FARMINGTON – Franklin County commissioners unanimously approved amending the county’s tax increment financing agreement with TransCanada Maine Wind Development to capture more tax money that can be used for economic development within the Unorganized Territory.
The vote in favor of passing the revised agreement on to the Maine Department of Economic and Community Development for final approval came after a two-hour public hearing on the proposed changes Tuesday night.
At the hearing, county officials and residents spoke in favor of the economic benefits that amendment would provide, despite strong objections from a state official who claimed the effects of the proposed changes are “dangerous” for county residents in terms of taxes and management. The official’s remarks were the only negative comments made about the amendments Tuesday, and they did not sit well with those who supported the TIF, which brings money for economic development into the rural and remote area.
“To the comment of, ‘there is no place in the UT for a TIF.’ Well, are we second class citizens?” Freeman Township resident Bob Carlton said. “This isn’t Yarmouth. This is not Portland. This is finally a chance for us to get some development to an area that has been forgotten by the state.”
The original 20-year agreement was established in 2008 when the county approved a TIF district on Kibby Mountain and Kibby Ridge in the northern part of the county, near the Canadian border, where TransCanada developed a 44-turbine wind farm. The TIF district lets the county shelter the wind farm’s property tax revenue from state valuation and use it for several categories of county development projects as outlined in the TIF agreement. The TIF agreement also includes a credit enhancement agreement in which a percentage of tax revenue paid by TransCanada is reimbursed to the company.
Under the amended agreement, the county will receive an additional $12.4 million, for a total of over $16 million in captured revenue by the time the TIF expires in 2038.
The agreement presently caps the revenue the county can receive over the life at the TIF at $4 million, which is expected to happen by the end of the year – 12 years before the TIF is set to expire. The proposed amendment also extends the TIF an additional 10 years beyond the original 2028 expiration date.
Under the credit enhancement agreement, TransCanada’s share of the revenue was capped at $8.9 million. The county’s TIF consultant, John Cleveland, said that without a cap, which will be removed if the amended agreement is approved, TransCanada could earn up to $13.1 million in revenue before the credit enhancement agreement expires in 2028. However, TransCanada has agreed to give the county an additional $3 million in funding through the amended agreement over the course of the TIF, which could be used on projects throughout the entire county.
David Heidrich, spokesman for the Maine Department of Financial and Administrative Services, argued at the public hearing that the amended agreement would hurt taxpayers because of the shielding of the Kibby Wind Farm’s valuation from the county tax rolls.
“What this amendment does is ultimately dangerous,” Heidrich said.
However, figures presented by Cleveland indicated that expanding the TIF to capture 100 percent of the TIF revenue for the duration of the agreement is only estimated to raise the county tax rate 1 cent to $1.18 per $1,000 worth of assessed property beginning in 2019. Cleveland stressed that the 1-cent increase is based on the county continuing to operate at its current budget level with the same county assessment.
If no changes are made to the TIF, the tax rate would decrease about 2 cents, to $1.15 per $1,000 of assessed property; because under the present terms, beginning in 2009, the amount of revenue captured in the TIF decreases to 50 percent for the last 10 years with the remaining 50 percent going to the State of Maine Unorganized Territory account, which is collected and managed by the Department of Financial and Administrative Services.
Heidrich said that while TIFs are common among established municipalities, they are no place for the state’s unorganized territory’s because there is no established local government.
County commissioners act as the governing and legislative body over unorganized territories, and those in favor of the amended agreement cited the money being kept and managed locally was in the UT’s interest.
“We do have a form of government, we have the county government that’s working through this TIF, and that’s working very well,” Carlton said. “You don’t get the money. I’m sorry, but it’s going to the county and it’s being used well.”
The amended agreement also includes broadening the categories of development projects and budgeting areas that TIF funding may be used for.
New proposed amendments to the development program include being able to use TIF funding for telecommunications infrastructure for the Unorganized Territory, such as cellphone towers and high-speed internet; a portion of county staff salaries and professional services; media and advertising costs for tourism and marketing; environmental improvements; recreational trails and public safety costs.
The proposed amendments also include the establishment of a revolving loan fund that will stay in place even after the TIF agreement expires. The fund would be used to dispense grants or loans to businesses that are looking to move to, or expand within, the Unorganized Territory. As the loans are paid back, the money would be put back into the fund to ensure it can be used for future loans once the TIF expires.”We are trying to bring businesses to the UT,” said Richard Fotter, of Wyman Township. “Please don’t forget about us and continue to fund this.”
Both Fotter and Carlton are members of the UT board that reviews the applications for projects or programs seeking TIF funding.
Sen. Tom Saviello, R-Wilton, and Alison Hagerstrom, executive director of the Greater Franklin County Development Council, also spoke in favor of amending the agreement to greater benefit the UT and the county as a whole.
If the Maine Department of Economic and Community Development approves the amended agreement, the increased revenue capture will go into effect in April 2017, while the expanded list of project categories will be implemented immediately.
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