HALLOWELL — City officials have asked the state Department of Economic and Community Development to correct an error to the city’s downtown tax-increment financing district that reportedly had no effect on the amount of money captured and sheltered by the city.

The error came to light in April 2019 after City Councilor Maureen Aucoin, a former assessor’s agent and interim city manager for the city, discussed it at a meeting of the City Council. She asserted 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 — were not assessed correctly.

By her estimate, which she said she came up with after meeting with the city’s current Assessor’s Agent Rob 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 reported in May 2019 that Duplisea said in a memo the original downtown TIF document was “in error” because it declared the original assessed value of property in the district was $30,497,600, but “a correct calculation” was $41,097,700. He said the error was not discovered and was signed off on by the city’s Board of Assessors prior to his arrival as the city’s assessor’s agent. He recommended correcting the error immediately.

Duplisea noted then that the error in original assessed value (OAV) did not affect the value captured by the city, as it was calculated using increases in property value.

“All the calculations were based solely on amounts of increase, and the starting point, no matter what is (or) should have been, did not alter the calculations,” he said at that time.

Earlier this month, during a meeting of the Finance Committee, committee members and City Manager Nate Rudy discussed a draft letter to the DECD that was dated June 9. That letter asks the DECD to “correct a (scrivener’s) error in the Original Assessed Value of the taxable property in the TIF district that we have used in to report our TIF District values.”

The letter also states that Duplisea discovered the error that was “… reported to DECD going back to the beginning of the program in 2014.”

The draft letter said “the reported OAV was $30,497,600 and the correct OAV is $41,200,700,” higher than the number suggested in May. The draft letter said the error was “from an incorrect transcription of the value from a spreadsheet created at that time.”

Rudy’s draft letter also mentioned Duplisea’s method of capturing value based on increases in property value and called assertions that the city was not capturing the maximum value of the TIF district, “erroneous” and “exacerbated by press coverage.”

Aucoin asked for the part of the letter that mentioned assertions the city wasn’t capturing the full value of the TIF and press coverage to be stricken from the letter, stating that she considered it “inaccurate,” and the letter should not contain interpretations of press coverage.

“I would cross out that entire line, because I think it’s inaccurate,” she said. “I don’t think we were capturing the full value.”

Aucoin did not comment specifically on why she believed the city was not capturing the full value of the TIF district, but expressed confidence in the city’s TIF procedures going forward.

“I think we are on track to move forward with accurate TIF numbers for the upcoming budget,” she said.

Rudy defended the line in the draft letter, stating that assertions have been made that “the city has lost hundreds of thousands of dollars in value” and he believes that’s “incorrect.”

“There are Hallowell citizens that believe we left hundreds of thousands of dollars on the table,” he said. “I want people to feel comfort in knowing that we didn’t lose that.”

City Council Kate Dufour agreed with Aucoin, stating that the city didn’t need to “bring the politics into the letter” to the DECD. She said whatever “public relations fix” with citizens should come from the city. Rudy then said he would make the suggested edits before the letter was sent.

Rudy said later in the meeting that he was moving forward with procedures to add the Hubbard Free Library to the downtown TIF district. He said that process would likely be more involved than the amendment of the original assessed value.

According to a spreadsheet provided to the Kennebec Journal by Rudy earlier this month, the city collected $789,504 from fiscal year 2017 to fiscal year 2020 in the downtown TIF district. Using the amended OAV, the city would have collected $804,515, a difference of $15,011. He said this spreadsheet shows that the assertion that the city did not shelter “hundreds of thousands of dollars” is not accurate.

“What I think is important is for folks to understand confidently that we were pretty close,” he said. “The assessor’s agent used sound practices and we’re glad that we found the correction and we’re going to submit the correction to DECD.”

Rudy said, if the amended original assessed value was used, the property tax rate could have increased over time.

He explained that all property tax money collected is placed in a general fund, which is used to cover all expenditures for the city. Funds from TIF districts — taxes collected the difference of current property values and original property values — are moved from the general fund to a separate TIF account, which is counted as an expense to the general funds, while taxes from the original valuation of the property remain in the general fund.

TIF funds are then used for qualifying projects, and moved back into the general fund for such projects.

“In the case where a community wanted to reduce the mill rate, one thing they could choose to do is use less than 100% of the (maximum captured assessed value), and thus shelter less money in the TIF fund to keep more money in the general fund for regular expenses,” he said.

Andrea Smith, DECD’s director of tax incentive programs, said Monday her department has been working with Hallowell officials to address this matter since last year.

“The community also confirmed, to DECD, that the footprint of the district is correct and the community has been capturing the proper amount each year,” she said. “Because the footprint and the capture are correct, an amendment to the TIF was not required.”

DECD spokesperson Kate Foye said the letter is all Hallowell officials needed to supply for the correction to be made.

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