Tax Incentives for Downtown Redevelopment

The Concord Monitor reports on legislation that has been fast-tracked to allow a tax break for redeveloping a vacant building in downtown Concord. The developer behind the project is Steve Duprey, former chairman of the NH Republican Party, and last scene as a prominent traveler on John McCain's Straight Talk Express during the Presidential race.

Originally, that statute gave a tax break to anyone who rehabilitated an existing "underutilized structure" in an urban or town center. The new law would give the same tax break to anyone who demolishes the blighted building and rebuilds on the same site. According to the law, the new building would be assessed at the same value as the original blighted building for up to five years. If the building has a residential component, the tax break could last for seven years, and if there is affordable housing involved, the tax break could last for nine years.

The law specifies that a replacement building would only be given the tax break if it were determined that the building being demolished "does not possess significant historical, cultural or architectural value." The final decision to grant the tax break would be made by the city or town's local governing body.

Duprey has proposed building a 40,000- to 70,000-square-foot office building on the site of the Sanel Block, at 45a-49 S. Main St. He would sell part of the lot to CATCH Neighborhood Housing to build a 40-unit apartment building. Although Duprey's office building was not originally going to have any residential units, he recently told the Monitor that he was considering putting eight to 10 condominiums on the top floor. That could potentially trigger the extra two years of the tax break.

Targeted tax incentives are problematic. It leaves elected officials in the position of deciding which redevelopment projects deserve special treatment, and which have to fend for themselves in a higher-tax climate. It also opens these officials to rent-seekers who break down the doors of the State House of City Hall looking for favors. It would be better for the state and city to encourage development by passing a friendlier tax structure. States and cities that took less money from developers regardless of their intentions or political connections would see more development. Instead, we're left with public bodies handing out tax money like it was candy on Halloween.

These targeted tax breaks will have benefits. Most flawed policies do. But we'd all benefit more if the Legislature didn't try to micromanage the future of Main Street in Concord.

Disclosure- Steve is a friend, and once hired me to consult for the party during the 2000 General Election. I've always considered giving me a job a sign of intelligence and character.