From the Courier Gazette.Knox Village Soup
Power plant developer will seek TIF agreement with city
Developer to press: 'No comment'
By Daniel Dunkle | May 28, 2015
Photo by: Daniel DunkleRockland Energy Center spokesman Evan Coleman speaks to residents at the May 26 public forum at City Hall.
ROCKLAND — During a public forum May 26 concerning the proposal to build a natural gas fired power plant on the current City Hall and public works garage property, the developer for the project said his company would seek a tax increment financing district agreement with the City of Rockland.
Evan Coleman, who is described as a partner in Rockland Energy Center, the local name for the project proposed by Energy Management Inc., fielded questions from the public including a question specifically asking about the possibility of a tax increment financing district (often referred to as TIF agreements).
Coleman said at the meeting that the company would have a TIF agreement with the city for a 25-year period. He described this as a negotiated tax agreement that would set what the company would pay in taxes each year for the term of the agreement. He added that way, the city would know exactly what it was receiving each year in taxes and the power plant company would be able to plan for its exact costs each year.
Contacted by phone May 28 for additional detail, Coleman said, "Traditionally, we don't comment to the press." When a follow-up question was asked, he terminated the phone call.
"There has been no formal discussion about Tax Increment Financing and therefore, no agreement," City Manager James Chaousis said in an email May 27. "We told the developer, like we tell most developers, that Tax Increment Financing is a tool that the city is willing to use to leverage development."
Under Maine law, municipalities are allowed to create Tax Increment Financing districts to attract or promote economic development. It was originally intended to provide tax incentive for improving an area and bringing in jobs and economic growth. It typically was used to promote development in a blighted or unattractive area.
In a TIF district, taxes paid on new property value created by the development can be used to fund infrastructure improvements. Under the TIF law, municipalities can also offer developers Credit Enhancement Agreements, which refund a portion of the property taxes paid on the new development to the business.
These agreements are approved and overseen by the Maine Department of Economic and Community Development, and they can have a span of up to 30 years under Maine law.
TIFs also function as tax shelters in that the new value generated by the development is not added to the municipality's overall tax valuation. If the city's value goes up, state subsidy for schools, county taxes and the like go down.
As a result, Rockland Community and Economic Development Director Audra Caler-Bell said, if that revenue went into the general fund, the city would lose 42 cents on every dollar to loss of subsidy.
"There has been no formal discussions about CEA’s (Credit Enhancement Agreements)," Chaousis said. "We told the developer, like we tell most developers, that CEA’s are a tool that the city is willing to use to leverage development."
Some residents have voiced concern about the potential TIF agreement.
In a letter to the editor, Debby Atwell of Rockland criticized the proposal.
"For you all out there unbaptized in city taxing affairs, a TIF is a tax break — a rebate for a big company doing business here," she wrote.
In the letter, Atwell points out the Nautica tax break, which caused controversy back in 2002-2003 when the company closed and moved out of the city after receiving a tax break. About 300 lost their jobs when the company moved its operations to Virginia. The city, at the time, argued this was a violation of the TIF agreement.
At the time, VillageSoup editorialized that while this TIF did not work out for the city, it was still a viable economic tool, and pointed to the Fisher Engineering TIF as a more successful example.
Atwell voices skepticism that Rockland residents will receive jobs if the power plant is built.
"The power plant's operating jobs amount to 15 highly specialized technician posts," she said. "Those jobs are first class salaries and, as a rule, those people don't live in Rockland. ...So don't start counting the money. It's a pile of fool's gold. What we will get is carbon dioxide pollution raining down upon our primary and middle schools, playing fields, little league fields."
To continue exploration of the topic of TIFs, we will soon publish on the VillageSoup website a series of articles on TIFs from the Maine Center for Public Interest Reporting.
Caler-Bell said the reason more information cannot be released is because this development is so early in the process. It's in what she referred to as the "conceptual phase," and details are changing every day. "This is unfolding in real time," she said.
The full video of the May 26 public forum can be viewed athttps://rocklandmainemeetings.wordpress.com/
Courier Publications News Director Daniel Dunkle can be reached at 594-4401 ext. 122 or ddunkle@villagesoup.com.
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