Franklin councilor moves to dissolve industrial park TIF due to inactivity

FRANKLIN — One city councilor is leading the effort to dissolve one of this city's two Tax Increment Financing, or TIF, districts, saying its advisory board is inactive and he's unable to get pertinent information about its use. 

Councilor Timothy Johnston (Ward 1) wants to dissolve the Business Park and Industrial TIF district, and move any remaining money to the general fund. He says it is unclear what the TIF district's use is.

“It's frustrating that I can't get the information that I wanted to know. How much money is in the TIF, what's it being used for? And nobody cares to tell me that.”

The city has two TIF districts, the Business Park district and the Franklin Falls Mixed Use district. Along with Johnston, other councilors and residents have raised concerns about their purpose and efficacy.

TIF districts are set up to spur development by taking new, increased property tax revenue and putting it into a dedicated fund. The amount allocated is determined by the difference between the original taxable value, and the assessed value after improvement. Revenue from the original taxable value when the district is established goes to the general fund. Because tax revenue goes back into projects within the district, it encourages developers to invest there. Planning and Zoning Director David Chunn gave an example of the impact a TIF district can have.

“If you're a developer, not only are you guaranteed — if the development is successful — to have infrastructure improvements that support further investment and development, but you'll also get part of your money back in regard to the amount of money you put forward as a developer to build sewer and streets and that kind of thing,” he said. “It makes something that looks shaky look much more attractive.”

The Industrial Park and Business TIF was created in 2013, to bring in commercial and industrial properties to land off South Main Street. There are currently no bonds sold for projects in the district. And while Franklin City Council established an advisory board for the Industrial Park and Business TIF district in July 2023, Acting City Manager Scott Clarenbach said it is unclear whether they've met.

Chunn said it is common for TIF districts to go away after their intended use.

“TIF districts are dissolved or removed because it's felt that they have served their purpose, or that there's nothing further to gain from it,” he said. “That's typically why it's never meant to be a permanent thing. They're always meant to have expiration dates of 10 to 20 years.”

Johnston said he would be fine with reinstalling the TIF district in the future for a specific purpose.

“If there was a need for another TIF in the industrial park, that's not to say that one can't be created at that time,” he said. “But the one that is currently there has ran its course and is no longer useful to the residents.”

A public hearing to consider terminating the Industrial Park and Business TIF district is scheduled at 6 p.m. on Monday, Nov. 3, at Franklin Elks Lodge. Clarenbach urged the council to wait until next year's tax rate is set before making any changes which might affect it.

The Franklin Falls Mixed Use TIF district is still active, bonding for projects from Chinburg Properties, which include apartments at Stevens Mill, and Kettlehead Brewing’s Franklin location. The advisory board has not published any minutes since 2019. Those minutes reflect discussion around whether to increase the amount of TIF funds to go toward Mill City Park, after potential increased property tax revenue from the Chinburg Properties. The Franklin Falls district encompasses downtown and several parcels along the Winnipesaukee River. 

The Stevens Mill property is worth $2 million, but any revenue from additional increased value will not be seen until after June 30, 2030, as the city council approved a tax relief incentive for its development.

Clarenbach said that unlike other boards and committees in the city, advisory boards are meant to offer guidance to city council on recommended projects. While all city boards are required to report minutes in New Hampshire, Clarenbach said the advisory nature puts them in a gray area.

“I don't know of any other advisory boards in the city, other than the TIF advisories, where there's a body that its only purpose is to give advice to a group,” Clarenbach said. “I think that's where part of this challenge comes from. It's not an often-used portion of municipal government.”

But New Hampshire RSA 162-K, outlining rules and definitions for TIF districts in New Hampshire, states in subsection 11 that municipalities must make annual financial reports. Clarenbach said he is unaware whether any annual report has been made for either district.

The assessor's office provided increased values for each district, with $2.79 million in current value for the Industrial Park and Business TIF, and $9.23 million for Franklin Falls Mixed Use. The industrial park district retains 50% of new tax revenue, while the Franklin Falls TIF retains 100%.

City council approved new members to the Franklin Falls Mixed Use TIF district advisory board on July 7, to fill vacated slots. Debra Auger, Denis Duquette, Erica Bruce and Michael Lombardo now sit on the board. Additional members are Clarenbach, Chunn, Franklin Business & Industrial Development Corporation Executive Director Jo Brown, resident Jason Grevior and Leo Paquin, who works at a business within the district.

Lombardo joined the board to help push ideas to invigorate the downtown. One idea would be to use funds to help finance property owners to fill empty buildings.

“I think if we can focus the energy of the TIF on bringing business to our downtown, those businesses will generate revenue,” he said. “Those businesses will bring in more people to spend more money, which, you know, can help bring some of that money back into the city.”

But Clarenbach said part of the reason for the downtown advisory board’s inactivity stems from not having funding for projects, as most of the available money is flowing to Chinburg Properties.

"It’s sort of like having a recipe card and you say, ‘Oh, I feel like some cookies today,’” Clarenbach said. “And you go to the cupboard, and there's no flour, there's no sugar, there's no chocolate chips.”

Johnston hopes to help taxpayers by dissolving the Industrial Park and Business TIF district, and put its funds into other parts of the city.

“The city has a hard time with income being a tax cap city. We can't necessarily raise taxes any more than what's legal,” he said. “My whole thing about the city council was trying to find ways to lower the burden of the taxpayer, at the same time still trying to do what we can to keep up with economic improvements and things like that. Economic development.”

Franklin's tax cap limits the amount which can be collected from property taxes in a given fiscal year.