Tuesday, June 28, 2022

Local News

Madison Adopts Tax Incentive Program for Business Growth

Each election cycle and each budget season conversations arise over how to grow the Grand List in town. In a heavily residential town, rapid Grand List growth isn’t easy, but the Economic Development Commission (EDC) recently put forward a tax incentive program to try to encourage appropriate businesses to come, stay, and grow in Madison.

The program has been in the works for several months and would allow business that meet certain criteria to come before the Board of Selectmen (BOS) and request that their property taxes be applied in an incremental manner on a property that is being improved by a certain amount. The idea is if a business is looking to set up or grow here, the town has a way to make Madison more appealing than neighboring communities by offering a program that can smooth out a property tax increase.

“It’s an indication more than anything that Madison is not only receptive to responsible development in town, but is actually even incentivizing it to the point that the town is capable of doing,” said EDC Chair Ryan Duques.

The BOS approved the program at a recent meeting. Duques said the town has the authority to implement a program like this because, under state statute, the state does allow for property tax incentives to be offered for commercial development on a municipal level for phased-in increases in Grand List.

“The nice thing about this is it’s pretty non-controversial because it is only on the increased value that a business or developer is willing to make, so it doesn’t ever remove anything from the Grand List,” said Duques. “…The pie is never shrinking. It may grow a little bit slower, but it may not have grown at all if we didn’t incentivize it.”

For a business to qualify for the program, the business would be eligible only if its expansion or initial development resulted in the contribution of at least an additional $175,000 in assessed real estate value to the Grand List and result in the creation of 10 or more full-time equivalent working positions in the town. The tax incentives can be offered for a period of no longer than 10 years.

For example, if a business in town has a property assessed at $400,000, pays property tax on that amount ($8,336 at the 28.04 mill rate), and is now planning to improve its facility and increase its headcount so that the facility is now assessed at $800,000, the corresponding tax increase of that improvement (an additional $8,336) would be due from the business in that first year. However, if the business applied for this program, that new property tax could be phased in over a period of five years, giving the business time to acclimate after the improvements.

In some ways the program would slow the increase to the Grand List because a businesses’ property tax increase would not hit all in one year, but Duques said while Grand List growth might be slower, the idea of a program like this is it might help guarantee growth.

“Sometimes to have that phased-in property tax can be a real help and it can be such a help that we hope it encourages business that may be weighing increasing their facilities here in Madison or perhaps in another town to say, ‘We love Madison, we love being in Madison, and the town is demonstrating that they want us to be here through their commitment to this policy and so we are going to take advantage of the policy and stay and grow our business here,’” he said.

Duques said the program doesn’t change what kind of businesses are allowed in town under zoning rules and doesn’t pull anything off the Grand List.

“The policy also doesn’t include any changes or any preference or anything that would violate our current zoning rules and provisions, it just layers on top of that,” he said. “It’s one of these rare instances of a nice policy that doesn’t hurt anybody and really only stands to help people.”

Zoe Roos covers news for Guilford and Madison for Zip06. Email Zoe at z.roos@shorepublishing.com.

Reader Comments