SKOWHEGAN — Town officials have rejected a request from a local law firm to use tax increment financing funds to fix a crumbling wall.

The decision underscores an ongoing disagreement in town over how the hundreds of thousands of dollars that the TIF generates each year should be used.

The five-member select board voted 1-2 at its Tuesday night meeting to deny the application from Merrill, Hyde, Fortier & Youney at 95 Water St. to use $13,000 from the town’s downtown TIF fund.

Chair Whitney Cunliffe and Ethan Liberty were opposed; Amber Lambke, who also chairs the town’s Downtown TIF Advisory Committee, voted in favor. Vice Chair Kevin Nelson and Elijah Soll were absent.

“It’s a truly sad day for the Town of Skowhegan,” said John Youney, the president of the law firm, after the board took its vote.

Youney, 71, said his business applied for the $13,000 to address damage to a wall on the east side of its two-story building, adjacent to Key Appliance. 

Storms in late 2024 and early 2025 damaged the wall, and the firm argued for a while with its insurance carrier to try to get it covered, he said. Weather this winter caused further damage, throwing portions of the brick facade onto Key Appliance’s roof, Youney said. 

The firm proposed to match the grant with plans to spend $2,000 this year on repair and maintenance, and it planned to cover any overages on the wall repair.

Youney is concerned that if the wall collapses, so will the building.

“This is an extraordinary situation,” Youney told the board.

Lambke said the project met the criteria outlined in the TIF documents approved by voters and the state, and the advisory committee recommended approval at a meeting Monday.

Cunliffe, who is on the advisory committee but missed the Monday meeting, questioned whether that meeting was sufficiently noticed and said he took the application materials out of the select board’s meeting packet because the item was not listed on the agenda. Lambke said the committee meeting was not an emergency meeting, and members set the Monday meeting at their previous meeting in late March.

Liberty and Cunliffe largely did not question whether Youney’s proposal met the criteria for what the TIF dollars can be used to fund. But they questioned whether giving grants to local businesses from that account is the best use of the funds.

Cunliffe, who has been opposed to other recent TIF grants, said the funds could be better spent on downtown infrastructure, much of which would also fit the spending criteria. As the town catches up on three years of pending audits, officials should be careful with how they use the funds now in case they are needed in an emergency, he said.

He suggested supporting businesses through low-interest loans or 50-50 matching grants to ensure the funds are being well-spent. 

“This is in a period of time where we can’t borrow money if something goes wrong,” Cunliffe said, referencing the backlog of financial audits. “It just isn’t financially prudent to continue this way until we stabilize our finances.”

The funds could be used for town infrastructure projects and other kinds of initiatives, Lambke agreed, but she said town departments and relevant organizations need to approach the advisory committee to have those requests considered. The town has been awarding business grants for the last few years, and several applications are in the works.

“The point of the program is to deploy the recaptured funds within a finite period of time to improve property tax values in the region,” Lambke said. “That is the point of the program. It’s not to hold onto it and save it, like a bank.”

TIFs are an economic development tool that many municipalities use. There are more than 400 TIF districts across Maine, a state database shows.

The terms and conditions of each TIF are unique, but the general concept is the same: It designates an area where a municipality captures increases in property tax revenue as a result of commercial investment over a specific period of time.

The taxes on the original assessed value continue to go into the municipality’s general fund as with any other property. The taxes on the increase in valuation — the tax increment — are set aside for specific projects, which must be outlined when the municipality creates the TIF.

As another possible benefit to the municipality, the increase in valuation of the TIF district is “sheltered” from the state-determined valuations, used to compute a municipality’s share of the school district and county tax assessments as well as state aid for education and revenue sharing. A lower state valuation, for example, generally means the municipality contributes a smaller share of the school and county budgets.

Many TIFs, but not all of them, also include a credit enhancement agreement, in which the town returns a certain percentage of the increased tax revenue to a developer.

Skowhegan has four TIFs, all of which voters have approved at town meetings and received further state approval.

The 30-year Downtown Omnibus TIF was created in 2006, renewed in 2017 and expires in 2036.

Skowhegan’s downtown TIF account has a current balance of about $235,000, with about $158,000 undesignated and available to utilize, Lambke said. March tax payments are estimated to bring in an additional $77,000.

Town Clerk and Treasurer Gail Pelotte told the board that she agrees the town is in a “bad situation” with its financial recordkeeping due to the constant turnover in administration in the last three years. 

But, Pelotte said, the town has dished out larger TIF grants recently to other businesses, so it would not be fair to deny Youney’s request.

“I just think it is a shame that we do not do this for $13,000,” Pelotte said.