Tax exempt property

While many property owners scrambled to pay their tax bills this week, for others the deadline passed unnoticed.

Land and buildings with an assessed value of $285.8 million — equal to 15-percent of the gross sum of all taxable property in the city — is exempt from property tax. Altogether exempt properties amount to 538 parcels covering approximately 28-percent of the total acreage of the city.

However, these figures include the common areas, club houses, boat slips and other amenities of condominium developments, altogether 275 parcels with a total value of $17.3 million. These properties are assessed but not taxed directly. Instead, their value is captured in the assessed values of the individual condominium units, which of course are taxed. For example, the assessed value of a condominium unit with a boat slip will be greater than one without.

Eliminating these properties from the mix leaves 263 parcels with a total value of $268.5 million as genuinely tax exempt. Of these, 129 properties with a value of $75.6 million are owned by the city as public property. Just five of these properties — the three elementary schools, middle school and high school — account for $42.5 million, or 56 percent , of the value of all municipal properties.

The state and county own 28 parcels in the city with a total assessed value of $59.5 million. The most valuable of these are the state forests on Meredith Center Road with a combined value of $20.2 million, followed by the Balkan County Nursing Home at $10.2 million and the New Hampshire Community Technical College-Laconia at $5.5 million. The federal government owns two properties — the office building on Main Street and post office on Church Street — with an aggregate value of $2.8 million.

The city's 40 churches have a combined assessed value of $26.1 million, of which the properties of the Roman Catholic Church and New Hampshire Catholic Charities, Inc. account for $11.4 million.

The remaining 64 tax exempt properties include charities, social service agencies, veterans associations, subsidized housing, hydroelectric facilities, and, above all, LRGHealthcare and the Taylor Home. Altogether this potpourri of properties has an assessed value of $104.4 million, two-thirds of it represented by LRGHealthcare and the Taylor Home. With 11 parcels assessed at $43 million LRGHealthcare is the largest private property owner in the city, followed by the Taylor Home with five parcels assessed at $30.3 million. Avery Hydroelectric Associates at Mill Street and Lakeport Hydroelectric Corporation on Elm Street are exempted legislation designed to encourage small power producers.

Assessor Bob Camp explained that property owners seeking an exemption must apply annually, demonstrating that they qualify as a religious, educational or charitable institution. Although most are straightforward, he described others as "borderline." Property owners whose applications are denied can appeal to the Board of Tax and Land Appeals and, if denied again, to the New Hampshire Supreme Court.

Camp said that since these properties are exempt from tax, they are not assessed the same as taxable properties. Moreover, many tax exempt parcels, especially public properties, are not liable to the market forces that determine the assessed values of taxable property. Consequently, the assessed values of tax exempt properties are further from market values than those of taxable properties.

Camp said that the land values of tax exempt properties are likely to approximate market values more closely than the assessed value of their buildings. The assessment of the buildings, he said, amounts to replacement costs less depreciation, which runs roughly between half of one percent and one percent a year. Replacement costs are calculated using the Marshall & Swift Commercial Appraisal, the standard for the insurance industry. However, Camp said if there is sufficient data, he may also adjust the value of tax exempt buildings to mirror the market for comparable commercial real estate in the city.

Taken together the tax exempt properties represent about $4.8 million of property tax revenue at the current tax rate of $16.72 per $1000 of assessed value. According to the city's filing with the New Hampshire Department of Revenue Administration for 2005 it received $229,490 in payments in lieu of taxes from eight property owners, two-thirds of it from the Taylor Home, which pays $150,000 a year. Camp called payments in lieu of taxes "goodwill gestures."