Skowhegan selectmen approve Spinning Mill TIF proposal, sending it to town meeting

SKOWHEGAN — The Skowhegan Board of Selectmen has approved a tax increment financing proposal for the redevelopment of the downtown Spinning Mill, a key step to getting the project back on track after it suffered extensive flood damage.

The proposal, approved Tuesday, next goes to voters at the town meeting planned for June.

A TIF designates an area where a municipality will capture increases in property taxes as a result of commercial investment. The municipality commits to using the increase in tax proceeds over an original assessed value to fund specific projects related to economic development, which are identified by town officials.

The municipality not only benefits from those set-aside funds to complete projects, but also because the additional value generated by the project is sheltered from the negative impacts of a growing tax base. That means state aid for education and revenue sharing will not be decreased by rising property values, and the county assessment will not increase based on the commercial investment.

On the developer’s side, TIFs are beneficial when they include a credit enhancement agreement in which the town passes along all or a portion of the taxes generated in the TIF district to the developer.

In the case of the Spinning Mill TIF proposal, 90% of the tax increment financing will go back to the development for 15 years as a credit, with the other 10% going toward the town’s TIF fund, according to Jeff Hewett, the town’s director of economic and community development.

Then, for the next five years, the Spinning Mill project will get back a 45% credit.

For the remaining 10 years of the 30-year TIF, the town will receive all of the financing, with no credit for the Spinning Mill.

At Tuesday’s Board of Selectmen meeting, Hewett said it is hard to predict the increase in assessed value because it depends on various factors. He said about $15 million to $17 million is expected to be invested into the building, which was most recently assessed at about $500,000.

Town officials expect to use the proceeds for several projects in the area that it would otherwise pay for through general taxation. The list has yet to be finalized, Hewett said.

“There’s a lot of things on the island that we’re hoping to do improvements to that we have to do by the general taxation anyway,” Hewett said. “This will just try to give us another funding source so that we don’t have to take it out of general taxation to do those things.”

For the developer, Bangor-based High Tide Capital LLC, principal Dash Davidson said in January a TIF would be the “last piece of the puzzle” in getting the development going again after it sustained more than $3.5 million in flood damage.

While High Tide Capital is working to cobble together a mix of public-private financing, some of which has already come from loans from Skowhegan and Somerset County, a TIF agreement would allow the developer to show it will have sufficient cash flow in the future to service the debt it now needs to take on, Davidson said in January.

“It’s a win-win for both sides to get it done,” Hewett said Tuesday.

Plans for the project at 7 Island Ave. include commercial space, a hotel and workforce and higher-end housing. Davidson and some town officials have said that the development will be a centerpiece of Skowhegan’s ongoing economic revitalization.

But construction at the 80,000-square-foot building, which formerly housed Solon Manufacturing and Maine Spinning Co., largely stopped in January.

The Dec. 18 storm caused the Kennebec River to rise to historic levels, flooding the building and causing millions of dollars in damage. The destruction drew the attention of Gov. Janet Mills, who visited the site.

Insurance will cover some of the costs to get back on track, Davidson said, but High Tide Capital needed about $1 million to bridge the gap, according to his assessment.

Along with voter approval at the town meeting scheduled for June 10, the TIF proposal need be OK’d by the state Department of Economic and Community Development.