AUGUSTA — A proposal to create a tax increment financing district surrounding a new hotel under construction on Western Avenue could help pay for future renovation of Hartford Fire Station, trails at Mill Park and downtown improvements.

While some TIF districts return some or all of the property taxes paid on new development within them to private developers to help spur economic development or offset project costs, in this case the city would keep 100 percent of the proceeds.

Augusta City Council on Thursday will consider a tax increment financing agreement for the new Homewood Suites hotel at 377 Western Ave. in Augusta. Staff photo by Joe Phelan

The Homewood Suites hotel being built at 377 Western Ave. in Augusta. Staff photo by Joe Phelan

Eventually, city officials plan to use the $4.4 million in property taxes the hotel project is projected to generate over the next 30 years for public infrastructure.

A public hearing and a council vote on the proposal are planned for 7 p.m. Thursday in council chambers at Augusta City Center.

According to Keith Luke, the city’s deputy development director, the consensus of city councilors at a Feb. 25 meeting was to allocate money expected to be generated by the TIF as follows:

• $2.6 million for future renovation of the city’s main fire station, the historic Hartford Fire Station just south of downtown atop Rines HIll;

• $1.2 million for economic development administration, planning and initiatives;

• $232,000 for downtown improvements, including repairs to a city-owned parking garage;

• $225,000 for the creation of a trail system at Mill Park, alongside the Kennebec River.

Officials have noted for some time that the fire station, built in 1920, eventually will need to be renovated and updated, in part because today’s firetrucks are much bigger and heavier than the station was designed to hold. The city’s recently ordered but not-yet-delivered new multi-purpose ladder truck won’t be kept at Hartford, for example, because it won’t fit there.

The proposed TIF district, Luke noted in a memo to William Bridgeo, city manager, “captures 100 percent of the tax increment generated by the new Homewood Suites hotel entirely for the benefit of the city — there is no credit enhancement or financial return to 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 the municipality’s valuation increasing and without its share of state aid decreasing correspondingly.

Over its 30-year lifespan, the Western Avenue hotel TIF would allow the city to avoid a nearly $2.2 million “tax shift:” a $1.7 million in state education funding decrease, a decrease of $213,000 in state revenue, and a $208,000 increase in Kennebec County taxes.

Councilors on Thursday also are scheduled to:

• Honor resident Paul Vachon, athletic director at Cony High School, upon his induction into the state Franco American Hall of Fame;

• Consider authorizing Bridgeo to seek the AARP’s designation of Augusta as an Age-Friendly Community;

• Consider accepting $20,000 in grant money, with no local match required, for speed-limit enforcement from the state Bureau of Highway Safety; and

• Consider selling two parcels of land acquired by the city through nonpayment of taxes — one at 323 Bolton Hill Road, for $5,000; the other, at 455 Church Hill Road, by sealed bid for a minimum of $2,400.

Keith Edwards — 621-5647

kedwards@centralmaine.com

Twitter: @kedwardskj

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