Property taxes are a third rail in NH politics, sparking high intensity debate every time they are raised. It’s not hard to find folks who think they are unfair, too high and tied to assessments that are either inaccurate or artificially inflated (or deflated) depending on the scenario. Ironically, the people having these conversations are NH residents, but the people paying the majority of property taxes usually call somewhere else home. And some of the most valuable land is owned by entities that don’t pay anywhere near the full property tax rate.
About 80 percent of total land and building value statewide is residential, and from the Lakes Region north, much of that is second homes, says Economist Russell Thibeault of Applied Economic Research in Laconia. An analysis of the five most valuable properties in NH’s 13 cities—in total worth $2.5 billion—revealed that 31.3 percent of top properties are hospitals or nursing homes, most of which are nonprofits and therefore negotiate payments in lieu of taxes (called PILOT payments), a sum much lower than the tax rate. The second biggest group is retailers (24.9 percent), whose owners hail from eight states other than NH.
All told, of the most valuable properties in NH’s 13 cities, hospitals and health care accounted for $774.31 million in land and building value, which is not reflected in the tax base. Consider the case in Lebanon: A 2010 study by the Lincoln Institute of Land Policy in Massachusetts reported that PILOT payments to Lebanon in Fiscal Year 2010 totaled $1.28 million, or 3.03 percent of the city budget. Yet if taxed at its full value, Mary Hitchcock Memorial Hospital alone would generate $3.22 million in taxes, or 7.6 percent of city revenues in 2010 and it is not the only nonprofit hospital in the city. The study of selected major cities found that Lebanon should consider itself lucky. PILOT payments accounted for, on average, less than 1 percent of city budgets.
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