Hallowell holding public hearing next week on controversial extension of ice arena tax breaks

HALLOWELL — The public will have a chance to weigh in during a hearing Monday on a proposed extension of tax breaks for a city ice arena that was rebuilt following a roof collapse nearly 11 years ago.

A 10-year extension for the tax increment financing and credit enhancement agreement for the Camden National Bank Ice Vault, formerly known as the Kennebec Ice Arena, will be the subject of the hearing on Monday at 6 p.m.

Facility owner Peter Prescott originally applied for a 20-year, 100% TIF and credit enhancement proposal after the building’s roof collapsed in 2011. The city ultimately decided to modify the agreement to last 10 years with a renewal option after the deal’s expiration in May 2022.

Prescott argues that owners of the ice arena are dealing with the costs to rebuild the arena a decade ago, made more acute by a lack of business from when the COVID-19 pandemic first hit in 2020.

In a memorandum to the city from Prescott on behalf of the ice arena, he said the total cost of rebuilding the facility was between $5 and $5.5 million. Between $3 and $3.5 million was paid through other sources such as sponsorships and donations, and the remainder was financed through a $2 million loan.

Even with the credit enhancement agreement, he wrote that the payments could not be made through the facility itself, particularly after hardships amid the pandemic. As a result, Prescott paid roughly $2 million out of pocket to cover the debt.

“In summary, the total cost of the construction that was not paid by other sources was roughly $2 million,” the memo read, “a number that is far in excess to the total of (credit enhancement agreement) payments made to date and also in excess of the total of CEA payments that would be made if the city were to approve the proposed expansion.”

Even though the redevelopment is complete, Prescott’s memo argues that the extension fits well beyond the requirement of creating a minimum new taxable value of $500,000, as it is currently assessed at $3,089,500, or $2,835,400 over the base value of the TIF district.

TIF districts allow a municipality to realize all of the newly created value within them by sheltering property taxes generated by new development. Otherwise, the increased value would be shifted into state funding formulas, resulting in decreases in state funding for education and revenue sharing and increased county taxes.

The credit enhancement agreement helps developers by paying back a percentage of that newly generated tax revenue directly to the developer or business to help with project costs.

Hallowell resident Patricia Connors, who last year distributed a flyer to residents urging them to look into the TIF and to persuade the council not to accept the renewal, took issue in particular with the proposed credit enhancement agreement.

Connors, in a letter sent to the council on Jan. 7, wrote that credit enhancement agreements are not inherently part of a TIF or even necessary for the town to benefit from such an arrangement. She also argued that the additional $500,000 requirement has not been met as there will not be any new development occurring.

She suggested during a Jan. 10 council meeting that money from the tax break could be better spent on capital improvements, such as the police and public works departments.

In a letter of support from Kennebec Ice Arena General Manager Bill Boardman, he argued that the facility offers numerous benefits to the city, as it is used for learn-to-skate and figure skating programs, youth hockey, and that the single sheet 200-by-85-foot rink is used to host the Maine Hockey Association State Tournament and the New England Regional Tournament.

And aside from sporting events, Boardman said the facility provides numerous community services, including hosting blood drives for eight straight years, serving as a Good Shepard Food Bank distribution site, serving as a collection site for Bridging the Gap and taking donations for families in need, providing resources and funding to Hall-Dale High School, and offering up the facility’s conference and meeting space for special events, private business meetings, state of Maine meetings, and educational programs related to hockey and skating.

He said that while all ice arenas in the area have not allowed community use since March 2020, the ice vault has opened for community use in accordance with health and safety guidelines.

Connors, in a Wednesday email to city officials, said that while she is in favor of youth sports and believes that the arena does enhance the town, it is not wise to approve 10 more years of tax breaks.

“If Prescott, private owner of the ice arena, cannot operate it at a profit he should sell it to someone who can, not come back for another half-million subsidy,” she wrote.

Projections included in the TIF amendment application for years 11 through 20 show that assuming the city tax rate remains at $21.30 per $1,000 of assessed value, the projected total TIF revenue for each year will be $60,294. The city’s general fund would also receive $5,414 each year from the original assessed value.

Under the revised credit enhancement agreement, $57,374 would go back to the developer for the first six years, and then $51,335, $45,296, $39,256, and $33,217 for the remaining years.

The city TIF fund, on the other hand, would receive $3,020 for the first six years, and $9,059, $15,099, $21,138, and $27,177 during the final four years.

The projected total for the final 10 years is $664,334 in TIF revenue, $573,139 returned to the developer through the credit enhancement agreement, $91,195 added to the city TIF fund, and $59,559 in city general fund dollars from the original assessed value.

The projections assume that the state subsidy and county tax formulas do not change over the course of the next 10 years. The amendment in the council packet noted that, because of these assumptions, “the projections are less likely to be accurate farther into the future.”

The actual totals for the first nine years of the TIF are $392,171 in total TIF revenue, $388,250 in credit enhancement agreement returned to the developer, $3,922 to the city’s TIF fund, and $42,985 in city general fund dollars.

City Manager Gary Lamb, in an email exchange with Connors and councilors, said the council is not required to approve or deny the amendment application on Monday and could vote to postpone the discussion until March.