By Zack Anchors
Staff Writer
    The South Portland City Council is considering the creation of three proposed tax increment financing districts (TIFs) that would allow property taxes otherwise destined for Augusta to be directed towards a wide range of projects throughout South Portland. The creation of a Maine Mall TIF, a Rigby Railyard TIF and a Knightville-Mill Creek TIF would be the crux of an ambitious economic development program intended to eventually result in the creation of an economic development committee and the funding of numerous projects designed to address ongoing challenges facing the city.
    Although tax increment financing districts are not new to South Portland, city officials say the three currently being proposed are TIFs of a different breed. Over the last 13 years the city has created seven of the special districts, most of which were designed as incentives to lure large companies like National Semiconductor or Durastone to build facilities in the city. A development that occurs within that style of TIF can then have its property taxes partially reimbursed or applied to projects that directly benefit the development–an approach that some say gives such developments unfair advantages. The three proposed TIFs that the City Council will consider at their Feb. 5 meeting have an important difference: instead of directing funds back to the developer, the revenues generated by the TIFs will be directed to the city, providing funds for projects that could include anything from hiring an economic developer to building new sidewalks and bus stops.
    The proposed TIFs were presented to the council in a report compiled by the 8-member TIF committee, a group that was formed to study how TIFs could be used as an economic development tool for the city. The project was initially limited in scope to the Knightville-Mill Creek area, with a focus on finding funds for projects that would enhance the downtown-like environment of the neighborhood. But after concerns were raised that it would be unfair for funds generated from a proposed TIF in the west end of the city to be directed to the East end, the project was expanded.
    “It’s striking to me that what began as a downtown development project has turned into a city-wide development project,” said Chuck Lawton, a consultant from Planning Decisions who is working with the committee. Lawton and Planning Director Tex Haeuser presented the committee’s findings to the council at their Jan. 21 meeting and answered councilor’s questions. Although councilors voiced unanimous support for the proposed TIFs, some were concerned that the public might have a negative impression of TIFs and that residents of the West End might feel the project would not benefit them.
    In a position paper City Manager Ted Jankowski summarized how the TIF would generate revenues:
    “Unlike previous TIFs created in South Portland, the proposed TIFs are not primarily intended to rebate taxes to individual businesses but instead are designed to shelter valuation increases from reductions in State payments to the City and from increases in the County tax; and, to use the sheltered funds for municipal projects, many of which are already programmed, that contribute to the economic advancement of South Portland.”
    To help councilors understand how the new TIFs would work Lawton offered a typical scenario as an example. The scenario begins with the city outlining a certain geographic area—the Rigby Railyard area--as targeted for economic development. A developer then approaches the city with an interest in building a development in the area—in Lawton’s example, “Mr. Jones” wants to build a biomedical factory. If the city decides the factory is worthy of a TIF, the city would then apply to the state to create a TIF district that would surround the factory.
    One type of TIF—the credit enhancement TIF—would allow Mr. Jones to receive back a portion of the property taxes he pays, which serves as an incentive for him to bring his development to the city. Another type of TIF would require that the tax revenues be used to reimburse Mr. Jones for improvements he made to the TIF district—the installation of new traffic lights or a new sewer line, for example.
    The version of the TIF that the city is currently considering is a third type. This TIF would allow the city to receive a portion of the property taxes generated by Mr. Jones factory and to use the funds with a fairly broad mandate—although there are restrictions. The funds generated by the TIF could be used for such measures as hiring a waterfront market director, Lawton said, or undertaking historic preservation projects.
    The TIF Committee’s report included ideas for specific projects areas that funds from each proposed TIF could be directed to. Many of the projects are expected to be undertaken in the future regardless of the TIFs, or are already in the works. The committee identified four broad challenges facing South Portland that the TIF funds could be used to address: the growing share of residential property comprising the city’s tax base, the need for improvements to the city’s transportation infrastructure, the desire to vitalize the city’s downtown areas and other areas of potential growth, and the impact of the Maine Mall on the city as a whole.
    Lawton said that transportation issues clearly made up the largest challenge facing the city, and he pointed out that about 15 percent of the city’s land base consists of roads, compared with around five percent in neighboring communities like Portland and Westbrook.  The report calls for using TIF revenues to “redesign and rebuild transportation infrastructure.”
    Lawton described the Maine Mall area as a mixed blessing for the city. Although the commercial area only makes up 17 percent of the land base, it provides 25 percent of the tax base. But it also contributes greatly to “traffic congestion, water runoff, noise and competitive impact on the traditional downtown,” according to the report.  To deal with those issues the report calls for creating a “Maine Mall Improvement District.”
    Another aim of creating the TIFs is to mitigate the “Robinhood effect”—the manner in which most of the revenues generated within the city are ultimately directed to the state, often to be used for projects in other regions. City Manager Ted Jankowski joked that the Rigby Railyard TIF should be renamed the “Sherwood Forest TIF,” but also explained that the TIFs would serve to lessen the city’s dependence on revenues from its residential tax base, which as a share of total taxable property has increased from 34 percent to 50 percent since 2001.      Lawton said another component of the overall economic development project involved attracting biomedical research to the city, promoting a creative economy and forging links between the city’s semiconductor industry and other commercial enterprises in the area.
    The report recommends that an economic development committee eventually be established that would be responsible for managing the funds generated by the TIFs. The possibility of hiring an economic developer for the city was also discussed, though was not directly recommended in the report.
    The council will hold a first reading and public hearing of the TIF proposals at their Feb. 5 meeting. If the plan is adopted the TIF committee will then draft TIF applications to be submitted to the state and bring them to the City Council for approval in either February or March.