HALLOWELL — A city committee Wednesday night unanimously recommended a tempered proposal for a tax break that would allow the Kennebec Ice Arena to be rebuilt, a move the arena owner called “tremendous.”

Hallowell’s TIF Review Committee, chaired by City Councilor Phillip Lindley, was appeased by a move by the arena from the owner’s initial stance — a 20-year, 100 percent tax increment finance agreement — to a 100 percent TIF over 10 years, with the city council retaining the option to extend the pact another 10 years or let it expire. A TIF shelters property taxes generated by new development within designated districts.

After the vote, Lindley called it “the first small step,” later saying the TIF’s final acceptance would only come after city council approval of owner Peter Prescott’s preliminary application, preparation of a final application, a public hearing on it, an appearance before the city’s planning board and final council approval.

Prescott, of Manchester, addressed the committee briefly, letting two Portland-based attorneys, Les Wilkinson and Kevan Deckelmann, and his accountant, Michael Stillings, do most of the talking on the logistics of the financial proposal.

But members of the skating and local business community did a fair share of talking as well.

The small, usually sparse public section of City Hall’s council chambers housed an overflow crowd of more than 25 — more chairs had to be moved into the room to seat everyone. Some still stood. Many applauded after the vote was taken.

Near the beginning of the meeting, Wilkinson made reference to a remark Lindley made at the committee’s meeting last week, that constituents who contacted him were “probably nine to one against” the 100 percent, 20-year TIF proposal.

“We thought that you were looking for a reality check,” Wilkinson said. “Nine to one — we didn’t think that was accurate.”

Priscilla Millier of Winthrop, a founder of the Skating Club of Maine, broke into tears when describing the impact the arena had on her son, John, who became a nationally recognized ice dancer.

“This has been a labor of love,” she said. “I’m so proud of this rink and this crew.”

Peter Thompson, president of the Kennebec Valley Chamber of Commerce, spoke briefly and delivered a letter to the committee.

“The arena has helped stimulate business throughout the area to the point that now some businesses are expressing concern about the loss of (arena) related sales,” the letter reads.

Andy Couture, the owner of Sparetime Recreation, which operates a bowling alley and restaurant adjacent to Prescott’s ice arena which collapsed under a heavy load of snow in March, said the arena’s collapse has led to a devastating loss of business — perhaps as high as 20 percent.

“It’s vitally important to me that the ice arena stay where it was,” he said. “Not everybody wants to bowl and not everybody wants to skate. If you offer those services, you bring more people to the area.”

Couture said not accepting the TIF proposal would “send a message to the greater business community that Hallowell may not be a good place to locate.”

Hockey official and official evaluator Sheldon Tozer, of Winthrop, said professional referees have been developed through training at the Kennebec Ice Arena. Without it, he said, more may not have the chance.

“The rink has always given us ice time. The rink has always given us classroom time,” he said. “We need to get it back.”

Wilkinson provided the committee with outlining of other Maine ice arenas’ tax status, finding the majority, unlike Prescott’s, were tax-exempt because they are publicly owned, run as a charity or by a school.

Another document, a financial pro forma, projected the real estate taxes on the new property, thought to be valued at $4 million, to incrementally rise from $65,000 in 2012 to $71,800 in 2022.

The document also projected the arena would operate at a loss for the conceivable future. It said only in 2018 will expenses be less than revenues, but even then, interest, capital expenditures, depreciation and debt payment would have Prescott in the red through 2022 and beyond.

According to Wilkinson, Prescott could file as a nonprofit organization and gain tax-exempt status. If he did, the city “wouldn’t just lose $65,000,” Wilkinson said.

“You don’t get anything forever,” he said.

If the 100 percent TIF were granted, Prescott would not have to pay taxes on the value between the property’s assessed value, $287,900, and the new property’s value, estimated to be around $4.3 million.

In essence, the city’s valuation would let the assessed value of the property, no matter what improvements are made, stay at $287,900 for the TIF’s duration. Prescott would pay property taxes based on that value.

Though the city doesn’t collect as much tax revenue, it benefits. Money sheltered in a TIF doesn’t count toward a municipality’s overall property tax value during the TIF’s life. That lower taxable value means state revenue sharing, which affects school budgets, is not adversely impacted.

Ben Sturtevant, a former sports editor at the Kennebec Journal and the Morning Sentinel who lives in Hallowell, called the arena “a treasure.”

“In the long run, we may get money from this deal,” he said. “I think it’s something we should do.”

At last week’s meeting, a memo from City Manager Michael Starn said Hallowell should expect to lose $36,720 annually in revenue as a result of the TIF.

Last week, it was revealed that Prescott would be the only borrower on a $2 million bank loan to fund the arena’s rebuilding. He said a bank has told him they would loan him the money if a TIF agreement with Hallowell could be reached.

“They questioned who was going to back this, because it’s risky,” Prescott said. “I know for a fact that even if we get what we ask, we’re going to have a hard time building it.”

Last week, the committee was hesitant to give out the 20-year TIF. Given the concession, the attitude was more optimistic Wednesday.

“20 years seems like an awful long time to give a tax break to a private entity,” Lindley said after the meeting. “He’s privately funding a city recreational facility and public-private partnerships usually work the best.”

“I think it’s like we’re at a crossroads and I think we need to send a strong message to the council that this is more than an economic development proposal,” committee member Joel Davis said.

“Thirty-eight years ago, Peter Prescott had a vision,” Davis said, referring to when the ice arena was originally built. “Luckily for us, it’s a recurring vision.”

Hallowell’s City Council is expected to vote on the preliminary application Monday. Three councilors, Lindley and Edmund Cervone, are on the TIF Review Committee. Councilor Steven Vellani was absent from Wednesday’s meeting.

“The council’s going to be a heck of a battle, but if they listen to the people, there won’t be a problem,” Prescott said after the meeting. “You know. You heard the people.”

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