AUGUSTA — Residents will be asked Nov. 3 to allow the city to borrow nearly $1.7 million for street and sidewalk improvements, money officials say will be paid back not with residents’ taxes, but with taxes to be paid on natural gas infrastructure.

The proposed 10-year bonds, if approved by voters in a referendum question, would be repaid from proceeds to be collected in taxes from natural gas pipelines and other taxable gas infrastructure installed in Augusta in recent years by Maine Natural Gas and Summit Natural Gas of Maine. The money has been deposited in a tax increment financing account.

“It won’t raise taxes, so it’s a win-win,” Mayor David Rollins said of the proposed bond referendum. “We get new roads, and no new taxes.”

Ralph St. Pierre, finance director and assistant city manager, said the city set up the special tax account to collect the proceeds from taxes on natural gas infrastructure a few years ago as the new fuel arrived in Augusta.

While sometimes tax districts are used to return property taxes to private developers to help bring economic development to a municipality, the districts also can be set up to return all the tax proceeds to the city, not the developer.

New property value sheltered in a tax increment financing agreement doesn’t count toward a municipality’s total property tax value used by the state. That benefits the municipality, because when a municipality’s property value increases, its amount of state aid for schools and other state revenue drops, and its share of county taxes increases.

By sheltering that money, the municipality can use it for specific projects allowed by state rules without its valuation increasing and without its share of state aid decreasing correspondingly.

St. Pierre said the gas accounts were set up, and approved by city councilors, with the intent of collecting money to pay for street improvements throughout the city.

“The gas TIF funds go, 100 percent, toward municipal projects,” he said. “No money went back to Summit or Maine Natural. It all goes to the city.”

Rollins urged voter support for the referendum question, noting the city has deferred some paving projects and allowed some streets to deteriorate because it just didn’t have money in the budget to do them.

“This is a great opportunity to catch up on the deferred street maintenance,” he said. “For many years we’ve only been able to do a minimal amount of work on streets. We’ve got a stretch of years coming up here where we’ll be able to take care of some stuff that got away from us before, because now we’ve got a revenue source.”

St. Pierre said major street work to be funded by the bonds is planned on Patterson Street, Leighton Road, Commercial Street downtown, Cross Hill Road, and Cony Street Extension between Haskell Street and Cony Road.

Maintenance paving also will take place on other city streets and sidewalks.

If figured at an interest rate of 2.75 percent, interest on the $1.67 million in proposed bonding would come to an estimated $253,000. That would increase the total debt taken on to about $1.93 million.

Polls will be open from 7 a.m. to 8 p.m. Nov. 3 in Augusta. The voting site in Ward 1 is the Augusta State Armory, on Western Avenue; Ward 2, Augusta City Center, on Cony Street; Ward 3, Augusta Civic Center, on Community Drive; and Ward 4, Cony High School on Pierce Drive.

Keith Edwards — 621-5647

[email protected]

Twitter: @kedwardskj

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