MONMOUTH — Town officials hope to turn a promised financial windfall into a harvest of new business by creating a business park and sprucing up the downtown.

The Economic Development Committee is proposing to fund the projects through a tax increment financing district derived from a portion of the tax boost created when Central Maine Power completed its South Monmouth Road substation.

The development committee, which is headed by Selectman Timothy McDonald, floated the idea to the full board of selectmen earlier this month. The board is expected to continue that discussion at a meeting scheduled for 6 p.m. tonight at the town office.

“We need to explain the concept before we start talking about the details,” said Town Manager Curtis Lunt.

The CMP substation, completed last year, will add about $22 million to the town’s valuation. That means the town will receive about $293,000 more in property taxes each year, Lunt said.

But the increased property valuation means the town would receive less money from the state through revenue sharing and for education and pay more in county taxes. Lunt said that based on current calculations, the impact would total about $100,000.

The Economic Development Committee’s proposal would shelter about half of the substation’s property value, or $11 million. The maneuver would allow the town to keep about $146,000 in property taxes that would be earmarked for specific projects, like a business park and downtown improvements, while giving business a tax break.

As a tradeoff for creating the tax increment financing, also called a TIF, and limiting how the tax money can be spent, the state would cut in half the valuation increase created by the substation. That means the impact on state revenue sharing and education funding, and the increased county assessment, would only total about $50,000, Lunt said.

“Sheltering (the valuation increase) keeps the money local,” Lunt said. “The TIF protects us from those effects.”

The Economic Development Committee’s proposal includes a $1.25 million loan to purchase land and build a business park. The committee has considered a couple of sites, Lunt said, including one north of the town office on Route 132. Lunt said payments on a 20-year loan, which would last the duration of the TIF agreement, would total about $100,000 annually.

The remainder of the TIF money, about $45,000, would be used for downtown improvements that would hopefully lure additional business, Lunt said.

The Economic Development Committee is still crafting the TIF plan and is seeking input from residents and selectmen as part of that process, Lunt said. The completed draft will be sent to the state’s Department of Economic and Community Development.

Once that department approves the plan it will be presented to residents at public hearings and then for a vote at a special town meeting. Lunt hopes the hearings will take place this by early winter for a vote in early spring. The final plan must be sent to the state by the end of March, Lunt said.

Spending would be limited to projects spelled out in the TIF plan, unless voters separately approve of other projects, Lunt said.

“It has to be spelled out pretty well,” he said.

Craig Crosby — 621-5642
ccrosby@centralmaine.com