By MICHAEL KITCH, LACONIA DAILY SUN
LACONIA — During the past decade, the city's property tax base has shrunk by more than 10 percent while the value of commercial property has diminished as a share of the total.
Although the total assessed value of taxable property in the city has risen for the past four years to reach $1,920,228,000, it remains 11.6 percent below the peak of $2,174,536 recorded in 2007.
The assessed value of residential property peaked at $1,816,321,000 in 2008 with the advent of the recession then dropped 17.6 percent to $1,495,744,000 in 2013 before climbing 7.3 percent to $1,605,415,000 in 2016.
The assessed value of commercial property reached its peak of $348,509,000 in 2007 then fell steadily for the next seven years before increasing to $291,464,000 in 2015 only to tumble to $282,976,000, its lowest point in a decade, the next year. Between 2007 and 2016 the assessed value of commercial real estate has fallen 18.8 percent.
In 2016, commercial property represented 14.7 percent of the total assessed valuation while residential property accounted for 83.7 percent, the largest share among the 13 cities in the state. Only in Berlin and Franklin does commercial property account for a smaller portion of the tax base.
The imbalance between residential and commercial property has a direct effect on the property tax rate, which is illustrated by a simple hypothetical example Mayor Ed Engler offered to the City Council.
Assume two municipalities, each with 5,000 households, which approximates the population of Laconia, where the average home price is $300,000 and the residential tax base is $1.5 billion. In one municipality, "A," the value of commercial property amounts to $78,947,358, or 5 percent of the total tax base of $1,578,947. The town raises $35 million in property taxes with a tax rate of $22.17. By contrast, in municipality "B" the value of commercial property amounts to $807,692,308, or 35 percent of the total tax base of $2,307,692,308. Since "B" has more property than "A," it has greater expenses and raises $40,000,000 in taxes, but with a larger tax base, its tax rate is $17.33. Homeowners in "A" pay $6,651 in annual property taxes compared to their counterparts in "B" who pay $5,199, a difference of $1,452, while raising $5 million more revenue.
The mayor has proposed rezoning the Commercial Resort District, which encompasses The Weirs, to set aside land for commercial development in an effort to redress the imbalance, which by lowering the property tax rate would encourage more competitively priced residential development.