HALLOWELL — In the wake of a reported error affecting the downtown tax-increment financing district, Liberal Cup owner Geoff Houghton said he sees the benefit of the program that shelters property taxes for downtown development — even though it isn’t always obvious where it is going.
“I don’t know what it’s been spent on,” he said, declining to speak specifically on TIF errors downtown. “I think they should promote that.”
Houghton said last week he would like to see more communication from city officials about where the TIF funds have been spent downtown because the TIF program is too “dense” for citizens and business owners to navigate without explanation.
TIF agreements allow municipalities to forgo increases in property taxes generated by new development within certain districts, as long those taxes are used for specific things. Though the municipality loses property tax revenue, money sheltered through a TIF agreement doesn’t count toward a municipality’s overall valuation. A lower valuation, generally, means more money from state revenue sharing. TIFs can also come with credit enhancements to put property tax money back in the developers’ pocket to help improve the property.
Money sheltered within the Downtown TIF — which is comprised of Stevens Commons, a stretch of Second Street south to Litchfield Road and north to Lincoln Street, the entirety of Water Street and the path of the Maine Central Railroad — can be used for a number of projects. There is no credit enhancement for downtown property owners in the Downtown TIF district.
A table prepared by city staff in February shows total expenditures of $240,229.81 in TIF funds in the downtown TIF district since fiscal year 2013, while bringing in $831,772 in revenue from the city’s three TIFs. The city has paid out $80,448.11 in credit enhancements to Woodlands Senior Living and $255,858.49 to the Kennebec Ice Arena, according to the table.
As of February, $76,560.10 has been spent on roads, sidewalks and stormwater, $35,735.43 has been spent on infrastructural improvements at Stevens Commons, $35,171.96 has been spent on renovating and maintaining “Arts District Facilities,” $20,937.68 has been spent on renovating the Second Street Fire Station, $20,142.96 has been spent on professional costs for the district, $14,623.68 has been spent on parking, $14,623.66 has been spent acquiring of lots and buildings, $10,814.14 has been spent on promoting and marketing the city, $4,689.68 has been spent on organizational costs, $4,000 has been spent on Kennebec River Rail Trail enhancements, $1,291.70 has been spent on economic development membership dues and $641.20 has been spent on “streetscape improvements.”
Other projects that have not received any funding through the TIF include street lighting, public restrooms, improvements to business gateways and downtown Wi-Fi.
Earlier this month, City Councilor Maureen Aucoin, a member of the Finance Committee as well as a former assessor’s agent and Hallowell’s former interim city manager, asserted that property in one TIF district and portions of the Downtown TIF district — one for the Woodlands Senior Living of Hallowell, a portion of the Summit Natural Gas pipeline and two properties on Winthrop Street — was not assessed correctly.
The Kennebec Journal incorrectly reported in previous articles there was a separate TIF district for the Summit Natural Gas pipelines. That does not change Aucoin’s assertion that the Summit pipeline, and two other properties on Winthrop Street, were not assessed correctly in 2019.
“It is assessed as a piece of real estate within the Downtown TIF,” she said, adding later that about 35 percent of the pipeline is within the TIF district. “Since it is also located outside the (downtown) district area, only a portion … gets captured.”
A scheduled discussion about the TIF error at a City Council Finance Committee meeting was postponed on Monday, April 22, when Nate Rudy, Hallowell city manager, was unable to attend. He said the Finance Committee will meet May 20, May 30 and June 3 to discuss the error.
“I’m discovering vital information that I was not aware until only recently and I’m doing my best to get corroborated facts and professional opinions on how to resolve these issues in the best interest of the city,” Rudy said. “It takes time to get accurate information and verify it.”
Rudy said last week some of the pipeline “probably … should be captured” in the downtown district, but could not confirm Aucoin’s numbers until the assessor spoke on them. Rudy said the parcel number for the pipeline was not included in the Downtown TIF’s documentation, so city staff, including assessor Rob Duplisea were not aware that any portion of the pipeline should be sheltered as part of the district.
“They’re probably accurate,” Rudy said of Aucoin’s estimates. “She may have all of this information but (the assessor’s agent and I) never got it.”
Duplisea did not respond to repeated phone calls and emails during the past two weeks to clarify the concerns Aucoin raised about the city’s TIF agreements.
The city’s downtown TIF was approved by the state in June 2014, but the documents used city valuations that were current in March 2014 based on April 1, 2013 assessments. The pipeline was still under construction in November 2013 and Aucoin said it was first assessed on April 1, 2014.
By Aucoin’s estimate, which she said she came up with through a meeting with Duplisea, a total of $208,765 in property and personal property taxes was put into the city’s general fund in fiscal years 2017, 2018 and 2019, based on $10.7 million in cumulative captured property value. That tax money should have been sheltered for downtown projects, but instead was placed in the general fund; the Kennebec Journal found $78,952 — or 37.8 percent — of the $208,765 was used for city expenditures, while $119,826 — 57.4 percent — went to school district funding and $9,987 — 4.8 percent — went to Kennebec County administration.
Aucoin said Monday she did not check to see if the downtown portion of the pipeline or two properties on Winthrop Street were assessed properly in 2017 or 2018.
The implications of the error could have a longer-term effect, because the city’s total tax valuation and property value assessment are used in formulas to determine state revenue sharing and school subsidies, but State officials have declined to meet with the Kennebec Journal to discuss these implications.
The Finance Committee and the city’s TIF Policy Committee will meet at 8 a.m. Wednesday, according to the city’s online schedule, but Finance Committee chair George Lapointe said Thursday that meeting would only include discussion about the city’s policy and not the error. In March, the city approved $2,500 in funding to hire Augusta consultant Raegan LaRochelle to rewrite TIF policy.
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