PORTLAND, Maine – The state department that oversees tax collection in Maine has come out against extending a property tax break on the 44-turbine Kibby Mountain wind farm in Franklin County, saying the deal is a giveaway on the backs of residents outside the unorganized territory.
David Heidrich, spokesman for Maine’s Department of Administrative and Financial Services, on Monday urged the Franklin County commissioners to reject the proposal for revising the property tax break with developer TransCanada, which has placed the property on the market.
“With construction of the Kibby wind farm long since complete, there is no conceivable economic benefit to the county or the [Unorganized Territory] to provide TransCanada with more money than originally negotiated,” Heidrich said in a written statement.
The county and developer negotiated those terms as part of a tax-increment financing agreement, which allows developers and governments to divvy up the new revenue created by a project that increases the value of a property. In this case, that’s the wind farm.
In this case, commissioners agreed to put 75 percent of the added value from the wind power project into the tax-increment financing agreement, with 60 percent of that amount going to the project’s owner as a “credit enhancement agreement” and 40 percent going to benefit the unorganized territory.
The county commissioners are scheduled to hold a public hearing Tuesday on proposed changes to the agreement, expanding it to 30 years from a 20-year term and expanding it to include all of the value added by the project. It also would expand the acreage.
The Unorganized Territory plans to spend $6 million of its proceeds under the new deal on a revolving business loan fund, $3.3 million for telecommunications infrastructure projects and $2 million for recreational trail acquisition, development and maintenance.
Under the current deal, the bulk of the county’s money has gone toward dues for regional economic development organizations and trail improvements throughout the Unorganized Territory, in hopes of promoting tourism to the area, according to a draft of the agreement.
Heidrich urged that the commissioners allow the deal to expire rather than extending it, arguing that tax-increment financing districts are not suited to the state’s unorganized areas.
“Developing a district in the unorganized territory harms the property owners in the [Unorganized Territory] – who have no organized, local government to represent their interests – and other municipalities in the county by shifting more of the county’s tax burden to those towns and cities,” Heidrich said.
What happens in the Unorganized Territory affects cities and towns elsewhere in the county because they are overseen by county commissioners who, each year, send tax bills to municipalities.
For example, Maine Revenue Services estimated expansion of the tax deal would result in the town of Jay paying more than double the amount in the current deal, which also delivers a portion of the money back to the county. Heidrich said Maine Revenue Service analysis found the proposed deal would cost Jay about $1 million over 30 years, compared with $350,000 over the current 20-year term, set to expire in 2029.
The proposal comes as TransCanada is working to sell the wind power project that it developed and completed in 2010.
Jennifer Link, a spokeswoman for TransCanada, said that the company is still working to find a buyer. She said the renegotiation is standard in the company’s course of business and the deal “wouldn’t necessarily be related to the sale.”
The company did not comment specifically on statements from Heidrich, who said he did not know when he issued the statement that the wind farm was up for sale.
The county commissioners did not respond Monday to emailed requests for comment, and TransCanada did not offer comment specifically on the criticisms from Maine’s Department of Administrative and Financial Services, which includes Maine Revenue Services.
The public hearing on the amended TIF proposal is scheduled for 5:30 p.m. Tuesday at 140 Main St., in the county courthouse building.