Camden citizens packed the Washington Street Conference Room Feb. 23 to scrutinize two proposed tax increment financing districts, and after two hours of questions, voted almost unanimously to implement what will be a financing first for the town.

The vote did not come without debate, nor attorney consultation and article amendments. But in the end, Camden approved establishing two TIF districts, one for a designated 39.27 acre downtown area, the other for an area stretching along 58.75 acres of Route 1 heading south out of town toward the Rockport town line.

Citizens were clear, however, that they wanted to be informed of, and to be able to vote on, each proposed project that would potentially be funded through TIF dollars.

“I just want to reassure people that the public process is part of every step,” said Karen Grove, chairman of the Select Board, toward the end of the meeting.

Citizens had remained skeptical throughout the evening and asked in several different ways for political assurance that the potential list of project expenditures would go before voters, either as separate warrant articles at town meeting, or clearly defined in the annual budget review.

“The bridge to nowhere” was cited several times during the meeting, as taxpayers demanded a transparent process of selecting future town projects. They were also referring to one of the potential TIF funded projects, a footbridge over the waterfall at the north end of the harbor. Other potential projects funded through the TIF dollars include a harbor boardwalk, a Megunticook Riverwalk, dam improvements, sidewalk expansions and the funding of an economic development director office.

Proponents of the TIF districts reiterated throughout the meeting that the districts and plans could be expanded or amended, and that the initial purpose was to gain town approval before submitting two plans to the Maine Department of Economic and Community Development. The purpose of moving on the two TIF districts now, as opposed to at June town meeting, according to proponents, was to enable the town to capture $3 million in new tax revenue before April 1.

The public hearing, followed by a special town meeting, began at 7 p.m. with a presentation by Peter Gross, Camden resident and chairman of the TIF working group, a subcommittee of the town’s Community and Economic Development Advisory Committee. The presentation was about why Camden needs a mechanism to set aside future tax revenue in two mapped out areas of town.

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 infrastructure and business development 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-generated revenue for projects in both TIF districts, with the other half going into the town’s general fund.

While the town needed to approve the TIF districts, so too does the state, and at the meeting, copies of the Department of Economic and Community Development TIF program applications were distributed to voters. Camden had contracted with Eaton Peabody Consulting Group and that Portland firm’s Matthew Eddy to help prepare the application, as well as explain TIF districts for boards, committees and citizens of Camden.

While proponents of the TIF districts, which included members of the Select Board and CEDAC, advocated for sheltering a percentage of tax revenue in the TIF districts, skeptics questioned whether the TIF districts would unfairly benefit property owners within a TIF district.

TIF districts have been regarded as economic tools for municipalities, and nearby towns, including Rockport and Rockland, have approved them over the past few years. Rockport implemented a TIF district in 2001 to boost economic development and sewer line construction along Route 1.

Gross said Feb. 23 that the TIF districts were a tool to capture and invest tax revenue that would traditionally slip away.

“That’s the key,” he said. “This is not going to increase taxes on anyone.”

With a TIF district, he explained, the money would stay in Camden. He used the example of a building assessed at $100,000.

“If I put $100,000 into the building and it doubled in value, that should mean my payment to the town would double,” he said. “I am going to pay that incremental increase in taxes but the taxes stay in the town. Without a TIF [district], 80 percent of that increase does not stay here.”

Citizens questioned whether the act of directing TIF money toward certain projects would result in a smaller general fund, from which the town pays for itself to function.

“We are going to still have to pay bills,” said Camden resident Robert Williams. If  “X amount of money” is diverted, that money is not available for the Snow Bowl or Maine School Administrative District 28, he said.

Roberta Smith, Camden town manager, responded that the incremental tax increase from increased property values in the TIF districts would be excluded from the general fund, and she reiterated the potential to shelter new tax dollars. She directed citizens to a prepared financial analysis that reads that for every annual average net of $98,537 worth of new taxes, that amount stays with the town, if a TIF district is created.

Without a TIF district, that $98,537 gets eaten away, first by the loss of state education subsidy, less $56,566; then $19,723 in increased local education costs; then less $4,201 in state revenue sharing; and finally, less $6,374 in increased county tax. The projected net benefit to the town without a TIF district, according to the financial sketch of Eaton Peabody, would end up at $11,673.

Leonard Lookner, Camden resident, asked who would line up projects for the downtown.

“Can priority C become priority A, and who sets that priority,” he said.

Gross said that CEDAC would be responsible for choosing which projects come first, acting as an advisory group talking with other committees, and then making recommendations to the Select Board.

“There will be a vote every year how those funds will be spent,” he said. “It’s CEDAC working with committees and the Select Board, and ultimately citizens will vote.”

Another resident asked whether taxes levied on those who do not live in a TIF district would be negative or positive.

“It’s a good question and a tough one to answer,” said Gross. “Property taxes should not go up. There should be an increase in property taxes and other development outside the districts.”

Eric Charlton told those in the room that he relocated to the coast 17 years ago and chose Camden because it was a residential town. “Thanks to the Select Board and zoning, the Wal-Marts and McDonald’s have been left out,” he said. But, he added, after reading the TIF program application, he gathered the emphasis was on getting more tourists, with “boardwalks and a bridge to nowhere. Are we going to be another Boothbay Harbor? I hope not.”

By the end of the meeting, all of the the 40-plus citizens, including CEDAC members, raised their ballots in favor of the TIF districts, except for one lone citizen voting no. The town had also voted to amend the language of the TIF districts to reflect what town attorney William Kelly described as a “scrivener’s error,” which had stipulated that projects must be completed within a five-year window.

Camden Select Board member Deborah Dodge said near the close of the meeting that the town needed the TIF districts to be economically competitive, and that “it is good for businesses to know that Camden is willing to invest in itself.”

Select Board Chairman Grove asked whether a public hearing could be held on each project.

“It can be anything the board wants it to be,” said Town Manager Smith.

Select Board member John French said the town had some “golden opportunities” to get infrastructure work done.

Select Board member Anita Brosius-Scott asked whether the town, by outlining the potential list of projects in the state application, was actually adopting that list.

“I don’t believe so,” said Eddy. “It always comes back by rule to the municipality.”

 

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.