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Jump Start Presentation to Saco City Council December 10, 2018 Denise Clavette, Director

De- MysTIFying Tax Increment Financing (TIFs) Overview of Tax Increment Financing & a Look at New Expanded TIF Districts, Development Programs, and Properties. Jump Start Presentation to Saco City Council December 10, 2018 Denise Clavette, Director Emily Cole-Prescott, Econ. Dev. Specialist

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Jump Start Presentation to Saco City Council December 10, 2018 Denise Clavette, Director

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  1. De-MysTIFyingTax Increment Financing (TIFs)Overview of Tax Increment Financing & a Look at New Expanded TIF Districts, Development Programs, and Properties Jump Start Presentation to Saco City Council December 10, 2018 Denise Clavette, Director Emily Cole-Prescott, Econ. Dev. Specialist Zach Mosher, City Planner Planning and Development Department

  2. Agenda • Understanding What TIFs Can Do • Development Programs & Terms • TIF Districts • TIF Strategies & Progress • Recommendations

  3. Understanding What TIFs Can Do

  4. What is Tax Increment Financing • A great tool to catalyze economic development • Allows municipalities to “shelter” increases in valuation (up to 30 years), avoid losses due to state and county fiscal formulas • TIF revenue: can fund infrastructure enhancements related to / required for project development (public or private) and/or project costs; and • A comprehensive development program can fund many municipal projects to enhance the economic development climate • Development program needs to meet statutory requirements and local process

  5. Benefits of TIFs • Assist in achieving economic development goals of comprehensive plan, or other planning / vision plans • Attract new investment (i.e. tax dollars), jobs, improve local economy • Accomplish significant infrastructure projects • Tax shift benefits

  6. Tax Shift Benefit • TIFs shelter new assessed value from a municipality’s state valuation • The “state valuation” = equalized total assessed value in municipality • The valuation impacts: • State education subsidies • County taxes • State revenue sharing subsidies • Local education contributions to the school district

  7. Fiscal Formulas Explained • State Aid For Education Impacts • Based on the State of Maine Essential Programs and Services funding model. Statewide mil rate is applied to a district's state valuation to determine local property taxes for education – the higher the valuation, the more funds that need to be raised locally. • Municipal Revenue Sharing Received by a Municipality • Based on population, taxes raised, and state valuation – the higher the valuation, the less $ of Revenue Sharing received by a municipality. • County Taxes Paid by a Municipality • Based on the municipality’s % share of the County’s state valuation – the higher the share of valuation, the higher the County Tax.

  8. What is a TIF District • Geographic boundary is defined (project specific, or area-wide) • Original Assessed Value (OAV) • Development Program is created and managed locally • Applications reviewed for statutory compliance by: • State of Maine Department of Economic and Community Development (DECD) • Maine State Housing Authority

  9. TIF Process • Municipality determines % of new valuation, and therefore associated revenues, to shelter within a TIF (up to 100%). What is not sheltered accrues to General Fund. • Sheltered revenues can be used to support municipal expenditures in support of or made necessary by economic development, and/or; • Can be used to ‘incentivize” private investment by a business and/or developer (through Credit Enhancement Agreement – Municipality determines % to be shared and can be any amount between 0% and 100% of all TIF revenues)

  10. HowTIFsWork(IllustrativePurposesOnly) TIFEnds (max.term) TIFCreated

  11. Lost Revenue in Every New Tax Dollar 45%LostRevenue 55%Availableto City

  12. Use of TIF program in Maine (as of 2017) • 482 TIF districts in the State of Maine • Approximately half include at least one Credit Enhancement Agreement (“CEA”) • Special types of TIF districts

  13. Special Types of TIF Districts • Downtown TIFs • Transit-Oriented TIFs • Omnibus TIFs • Affordable Housing TIFs

  14. Development Programs & Terms TIF Districts

  15. Nine TIF Districts in Saco • First Light* • Industrial Park Road Improvements • Spring Hill • Franklin Fuels • Park North / Cascade • General Dynamics • Saco Island Mill Building #4 • Mill Brook • Downtown Omnibus District * In review with DECD

  16. Saco’s TIF Districts • Approximately 1,330 total acres, of which about 758 are in the downtown district • Wide variety of development programs • Credit Enhancement Agreements • Many projects and resources have been funded over the years • First community in State of Maine to use the TIF program

