WINDHAM — Town officials are considering a Tax Incremental Financing district to fund the extension of a water pipeline through town along Route 111.

The state project will bring water from Manchester Water Works down Route 28 to Derry, Windham, Salem, Atkinson and Plaistow. The pipeline will bring water to developments near the Exxon Mobile in Windham near Route 111A. The town wants to expand that west along Route 111.

The tax district, if created, would not give the town the opportunity to levy more taxes on the properties within it. Rather, the district allows the town to use new tax revenue created —  whether they come from new development or new assessed value — to pay for a specific project.

This means if a barn is added to a house increasing the property value by $500, the taxes raised by that added $500 in value would go specifically towards the project. If property values raise from adding a water pipeline, like the one proposed, then taxes raised by that do not go towards the operating budget, but instead go towards the project defined by the district.

The value applied to specific projects are capped, and it helps to pay down debt faster — accruing less interest — if the project is bonded for. Or the town could choose to use the money as a savings account for the project.

The town would use these revenues from the tax district to expand the planned water pipeline further into town.

“It’s temporary, it's incremental for new money, it’s all about revenue, not about taxes,” explained Stu Arnett, consultant with ADG in Concord, to the Planning Board.

“We want to capitalize on this opportunity to bring the water through” town, Norman said.

Town officials are in the process of finalizing the major pipeline agreements, he added.

“We hope to extend (the pipeline) west to Ledge Road in Windham, to reach most of town and encourage more development,” said Rex Norman, community development director.

Windham officials previously applied to fund this work through a grant from New Hampshire’s Department of Environmental Services Drinking Water and Groundwater Trust Fund, which is the same fund paying for the larger pipeline.

The town was denied the grant last year, but is seeking to win a grant this year for the work. Revenue from the district would help pay for the pipeline as well, which Norman said would help the town’s chances at winning the grant.

State officials have also tightened water restrictions over the past year in relation to Perfluorooctanoic acids (PFOAs), which have contaminated some of Windham’s wells.

“The state lowered the threshold and some areas of concern now exceed that threshold,” Norman said.

For example, the high school would benefit from having access to the water pipeline, Norman said. Currently the well that supplies the school is contaminated and the town uses a heavy-duty filter to ensure good water quality, he said. Water from the pipeline would alleviate the need for the filter, he said.

The planning commission now is looking into creating the district and assessing what properties would be part of it. Revenue raised from the district can only be spent within the district, Arnett said.

The Board of Selectmen have asked members of the Planning Board to look into this as a possibility for funding the project. If the board proceeds with this route to raising revenue voters will be asked to allow it at the next town meeting in March. 

Once the district is approved it would begin collecting revenue.

Next year is a good time for the district to take effect, Norman explained, because the town is going to re-evaluate property values.

“It’s not a tax increase, it doesn’t take taxes from anyone,” Norman said. “It’s simply a funding mechanism to help municipalities pay off debt faster.”