Town officials are studying tax increment financing as a possible way to support housing and other local projects.
just now
The Bar Harbor Story is generously sponsored by the Maine Seacoast Mission.
MOUNT DESERT—Mount Desert Town Clerk Claire Woolfolk tallied another honor this fall.
The Maine Town & City Clerks’ Association honored Woolfolk with its President’s Award.
That award is meant to recognize Woolfolk’s “excellent service to the Maine Town & City Clerks’ Association,” according to the award.
“Congratulations, Claire,” Selectboard Chair John Macauley said, beginning a round of congratulations at the October 5 meeting.
Last year, the Town of Mount Desert, led by Woolfolk took top prize at NEMCI & A (New England Municipal Clerk Institute and Academy) regional competition. The prize wasn’t for best budget, beautiful views, or anything like that.
It was for an interactive poster, she created.
The rest of the October Selectboard’s meeting focused on a noise worry from a property owner, approving a special event application (Seal Harbor Library Fair – July 31, 2027, Seal Harbor Village Green); accepting a gift of $500 to the Mount Desert Fire Department from Julia Merck and Hans Ustch; approving a contract with Coastal Energy for #2 heating oil ($4.42 per gallon), and another for winter sand purchases at $18 per cubic yard.
It also accepted thank you letters from Bar Harbor Food Pantry, Eastern Area Agency on Aging, HOME Inc., Hospice Volunteers of Hancock County, Mount Desert Nursing Association, and the WIC Program.
All of this work—and Woolfolk’s recognition—came after an hour-long workshop about tax increment financing districts (TIF districts).
“Where this came about was a couple of months ago, we were working through financing for an entirely different project and trying to figure out ways to get that thing financed. And somebody sort of off-the-cuff mentioned, what about using TIF districts to try to make this go. Ultimately that project, it didn’t really end up making sense to go with a TIF district, but it sort of stuck in my head because I remember during my time at the town of Cumberland how we actually had pretty tremendous success with the TIF districts down there,” Town Manager Alex Kimball explained.
Towns or cities create TIF districts as a way to promote certain kinds of economic development.
The district is in a defined and designated area in that municipality. New development increases property tax revenue and that is then used to work on specific improvements and projects in that same district.
The nearby city of Ellsworth currently has four. Its first was formed in 1999 for the Myrick Street area. The current districts are:
- Beckwith Hill:
- Leonard Lake Senior Housing:
- Oriole Way Senior Housing:
- Oriole Way Affordable Housing:
Ellsworth’s website explains that the tax revenue generated in the district by new development creates a system that’s “effectively paying for infrastructure by capturing the ‘increment’ of new value created, rather than relying on current taxes.”
“There’s a lot of good uses for TIF districts but the real sweet spot for us is thinking about housing,” Kimball explained.
Kimball brought in Alyssa Tibbetts from Tibbetts Law to explain TIF districts to the Selectboard members.
“It’s not often that anyone but me finds this exciting, but it I think it is, as Alex said, a really really useful tool for communities throughout the state of Maine for a variety of different reasons. It’s often thought of as just an economic development, commercial development type of tool, but there are many, many other uses that the state of Maine has expanded the statute over the years to enable,” Tibbetts said.
The state has specific statutory requirements for the districts.
If Mount Desert were to go forward with implementing a TIF district, it would first have to locate and designate the area of the district. Then it would have to assess the current value of property in that district. That way, it can see how any value might increase from future development and by how much and use that for the projects that had been previously outlined by the town.
There are also two main considerations.
“One of which is will the district contribute to the economic growth or well-being of the municipality or the betterment of the health, welfare, and safety of its inhabitants. This is similar language to what you see … related to general home rule authority of a municipality in terms of are we making decisions for these purposes and it’s, as you can tell, a very broad consideration, but one that’s important. The other is that when a TIF district is designated, it’s designated by the legislative body of the municipality. So that would be town meeting,” Tibbetts explained.
There are also conditions for approval.
Among those conditions are that a quarter of the district’s area must be considered blighted, needing rehabilitation, conservation or redevelopment, and the area as a whole can’t be more than 2% of the town’s total acreage.
There is also a process for the TIF district’s development and approval. It has to have a public hearing, go before town meeting, and then be reviewed by the state. Town meeting in Mount Desert is May. The state’s reviewal deadline is March 1.
“There’s a real advantage to us getting this done now as opposed to waiting a year or so,” Kimball told the board because of that hitch in the timeline for approval with town meeting being after the state deadline.
The districts also create tax sheltering value for towns where they are located in.
“The state has said we want municipalities to have an option to utilize tax revenue in a very dedicated way and that’s what this is, but what sheltering means is that when you have that original assessed value that we talked about and then you have new assessed value on top of it,” Tibbetts explained, “what’s happening is that any time a municipality has new assessed value, there are three calculations that are significantly impacted by that growth in assessed value. And that’s state revenue sharing, state aid to education, and county taxes. And the reason for that is that all three of those are based on a community’s assessed valuation. So for state revenue sharing, the more, the higher your assessed value is, the less you will receive as a percentage of the total state revenue sharing pie.”
The higher a town’s valuation means the less state aid to education it receives and the more it pays in the Mount Desert Island High School funding and for county taxes. Mount Desert is currently a minimum receiver of the state aid to education because of its high assessment. This lessens that impact for a TIF district in the town.
“The benefit of the shelter is that you keep that assessed value from impacting those three formulas and you’re theoretically not losing; you’re avoiding a loss of state revenue sharing. You’re avoiding a loss of state aid to education and you’re avoiding an increase to county taxes and you’re keeping a 100% of the tax revenue on that new value with the community to use for dedicated purposes that are authorized under the statute,” she explained.
LINKS TO LEARN MORE
All slides are via Tibbets’ presentation.
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