  17. Saco’s TIF Districts: Acreage Cap • Per 30-A M.R.S.A. §5223 (3)(C), a municipality’s acreage within a TIF District is capped at 5%. • Downtown Development and Transit-Oriented TIF Districts are exempt from this calculation. *Source: Downtown (TIF #15) Development Program

  18. Saco’s TIF Districts: Valuation Cap • Per 30-A M.R.S.A. §5223 (3)(C), a municipality’s valuation within a TIF District is capped at 5%. • Downtown Development and Transit-Oriented TIF Districts are exempt from this valuation cap. *Source: Downtown (TIF #15) Development Program

  19. First Light Development Program District • OAV: $62,400 • Acreage: 10 • Term: 30 years, from July 1, 1997 – June 30, 2028* • FY 2019 Q1 Fund Balance: $55,670 • CEA with First Light: 40% of captured assessed value for five years** • Program Highlights: Can be used to fund acquisition, improvement and development of land for additional industrial parks • Funded Projects: Funds applied to City’s economic development program for a variety of programs, including acquisition of industrial park land *With DECD for review of term extension. **This was reduced to four years, with the fifth year applied to the City’s fund, with DECD’s approval. 71-1-1

  20. Industrial Park Road Improvements Development Program District • OAV: $5,169,200 • Acreage: 33.07 • Term: 20 years, from July 1, 2008 to June 30, 2028 • FY 2019 Q1 Fund Balance: $917,836 • CEA: Peoples Choice Credit Union: Payments made to company to offset costs of traffic improvements, capped at $100,000 • Program Highlights: To fund costs of various traffic improvements in the area of Industrial Park Road • Funded Projects: Street and site improvements along Industrial Park Road; CEA with Peoples Choice Credit Union ROWs not shown

  21. Spring Hill Development Program District • OAV: $5,746,000 • Acreage: 135 • Term: 20 years, from July 1, 2002 to June 30, 2022 • FY 2019 Q1 Fund Balance: $1,317,811 • Program Highlights: Costs for traffic mitigation fund for Rte. 1 improvements • Funded Projects: Contributed to traffic mitigation fund ROWs not shown

  22. Franklin Fuels Development Program District • OAV: $167,500 • Acreage: 6.86 • Term: 30 years, from July 2, 2008 to June 30, 2039 • FY 2019 Q1 Fund Balance: $68,607 • CEA: Currently, with White Rabbit LLC, limited to incremental taxes from new actual value capped at $125,000 • Program Highlights: Funds costs associated with Credit Enhancement Agreement with White Rabbit LLC; can fund operations and programming associated with various economic development initiatives • Funded Projects: CEA with White Rabbit LLC

  23. Park North Development Program District • OAV: $5,516,400 • Acreage: 323.48 • Term: 30 years, from July 1, 2008 to June 30, 2038 • FY 2019 Q1 Fund Balance: $145,778 • CEA: Park North Development LLC, first $200,000 of incremental value paid to company; follows 70% company and 30% City for next 30 years, until end of TIF District • Program Highlights: Currently, the second largest TIF District in Saco; may be used to fund economic development programs and revolving loan fund capitalization • Funded Projects: Developer is expanding sewer infrastructure and road improvements

  24. General Dynamics Development Program District • OAV: $5,900 • Acreage: .11 • Term: 6 years, from July 1, 2014 to June 30, 2020 • FY 2019 Q1 Fund Balance: $0 • CEA: General Dynamics, capped at $100,000 • Program Highlights: Reimbursements to developer capped at $100,000 total, based solely on .11-acre section of property • Funded Projects: Incentivized General Dynamics to expand facility in Saco

  25. Saco Island Mill Building #4 Development Program District • OAV: $280,000 • Acreage: 5.04 • Term: 30 years, from July 1, 2015 to June 30, 2045 • FY 2019 Q1 Fund Balance: $53,450 • CEA: Chinburg Properties; 80% to company in years 1 through 8; 60% in years 9 through 30, capped at $5 million • Program Highlights: May support costs associated with Shuttle bus service, PACTS sign project, Multi-modal train platform, and economic development programming for the City and regional entities • Project Funded: Incentivized redevelopment of mill building into apartment housing for the City and region

