Two vacant properties in Merrimack that residents have been very vocal about revitalizing may get a push in the right direction thanks to a new designation that gives a potential owner the opportunity for a tax break.

Community Development Director Tim Thompson announced late last week that the old Shaw's property and the former home of Zyla's have been designated as Economic Revitalization Zones, recognized by the state as being important to economic recovery for Merrimack.

According to Thompson, this designation allows potential buyers to apply for a tax credit in the years following the purchase of a building and the addition of new jobs.

“This is one of few financial incentives we're allowed to give in New Hampshire,” Thompson said.

Thompson said, for example, in other states big business can be baited by offering heavily reduced taxes for say the first 10 years after a business comes into a town. But those laws vary significantly, Thompson said, from state to state.

Earning a tax credit

According to Thompson, the ERZ designation allows businesses to apply for a tax credit if they create new jobs in the community and, either make significant repairs or alterations to the property, or to the equipment on the property.

The tax credit is equal to 6 percent of the salary of each employee who makes more than 2.5 times the state's minimum wage, plus 4 percent of actual cost incurred in renovating or creating the new facility/renovating existing facility or $20,000 for each new job created in the calendar year, whichever is less.
In a presentation given to the Town Council in April by the Economic Development Citizen Advisory Committee, it broke down a potential tax credit.

A company expands in Merrimack and leases 15,000 square feet of office space. They hire 30 new employees with an annual salary of $50,000 each and invest $25,000 in facility improvements

Tax Credit is the Sum of the following:

Six percent of salary for each new job with wage greater than 2.5x state minimum wage: $50,000 x 6 percent = $3,000 x 30 new jobs = $90,000

The lesser of 4% of: $25,000 facility improvement x 4 percent = $1,000 OR $20,000 x 30 new jobs = $600,000 x 4 percent = $24,000

Total Tax Credit = $90,000 + $1,000 = $91,000

Tax credit would be spread over four years due to annual cap of $40,000 (yr 1 = $40,000; yr 2 = $40,000; yr 3 = $11,000)

The great thing for the town, Thompson said, is that it is cost and liability free for Merrimack.

"It was a really simple process for us," Thompson said.

He filled out a two-page application, with the permission of the Town Council, explained the merits of the locations and submitted it to the state. Two weeks later he learned from the Division of Economic Development that the application was accepted.

His job now is to let the property owners know these parcels have been approved and it becomes a marketing tool when talking with potential buyers.

These two properties become the fourth and fifth ERZ designations in town.

In fact, 40 Continental Boulevard, which was purchased recently by Atrium Medical Corp., is one of them, as 57-59 Daniel Webster Highway, the former Nashua Corp Building. The old Nashua Corp has been purchased by Nanocomp.

Thompson said to his knowledge, neither company has applied for the credit, but both know it's available. The remaining ERZ designated land actually includes several parcels on 10-21 Continental Boulevard.

Merrimack's newest ERZ properties

The old Shaw's recently came back on the market after the supermarket chain relinquished a leased it has held on the building since the new store was built on Continental Boulevard. The absence of a strong anchor store in that plaza has been credited by town officials as a leading reason for the disappearance of business in many of the stores there.

Last July, Steve Sylven, a communications manager with SuperValu, which owns the Shaw's brand, told Merrimack Patch the company tried, after shutting the store, to find a “suitable tenant,” but were unable to. The lease was not renewed by Shaw's when it expired in April and the building, Thompson said, is being advertised as for lease, between 1,500 and 59,000 square feet. It is owned by the MEG Property Group.

Zyla's, an old discount warehouse, closed its doors in 2008, and since then, the dilapidated building has sat vacant a couples miles north of the old Shaw's on Daniel Webster Highway. Last November, the building was set to be auctioned, but it was postponed due to a low turnout of serious bidders. The day before its rescheduled auction date, a potential buyer came into the picture and the auction was canceled. According to Thompson, that sale fell through right around the time is was supposed to close.

Both of these properties have garnered a lot of conversation about what should replace them. See what people have said they'd like to see replace the old Shaw's and the former home of Zyla's and join the conversation.

But with this new ERZ designation, Thompson said the idea is that it could entice a potential buyer to consider one of these two properties because they could see some tax relief in subsequent years.

Thompson said getting these two properties added was an important step toward marketing them to potential buyers as they been listed by town officials as of high importance to revitalize. And while it is free and relatively easy for the town apply to designate other vacant properties, he cautioned about doing it too much.

“You want to be very careful that you don't designate too much of the town as ERZ because it can actually hurt it if businesses think that too much of the town needs recovery," Thompson said.

For more information visit the Town’s  Business Financing and Tax Advantages  webpage.