PORTLAND – While tax breaks can spur development in economically depressed areas, there is a risk that benefit can be used as a weapon against a city when the benefit expires.
Auto Europe received a 15-year, $1.2 million tax increment financing deal in 1996 to relocate from Camden to Portland. The money helped the company offset the costs of renovating a historic building at the corner of Commercial and Franklin streets.
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But the agreement expired in 2011, and the loss of the tax break is preventing the company from hiring new employees, according to Imad Khalidi, chief executive officer and part owner of Auto Europe, a call center for overseas car rentals.
“I love Portland. I love my building. It’s a great view,” Khalidi said. “But I don’t pay my employees with a view, I pay them with money.”
Khalidi said if the city doesn’t extend the TIF agreement, or help offset the $180,000 a year in parking expenses, he will move the company — along with its 240 employees — out of the city.
So far, the city has been unwilling to extend the TIF agreement, or provide financial assistance for parking, said Khalidi, who is looking to move to Biddeford, where he could receive a tax break and base the company in a former mill that has ample parking.
“I am frustrated,” Khalidi said. “The state of Maine does nothing for us. The city of Portland does nothing for us. I’ve got two choices: Either leave the state of Maine and go to New Hampshire, or move from Portland to Biddeford. Biddeford is a great city. Great city.”
Greg Mitchell, the city’s economic development director, would not discuss details of Auto Europe’s request.
“We work aggressively on business retention and expansion,” he said. “I pride myself on … trying to meet their needs as completely as we can.”
Mitchell said the TIF worked: It improved an economically struggling area and led to the renovation of a historic building.
“The city’s and company’s established goals have been more than achieved,” Mitchell said. “We don’t like to lose any businesses in Portland. But the building itself is available to attract other businesses.”
Absent further assistance from the city, Khalidi said he is prepared to move his company as soon as this winter.
“If the town of Portland sends me to hell, I have to go to hell,” he said.
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