a benefit, if our town is going to bend over backwards, and ignore the intangible values reduced by new development. If traffic's going to get worse, and forests are going to get cut down, it's not worth it to me.
2012 Goffstown Town Ballot: Article 9, and Goffstown's commercial zones
Here's this year's Article 9:
Shall the Town amend the Goffstown Zoning Ordinance, by changing the zoning of the properties identified as Tax Map 6, Lot 39, Tax Map 26, Lot 20, and Tax Map 6, Lot 35 from Agricultural (A) to Commercial Industrial Flex Zone District (CIFZ)? The property addresses are 400 Mast Road (6-39), Henry Bridge Road (26-20), and 329 Mast Road (6-35). Submitted by Petition. Recommended by the Planning Board 6-1-0.
What is this? Well, Lot 6-35 at 329 Mast Road is the County complex, containing the Women's Prison, the County Courthouse, and other County offices. That parcel of land is a long narrow strip between Rt 114 and the Rail Trail a few hundred feet to the north, extending from Henry Bridge Road on the west to Danis Park Road on the east. It includes these buildings as well as an undeveloped field across from the County Nursing Home.
The Hillsborough County administration put this article on the ballot by petition, and presented to the Planning Board earlier this year, saying they want to lease space in their buildings to private businesses, and in order to do so, they needed their land rezoned from Agricultural (A) to Commercial/Industrial Flex Zone (CIFZ) where businesses are permitted by right. (In the Agricultural zone private businesses can operate but commercial business would probably need a zoning variance.) Many people consider this a win-win situation: more revenue to the county, more tax revenue to the town, additional space for private business.
The other lots mentioned in this article are different. Lot 26-20 is a small vacant parcel of land on Henry Bridge Rd which may or may not be developable. Lot 6-39 is a 200+ acre parcel of land containing the County Nursing Home and a forested hillside.
For me, there are two reasons I've decided to vote no on this article. I'm in favor of rezoning lot 6-35 with the county offices. But the article, if passed, rezones both lots 6-35 and 6-39. To rezone lot 6-39 -- a 200+ acre parcel -- is too big of a rezoning step for me.
The other reason has to do with "mixed-use development" permitted in the nonresidential zones C=Commercial, I=Industrial, and CIFZ=Commercial/Industrial Flex Zone. These zones are meant to encourage commercial and industrial development. But they also were modified in the mid-2000's to allow mixed-use development. I remember when that zoning change was made, and at the time it was envisioned as buildings with stores or other commercial property on the ground floor and residences on the upper floors. The problem is that our zoning is pretty lax with respect to residential property. It can be in a completely different building than the commercial property. We're supposed to have a limit of up to 50% of the square footage allowed to be residential, but that limit can be waived by the Planning Board.
Indeed, we have just had our first mixed-use project in Goffstown in the Commercial Zone, on the parcel of land between the Shaw's and the Hannaford. This project has several pieces, including the Rite-Aid, 25 units of workforce housing, some undeveloped commercial property next to the Rite-Aid, and a back portion of the property off of Moose Club Park Road that the Planning Board just approved for 48 apartments. None of these pieces really has anything to do with each other -- except for the fact that they were all subdivided off of one parcel, and the developers have found it profitable to treat this as a single project -- and the Planning Board waived the 50% limit, so that more than 70% of the square footage of this "mixed-use" project is residential.
The Agricultural (A) Zone does not permit multifamily housing, e.g. apartments, and it has a minimum 2-acre lot size for subdivision. The CIFZ Zone, by contrast, permits multifamily housing by Conditional Use permit from the Planning Board, with a limit of 10 Dwelling Units per buildable acre, a density that is 20 times greater than the A zone.
Many people in our town have complained that we should have more commercial/industrial land, because Goffstown is so limited in available land, and much of it is unsuitable for commercial development, being hilly or covered in wetlands. Well, our town had a parcel of Commercial property, that our Planning Board let go for dense residential development.
Until I can trust that commercial- or industrial-zoned land is actually going to be used for commercial or industrial development, I can't vote for an article that rezones property to CIFZ only to allow a Planning Board to squander our precious commercial/industrial land on dense multifamily development.
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