  26. Mill Brook Development Program District • OAV: $2,090,500* • Acreage: 61.06 • Term: 30 years, from July 1, 2015 to June 30, 2045 • FY 2019 Q1 Fund Balance: $26,169 • CEA: Maine Molecular, 80% to company in years 1 through 10; 0% thereafter • Program Highlights: Can fund capital costs of recreation trail improvements and road improvements within 2 miles of the District • Funded Projects: *Technical correction pending review by DECD, from 2017 locally approved amendment ROWs not shown

  27. Downtown Omnibus Development Program District • OAV: $395,250,156.70 • Acreage: 757.8 • Term: 30 years, from July 1, 2017 to June 30, 2047 • FY 2019 Q1 Fund Balance: -$19,796 • Grants: Cutts Avenue (Economic Development Grant) • Program Highlights: Provides the City and the Downtown with the widest amount of funding options and opportunities for public improvements throughout all of the City’s TIFs • Funded Projects: Funded first payment of economic development grant for Cutts Avenue project; growth in coming years may fund a wide variety of projects, as shown on next slides detailing Development Program

  28. Downtown Development Program Within District/Municipality Within Municipality • Streetscape Improvements • Design, construction, installation of 3-phase power & Broadband/4G LTE costs • Reimbursement agreements with developers/companies • Waterway seawall • Waterway dredging • Marina infrastructure construction along Saco River • Economic development agencies (Saco Main Street & Chamber) operations & program funding • Bus shelters and transportation amenities • GIS mapping (maintenance & upgrades) • Workforce skill development/training costs • Environmental improvement costs • General economic development, including prorated salaries and portions of salaries for positions that work on TIFs

  29. Downtown Development Program Cont’d. Within/Outside District & Within Municipality Within/Outside District • Trail connections & improvements • Storm water & drainage improvements • Sewer infrastructure • Energy & gas transmission • Prorated costs of Harbormaster’s Office • Piers, floats, tourist boater amenities • Marina infrastructure • Prorated municipal equip. costs • Sidewalk rehabilitation/extension, parking improvements, lighting, crosswalks, central parking facility • Underground utilities • Road & intersection improvements • Pro-rated costs of public safety building & public safety equipment/infrastructure related to development within District • Capital costs of improvements

  30. TIF Strategies

  31. Strategic TIF Next Steps for Saco • Integrate TIF use with core objectives: tax base growth, job growth, workforce development, economic diversification, place making, community and downtown development • Go beyond use of TIFs for business incentives – shift focus to funding for public infrastructure and projects to support economic development (long-term) • Extensions of TIF Districts to 30 years • Potential boundary expansions of current TIF Districts (where it makes sense to do so)

  32. Progress Toward Next Steps • Completed comprehensive analysis of current TIF Districts, Development Programs, Credit Enhancement Agreements, and Grants • Hosted Jump Start TIF Meeting with City Administrator and City Staff, to obtain team-oriented objectives and citywide collaboration • Completed parcel review with Planning & Development Director, Economic Development Specialist, and City Engineer for potential transit district • Continue to track and report progress; guide all with planning and policies

  33. Recommendations • Amend and modify existing TIF Districts to create a comprehensive development program for all districts: • First Light (TIF #1): Development Program amendment • Industrial Park (TIF #5): 10-year extension & Development Program amendment • Spring Hill (TIF #7): 10-year extension & Development Program amendment • Franklin Fuels (TIF #8): Development Program amendment • Park North (TIF #9): Development Program amendment • Mill Brook (TIF #14): Development Program & possible boundary amendments • Create a transit-oriented TIF District • Postpone creating new TIF district(s) to maximize Captured Assessed Value (CAV) • Ready Seafood TIF District and CEA

  34. DECD Approval Letters • First Light • Industrial Park Road Improvements • Spring Hill • Franklin Fuels • Park North • General Dynamics • Saco Island Mill Building #4 • Mill Brook • Downtown Omnibus

  35. Credit Enhancement Agreements & Economic Development Grants • First Light Technology, 1998 • Peoples Choice Credit Union, 2009 • White Rabbit LLC • Park North • General Dynamics, 2014 • Chinburg Properties, 2015 • Maine Molecular Quality Controls Inc., 2015

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