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February 4, 2009

Maximizing Revenue Benefits Through Municipal Tax Increment Financing (“TIF”) City of Gardiner, Maine Joan M. Fortin, Esq. Charles Lawton, Ph.D. – Planning Decisions, Inc. February 4, 2009 . Legislative Findings. Provide new employment opportunities Improve and broaden the tax base

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February 4, 2009

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  1. Maximizing Revenue Benefits Through Municipal Tax Increment Financing (“TIF”)City of Gardiner, MaineJoan M. Fortin, Esq. Charles Lawton, Ph.D. – Planning Decisions, Inc. February 4, 2009

  2. Legislative Findings • Provide new employment opportunities • Improve and broaden the tax base • Improve the general economy of the state

  3. Program Summary • Allows municipality to “capture” new property tax value • Property taxes on new value are “TIF Revenues” • TIF Revenues can be used to fund a wide variety of authorized project costs

  4. Benefits to Municipality • Attract new investment (i.e., tax $$$) • Examples: City of Lewiston & Town of Lincoln • Significant infrastructure projects • Example: Town of Edgecomb & City of Bangor • Tax Shelter (i.e., the “tax shifts”) • Examples: City of South Portland, City of Bangor & Town of Eliot

  5. Tax Shelter Benefits • TIFs shelter new value from a municipality’s “State Valuation.” • A municipality’s State Valuation effects 4 important areas of municipal finance: • State Education Subsidy, • County Taxes, • State Revenue Sharing Subsidy, and • Local Education Allocation.

  6. Types of Municipal TIFs(under Subchapter 1 of Chapter 206 of Title 30-A) • Traditional Municipal TIF • Can be located anywhere in municipality • Downtown Municipal TIF • Located in the traditional central business district • Must be described in a downtown redevelopment plan • Some statutory limits do not apply

  7. Authorized Project Costs: 30-A M.R.S.A. Sec. 5225 • Project costs “inside” the TIF district • Project costs outside the TIF district, but “directly related to or made necessary by” the TIF district • Costs of economic development, environmental improvements or employment training within the municipality

  8. Ineligible Project Costs • Buildings or facilities used for the general conduct of government or for public recreational purposes • City halls • Jails • Recreation centers • Athletic centers • Swimming Pools

  9. TIF Criteria & Program Limits • 25% of area blighted; need of rehabilitation, redevelopment or conservation (N/A for downtown TIF) • Acreage Cap (N/A for downtown TIF) • Value Cap (N/A for downtown TIF) • Municipal indebtedness ceiling (N/A for downtown TIF) • Term limits

  10. Procedure for Creating a TIF District • Public notice • Public hearing • Vote by legislative body • Designation of TIF District • Development Program for the District • Downtown TIF must also include downtown redevelopment plan • Approval by Commissioner of DECD

  11. Funding Project Costs • Credit enhancement agreements • Municipal bonds • Setting aside TIF revenues

  12. TIF Accounts & Accounting • Development program fund • Project cost account • Development sinking fund account

  13. Gardiner’s TIF History • TIF Policy created in 1999 by Council • Amended 2003 • Downtown TIF (2003) • Libby Hill TIFs • Harper’s (2000) • Pine State (2004) • EJ Prescott (2005) • Associated Grocers TIF (2006)

  14. Tax Shelter Benefits Downtown E.g..

  15. Tax Shelter Benefits Downtown E.g.. $2.2 million TIF revenue $1.3 million from state.

  16. Libby Hill Area Wide TIF District • 22 Lots in Libby Hill Area Wide Business Park • 10 Lots from Phase I of Business Park TIF • 12 New Lots • Dennison Lubricants has already located on Lots 10 & 11 • $1.5 million in new value • Additional $1.5 million development within 5 years • 30-year TIF Term • Streamlines the Incentive Process • Incentive for Future Development

  17. Financial Benefits to City of Gardiner • TIF Revenue to Municipal Project Cost Account • Projected at $26.7 million over 30 years • Tax Shift Benefits • Projected at $19 million over 30 years

  18. Thank you. Joan Fortin, Esq. • jfortin@bernsteinshur.com • (207) 228-7310 Charles Lawton, Ph.D. – Planning Decisions, Inc. • clawton@maine.rr.com • (207) 363-3541

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