Camden residents will be asked to vote on two proposed tax increment financing districts at a special town meeting to be held immediately after a public hearing on Tuesday, Feb. 23.

The hearing will begin at 7 p.m. in the Washington Street Conference Room and will be broadcast on Public Access Television Channel 22. The hearing will be followed by a special town meeting of the Camden Select Board, which will continue its workshop to discuss long-term strategic goals for the town. That workshop is expected to begin at 8 p.m.

Mathew Eddy of the Eaton Peabody Consulting Group in Augusta spoke to the Camden Select Board Feb. 2, describing a proposal his firm created in collaboration with Camden’s Community and Economic Development Advisory Committee.

The Downtown Tax Increment Financing District would comprise approximately 38 acres in the area that is generally considered the downtown business zone, and would set aside 100 percent of the revenue in excess of the captured property value for expenditures in that district.

A Business Highway Development and Tax Increment Financing District would encompass 48 acres along Route 1 from the Rockport line to Elm Street near Free Street. It would keep half its TIF revenue for expenditures in both TIF districts, with the other half going into the town’s general fund.

How tax increment financing works

Tax increment financing is a tool used by states and municipalities to encourage business development in a targeted area.

A TIF program is created to designate a single piece of property or a district and capture the assessed value at a specific point in time. Taxes paid on the property’s value, beyond that value assessed at the start of the TIF, must be used for dedicated projects that enhance the district or development in that district. Property values and the taxes they generate may continue to increase due to additions, improvements, inflation and revaluation, but only the taxes on the frozen assessed value are directed into the town budget. The remainder of the revenue stays in the TIF fund and must be used for specified projects.

An example would be that of a property worth $100,000 that might generate $1,000 in taxes.

Adding a building to increase the value to $200,000 would generate a second $1,000 in taxes. For the life of the TIF the first $1,000 goes where it has always gone, to municipal operations. The second $1,000 — the increment — goes to the TIF fund.

TIF districts were originally created to draw development into blighted areas, where no businesses were investing. Once the TIF district was established, the theory said, investors would arrive and further improve the property, making it more attractive to future growth.

In addition to using TIF funds to enhance the TIF district, businesses may also be offered a credit enhancement agreement, which provides for a payback or rebate to the owner of a property of a portion of the tax paid on that property.

Proposals for a TIF district in Camden are not suggesting any credit enhancements, but rather are focused on creating a TIF fund for infrastructure and other enhancements to the districts created by the TIF.

Camden proposals anticipate business growth

If voters approve both of the TIF proposals under consideration, they will be authorizing Town Manager Roberta Smith to submit two separate applications to the Maine Department of Economic and Community Development. Copies of those applications are available at the Camden Town Office.

It the case of the downtown district, the application anticipates substantial business growth.

“The reason for proposing this TIF at this time is that there are likely to be a series of unique investments totaling more than $7 million that may occur over the next five years,” the document’s introduction states. “By freezing the values and using the revenue for downtown related projects, the community succeeds in sheltering those values from impacts related to the state and local school aid formula, local county taxes, and the state revenue sharing formula.”

Neither the Knox Mill nor the Apollo Tannery properties are included in the Downtown TIF District.

According to the application, there is too much uncertainty as to the future development and tax value of the Knox Mill.

“If the redevelopment of the property does not occur, it could drag down any new values created in a Downtown TIF District, limiting the revenue stream,” the introduction states. In the case of the tannery, the application cites debt currently owed on the site, and the possible need for added improvements as incentives for any potential sale, as reasons to omit the tannery site from the TIF district.

In both cases, the application suggests possible amendments to the district or stand-alone applications for additional future TIF districts.

In his Feb. 2 presentation, Eddy described a list of proposed projects to be done with the possible revenues, as well as the process for prioritizing those projects.

While revenue from the Downtown TIF District is projected, over the 20 years of the TIF, to be in the range of $1,970,000, a list of proposed projects to be paid for from the fund adds up to almost $2.7 million. Those projects include the construction of a $30,000 two-mile circular riverwalk from the tannery site to the downtown area, a $750,000 expansion of the harbor boardwalk that includes a footbridge over the falls of the Megunticook River, and various infrastructure and drainage improvements.

Another item on the menu of proposed Downtown TIF District expenditures is the hiring of a municipal community development director, with a budget forecast of $80,000 in salary and benefits and $65,000 on related project costs.

Despite anticipated revenue from the Business Highway TIF District estimated at $170,000 over 20 years, the second application’s investment plan calls for $300,000 in improvements to the so-called gateway area near the Hannaford Supermarket and along the side of Route 1 from the Rockport town line to the start of the Downtown TIF District. An additional $100,000 is slated to be diverted from the highway TIF to projects in the Downtown TIF District.

At the Feb. 2 meeting it was recommended that the Community and Economic Development Advisory Committee act as an advisory committee to the Select Board, which would be responsible for making final decisions within the parameters laid out in the applications.