The Benton Board of Selectmen is holding a public hearing on Monday to discuss the possibility of creating a development district around a Central Maine Power substation on Albion Road, aiming to shelter property taxes and ward off a reduction in state aid.
By creating a tax increment financing district, or TIF, around a portion of the substation’s property tax, town officials hope to prevent Benton from having to pay a larger percentage of the county tax and education expenses while receiving less in municipal revenue sharing from the state, according to Selectman Antoine Morin.
The extra cost and less state aid would result from the substation greatly boosting the taxable property in town.
“The substation alone represents 15 percent of our assessed value, which the addition (of assessed value) triggers increases in what we pay to Kennebec County and reduces our revenue sharing,” Morin said. “If we don’t TIF, we’d lose out on the ability to cap some of revenue coming from the substation for economic and community development.”
It’s not uncommon for towns to create TIFs to ward off raises in county tax or drops in municipal revenue sharing, according to Noreen Norton, an economic development consultant contracted by Kennebec Valley Council of Governments based in Fairfield.
“When new investment occurs, the state views it as the town being richer,” Norton said. “The town is better off with the TIF than without it, generally speaking.”
The substation, which has irritated nearby residents with a persistent buzzing sound since it was turned on in May, has an assessed value of about $24 million. State law puts a cap on the TIF value at 5 percent of the town’s total assessed value, so the proposed Benton TIF has the potential to capture about $8 million of the $24 million of assessed value for the substation.
Unlike some TIFs, where some of the property tax money goes back to the business to pay for a development project, the TIF proposed for the substation still requires CMP to pay all of its roughly $300,000 per year in property tax to Benton. If the town created the TIF around the whole 5 percent, it would then take about $100,000 of the property tax into its TIF district for economic development.
“CMP will continue to pay its full assessed amount, but by capturing some of it, we can use it for things like sewer line extension or costs related to the annual alewife festival,” Morin said.
Monday’s public hearing is scheduled for 6 p.m. at the Town Office. The annual Town Meeting, where residents will vote on the TIF and other town budget articles, is scheduled for 10 a.m., Saturday, March 15.