A former Portsmouth assessor, speaking in what he described as a common shorthand used in municipal finance discussions, put it this way: “Commercial property pays for services it doesn’t use. Residential uses services it doesn’t fully pay for.”
That formulation isn’t a law, but it captures the direction of the imbalance seen in municipal finance studies across the country.⁷
In its later years, the Durgin Lane retail site was assessed in the range of roughly $25–35 million, according to city property records, generating on the order of $400,000 to $600,000 annually in property taxes depending on the assessment cycle.¹² It did so with minimal ongoing service demand, functioning as a quiet surplus contributor within the city’s budget.
What replaces it—Prescott Post—is financed at nearly $100 million and will likely be assessed somewhere near that level once stabilized, which pushes annual tax revenue closer to $1.5–$2 million under Portsmouth’s combined tax rate.³
On paper, that looks like a clear upgrade.
The complication arrives with the people.
Residential property doesn’t just contribute revenue; it introduces recurring demand that scales with occupancy—public safety calls, infrastructure use, and, most significantly, education costs tied to school enrollment. The impact varies sharply depending on the type of housing, which is where multifamily projects like Prescott Post behave differently from suburban subdivisions.
Apartments compress both value and cost.
Units are smaller, infrastructure is shared, and the number of school-aged children per unit is typically low. Portsmouth planning assumptions for comparable multifamily developments have used working estimates of roughly 0.1 to 0.2 school-aged children per unit, a fraction of what single-family housing generates, which keeps the added school burden within a range that can be offset by higher assessed value.⁴
A city councilor, speaking during a housing discussion last year, framed the tradeoff more cautiously: “Apartments don’t come free. But if the valuation is high enough and the student count stays low, they can carry themselves.”
That conditional is doing real work.
Portsmouth approved the Durgin Lane redevelopment without offering a large tax concession because the underlying math, while not frictionless, is strong enough to support private financing. The project secured nearly $100 million in construction funding without requiring the city to redirect future tax revenue back into the development, preserving municipal control over the full tax base once the buildings are complete.³
A few miles away, the same confidence doesn’t exist.
At Fox Run Mall, the redevelopment proposal has leaned on a tax increment financing structure that would allow the developer to retain a significant share of future tax growth to pay for infrastructure. The request signals a different set of conditions: a declining asset, higher redevelopment costs, and a use mix that may not reproduce the combination of valuation and relatively low service demand that retail once provided.⁶