A Look Ahead: Keeping infrastructure costs from bankrupting our communities

Monadnock Ledger-Transcript
Published: 1/8/2020 8:59:13 PM

 

 

Editor’s note: This is one of several A Look Ahead 2020 stories we are running this week in which we take a look at what 2020 has in store for our coverage area.

If you were to pick a tax parcel in a small town or suburb anywhere in America and compare its tax value with the cost of the infrastructure servicing it, odds are that the tax revenue is not covering the cost of maintaining that infrastructure.

As much of America’s infrastructure reaches the end of its lifespan, maintenance costs not covered by tax revenue menace the solvency of municipalities across the country. How can we insure that our local communities can pay for their infrastructure in the coming decade and beyond?

According to planners like Ivy Vann of Peterborough and Joe Minicozzi, director of urban planning consulting firm Urban 3, the answer lies in perfecting the balance of density and sprawl.

Minicozzi’s firm was recently commissioned by Pinwheel Properties’ Jeremy and Liz Hitchcock to study Manchester’s future viability and analyzed the taxable value per acre, by parcel, in Hillsborough County. “Taxable value per acre” compares a tax parcel’s footprint with the amount of revenue it makes in taxes. Why is size so essential? In short, it’s because the closer businesses and homes are clustered, the fewer feet of infrastructure: roads and water, electric, phone, and internet lines, necessary to service them.

“The more spread out a city becomes, the more expensive it is to deliver those services,” Minicozzi said in a video on his company’s homepage.

The issue is exacerbated in New Hampshire, Vann said, “because all we have is the property tax.”

After World War II, the economy was booming and car culture was taking off. Developers preemptively invested in infrastructure, expecting ample financial returns from future homes and businesses, Vann said.

“We believed we’d get enough taxes to pay for them when we built them,” she said. “There was this sense that we were always going to grow.”

The lifespan of most public infrastructure is 35 to 50 years, she said, and it’s become apparent that the investment did not pay off nearly as well as planned.

“Ultimately we haven’t saved, or even made enough money to pay for the infrastructure we invested in.” she said. “We have more stuff than we can afford … Detroit already fell off the cliff.”

Insuring that tomorrow’s municipalities can afford their public infrastructure is a matter of simple math, Vann said. “You have to have enough denser areas producing income to support the amount that are less dense,” she said. If the balance is right, a dense downtown can generate the tax revenue needed to subsidize the cost of maintaining the rural areas of a municipality.

In October, Minicozzi delivered his analysis of Hillsborough County in a series of “Thinking Differently About Development” talks in Manchester. It featured a 3D map of the county, with the height and color of different tax parcels corresponding to their taxable value per acre. In the map, which is available as part of the presentation’s powerpoint online, a field of low-value green areas are punctuated by taller hills representing the county’s denser communities. One astronomical spire in Manchester represents a tenth-acre lot that generates a whopping 10 million per acre in taxes.

Vann attended the presentation. Generally, she said, three story buildings provide the level of density sufficient to balance the cost of infrastructure in an area. Everything less dense than that will eventually cost a municipality money in infrastructure costs not covered by the taxable value, she said.

So, how are areas of Hillsborough County doing under this metric? “Downtown [Peterborough] is healthy for a small town,” Vann said, and the city of Manchester is doing well because it has low sprawl. The Monadnock region’s best property on the taxable value per acre metric, Vann pointed out, is 36 Grove St. in downtown Peterborough, which has an art gallery and three condos on top.

It might be unsurprising that a three-story downtown building with business and residential space commands a higher taxable value per acre than, say, a single-family house on a large rural lot. What might be surprising is that the downtown building also ranks higher in per acre value than a big box store.

A Walmart, Vann said, has an enormous footprint but brings about $40,000 per acre in taxable value. A downtown shop would provide about ten times that, she said, and uses fewer services because it’s along an existing road.

To become solvent, Vann said that municipalities must allow places with infrastructure to become somewhat denser. “How much money are we willing to lose on suburban or rural sprawl?” she asked. “It doesn’t have to be Manhattan” she said, and pointed to Peterborough’s eight Vine Street cottages as a great example: that parcel has a tax valuation of $2.6 million, up from $47,000 before they were built. “That’s infill,” she said. “No additional town roads or utilities were needed to add that value to the neighborhood.”

Vann said the state’s Community Development Finance Authority also saw Minicozzi’s presentation in October and are interested in the potential to expand the Hillsborough County analysis to the entire state. A copy of the presentation can be found at the following site: https://issuu.com/siliconmillyard.co/docs/ short ened_u3_powerpoint1_

Editor’s note: This  article was corrected on Monday, Jan. 13, to say the value of the Vine Street development before the cottages were built was $47,000 and now with the eight cottages is valued at $2.6 million, which produces about $80,000 in tax revenues annually.


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