Franklin County commissioners will hold a public hearing Thursday on a proposed 20-year tax-increment financing agreement between the county and TransCanada, a Canadian-based energy company.
The hearing on the proposed Franklin County Enterprise Development and Tax Increment Financing District is scheduled to be held at 6 p.m. Thursday, May 29, upstairs in the Franklin County Courthouse. Commissioners will also consider a vote on the proposal after the hearing. If approved, it will then move on to the state to be reviewed to test its legality.
Wind farm proposal
TransCanada is proposing to build a 132 megawatt, 44-turbine commercial wind farm along Kibby Mountain and Kibby Range in Kibby and Skinner townships in northern Franklin County. The total investment to develop the project is estimated at $270 million.
Of that amount, it is believed that TransCanada’s taxable investment in the project will be $220 million over 20 years. According to the TIF agreement, anything taxed over that $220 million valuation would go into the state’s unorganized territory fund. The minimum TransCanada has agreed to invest as part of the TIF deal is $150 million.
The TIF plan proposes to capture 75 percent of the new tax revenue based on the $220 million investment for the first 10 years and 50 percent for the next 10 years, with the county keeping 40 percent and TransCanada getting 60 percent.
The remaining 25 percent of tax revenue gained in the first half of the agreement, and 50 percent in the second half, would go into the state’s unorganized territory fund to suppress any increase in property taxes, said Tom Walker of Maine Revenue Services.
The county would be able to capture up to $4 million, based on a $220-million taxable investment, in new revenue to invest in economic development in unorganized territory.
The proposal could also return a maximum of $8.9 million to TransCanada to reinvest in the development over 20 years, and $9.3 million in new tax revenue to the state’s unorganized territory fund.
The tax district would encompass nearly 4,078 acres in unorganized territory in the county.
Concerns have been raised about the company not paying its fair share, while others see it is as a once-in-a-lifetime opportunity for the county to get new revenue and invest it in economic development that could bring more jobs, tourists and businesses to the county.
If there were no TIF and the project went forward and was valued at $220 million in the first year of the agreement, the tax rate would go down significantly that year for property owners in unorganized territories, Walker said.
“We could expect to see a 28 percent decline in the tax rate,” Walker said.
For instance, the tax rate now is $8.08 per $1,000 of property valuation for the unorganized territory of Franklin County, and that rate would drop to $5.82 per $1,000 of value, he said.
If the project goes forward with a TIF agreement, it is expected there would be an 8 percent decline in the tax rate in the unorganized territory in the first year, he said. The rate would drop from $8.08 per $1,000 of value to $7.43 per $1,000.
According to Carrabassett Valley Town Manager Dave Cota, if there were no TIF, all municipalities would also see a decrease in county taxes. With a TIF, Cota said in a letter to commissioners, there would be a significant loss of property tax revenue and a corresponding tax shift back to Franklin County municipalities, especially high-valuation communities that will ultimately pay for the TIF.
County Commissioner Gary McGrane said commissioners did listen to concerns from municipal leaders about the TIF and tried to make it fair for all.
The agreement as negotiated is not for a 100 percent TIF.
For instance, if in the first year the wind farm project had a $100 million valuation, 25 percent – or $25 million – would be taxed outside the TIF district, McGrane said. The amount of taxable value doubles in the second half of the plan.
Caps were set on the amount of taxable investment that falls under the agreement, and there are caps on what both the county and the company gains in revenue from the TIF, he said.
By Donna M. Perry
26 May 2008
Wind farm, by the numbers:
• 4,077.53 total acres.
• 3,949.95 of those acres in Kibby-Route 27 tract that encompasses the project footprint and transmission line in Kibby, Skinner, Chain of Ponds and Jim Pond townships as well as the roadway and right of way associated with state Route 27 from Jim Pond Township to Coburn Gore Township.
• 75.58 acres in Wyman Township associated with transmission line, as well as the roadway and right of way associated with Route 27 that passes through the township.
• 52 acres in Township D and Township E associated with the roadway and right of way of Route 17, the Rangeley Lakes Scenic Byway.
Source: Franklin County Enterprise and Tax-Increment Financing Development Program
Wind farm TIF plan, by the numbers:
• $455,952: Assessed value of the district as of March 31.
• $185.9 million: Value of taxable property in the unorganized territory of Franklin County as of April 1, 2007.
• $220 million: Estimated new assessed real and personal property value of wind farm project added over life of TIF to Franklin County’s unorganized territory.
• $150 million: Amount TransCanada has agreed to guarantee as minimum assessed value.
Wind farm costs
TransCanada’s development costs for proposed wind farm:
• $180 million: Turbine cost
• $28 million: Roads
• $18 million: Transmission lines
• $44 million: Development costs
• $270 million: Total estimated company investment to develop project.
Source: Franklin County Enterprise and Tax-Increment Financing Development Program.
Questions and answers:
• What is tax-increment financing? It is a development financing tool available to Maine counties and municipalities.
• Are TIFs commonly used? Maine first enacted TIF laws in 1977. Since then, more than 300 TIF districts have been established across the state. There are two TIF agreements for wind power development in Maine. One is an unorganized territory in Washington County and the other is in Mars Hill.
• How does a TIF work? A portion of property taxes generated by new business investment is sheltered to fund a locally adopted economic development program. The property taxes paid on existing valuation prior to new business investment continue to support general government operations.
• How is a TIF established? A TIF district is a specific geographic area identified for commercial growth and investment. A development program states the benefits and public purpose of the economic development projects to be undertaken. A financial plan details the funding mechanism to support the projects and establishes the duration of the TIF program (up to 30 years).
Source: Eaton Peabody Consulting Group, Maine Revenue Services
26 May 2008
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