LEBANON — Plans to develop a dozen new buildings on 86 acres west of Lebanon Municipal Airport could harm business at the nearby Airport Business Park, according to a real estate agent representing several properties in the existing industrial park.

A new business park proposed by city officials would compete for tenants with the 18 buildings that already offer high-tech and manufacturing space in West Lebanon, Kelly Caron told the City Council on Wednesday.

“The second office park will have new and wider roads, sidewalks and underground power. We cannot offer that,” Caron said in a CATV recording of the council’s regular meeting. “We will lose more tenants, the airpark will suffer and we will turn to the city for lower tax assessments.”

The City Council on Wednesday voted unanimously to create a tax increment finance, or TIF, district to spur development of a 49-acre parcel owned by Lebanon and a 36.8-acre lot owned by Upper Valley Tech Park LLC.

The special district allows New Hampshire municipalities to use property tax revenue obtained from new development for infrastructure projects. Once the bonds for construction are paid off, the district reverts to general tax rolls and any additional money in the TIF fund is transferred to general accounts.

But infrastructure at the existing business park, which will connect to the TIF district via a new system of roads, is 33 years old and its roads are “cracking and crumbling,” Caron said.

“I understand there are no capital reserves for the roads and that the city is already burdened with debt due to the water and sewer project,” Caron said. “But the airpark issues are real for us and they are not going away.”

Ray Downs, a West Lebanon contractor, agreed, saying the city needs to improve roads “for the people that are coming and going.”

“I just think that the money could be better spent somewhere else and not trying to improve forestland,” he told the City Council.

The testimony prompted several city councilors to ponder whether it would be wise to include the existing business park in the TIF district, which would allow its funds to be used for paving.

But the idea drew a sharp rebuke from City Manager Shaun Mulholland, who described it as a “so-called smoke and mirrors” tactic.

TIF districts are designed to promote economic development in a designated area, but there are no plans to further develop the existing industrial park, Mulholland said. Instead, he said, road paving is and should be a regular obligation included in the city’s budget.

“Where towns and cities get into trouble is when they start to go away from that,” Mulholland told the City Council.

The industrial park isn’t the only area overdue for road improvements, and neighborhoods throughout Lebanon likely would like dedicated funds for upgrades, he added.

“I would urge extreme caution in using a TIF district for intents other than ‘development,’ ” Mulholland said. “Other communities have done that with disastrous results.”

Assistant Mayor Clifton Below responded that the city manager is “overreacting a little bit.” He said investing in the industrial park could help with the new airport development since they’ll be connected to the same system of roads and infrastructure leading down to Route 12A.

“I think we should seriously consider the appropriateness of expanding (the TIF district) to that original area,” he said.

Lebanon Planning Director David Brooks on Friday cited other reasons to hold off expanding the TIF district.

The Public Works Department is in the process of assessing Lebanon’s roads and is expected to issue a list of paving priorities next month. The industrial park could be high on that list and see infrastructure improvements sooner than expected, Brooks said.

Some property owners in the industrial park also are contesting their assessments. If the value of those parcels declined after being included in the TIF, the loss could create “a big hole” financially that could take years to recover from, Brooks said.

The City Council on Wednesday decided to wait until a road assessment is complete before further discussing whether to expand the newly created TIF district.

Some officials said they also would like to take input from the TIF’s advisory group — which the City Council will vote to create later this month — on the matter.

Tim Camerato can be reached at tcamerato@vnews.com or 603-727-3223.