Claremont
The downtown TIF, which includes the renovated mill buildings on Water Street, has not generated enough additional tax revenue from increased property assessments to meet the annual expenses, such as payments on the bonds that were purchased to complete infrastructure improvements.
To cover the roughly $330,000 annual shortfall, the city has been borrowing each year from the River Road TIF and consequently has accumulated a deficit of $1.2 million, according to Finance Director Mary Walter.
However, when the River Road TIF expires, it will have a surplus of around $1.5 million and Walter and City Manager Guy Santagate have suggested to the council that the money be used to pay off the deficit and cover next year’s revenue shortfall in the downtown TIF.
Tax increment finance districts are structured to encourage private-sector development within the TIF in combination with public infrastructure improvements. The increased private property values are expected to raise enough additional tax revenue to meet the TIF’s annual expenses, including bond payments.
When the city bonded for the improvements in the downtown TIF in 2007, it did so with the expectation that three early 20th-century mill buildings of the former Monadnock Mills complex between the Sugar River and Water Street would be renovated, including the Peterson, which was slated to be turned into condominiums. Although new windows were installed and the exterior brick was cleaned, the Peterson remains a shell and efforts to find other uses so far have been unsuccessful, Planning and Economic Development Director Nancy Merrill told the council last week.
“The TIF was based on all three mill buildings being developed,” Merrill told the City Council, adding that one “hit the skids” with the housing bust in 2009, a year after the Common Man Inn and Restaurant opened in the other two buildings.
On Tuesday, Walter said that as of June 30 of this year, the remaining debt for the downtown TIF is $6.2 million and the bond payment for the fiscal year beginning July 1 is $811,000 with total expenses for the district at close to $900,000. Walter said the district will generate about $570,000 in revenue, leaving a shortfall of around $330,500, which up to this year has been covered by borrowing from the River Road TIF because that district had revenues in excess of its expenses.
If the council chooses to use most of the River Road surplus to eliminate the deficit, Walter said it could use the other $300,000 to cover nearly the entire anticipated revenue shortfall in the Downtown TIF for the upcoming fiscal year.
“With the surplus from River Road, you could pay off the deficit. It could be wiped out,” Santagate said. “It is a good option to have.”
Asked by Mayor Charlene Lovett last week about a plan to find additional revenue to meet the entire annual debt payment within the district after the next fiscal year, Merrill said city officials will continue trying to improve the properties in the district and assist where they can with private development to increase the district’s overall assessment, which will add to the revenue.
Walter also pointed out that the expiration of the River Road TIF means an additional $11 million in assessed property valuation will come on to the general fund tax rolls.
At the current tax rate, that translates into about $440,000 in new tax revenue, though 60 percent of that is for the schools.
Going forward, Santagate said, any shortfall in the TIF would have to be paid with general fund taxes if TIF assessments don’t increase, but with the additional $11 million and the possibility of more private investment in the TIF, the amount needed could be around $150,000 and will decrease as the bond payments decrease.
Patrick O’Grady can be reached at pogclmt@gmail.com.
