FARMINGTON — Proposed changes to Franklin County’s tax increment financing agreement with TransCanada Maine Wind Development would increase the county’s property tax rate by one cent per $1,000 worth of assessed property beginning in 2019, when a shift in the percentage of how much tax money from the company’s Kibby Mountain wind turbine project is captured in the TIF occurs.
However, a consultant helping the county government negotiate the terms of the TIF with TransCanada told a handful of residents at an informational meeting Tuesday night that the benefits of the proposed amendments far outweigh the slight increase in the tax rate: The agreement would mean approximately $12.4 million in additional money over the term of the TIF, which can be used towards a number of economic development programs.
“It’s the opportunity to manage that money locally,” John Cleveland, a community dynamics consultant for Franklin County said. “If you can use that (money) to offset negative economic activity, that will in the long term keep more people here.”
The agreement was established in 2008, when the county approved a TIF district on Kibby Mountain and Kibby Ridge, in the northern part of the county near the Canada border, where TransCanada developed a 44-turbine wind farm.
The TIF district lets the county shelter the wind farm’s property tax revenue from state valuation and use it for several categories of county development projects. The TIF agreement also turns back to TransCanada a percentage of the taxes it pays.
By the end of this year, the county is expected to have received $3.9 million in revenue since the establishment of the TIF. The current agreement includes a $4 million cap in revenue the county can generate, so the TIF has to be amended in order for the county to reap any more benefit. The proposed amended agreement does not include a revenue cap.
The proposed amendment would extend the TIF by 10 years, expiring in 2038, and would increase the percentage of tax revenue captured from 75 percent to 100 percent.
Under the current terms of the agreement, 75 percent of tax revenue from the Kibby wind farm is captured. Of that 75 percent, 40 percent is kept by the county and 60 percent is reimbursed to TransCanada.
The terms of the agreement under which the tax money is turned back to the company would stay the same and would still be set to expire in 2028. With the TIF continuing for an additional 10 years past the credit enhancement agreement’s expiration at a revenue capture rate of 100 percent, the county would receive the maximum benefit from the TIF.
A one cent increase in the county’s tax rate would occur because the TIF would shield an additional 25 percent of the project’s value from state valuation, therefore taking that percentage of value out of the tax base and driving down the county’s valuation slightly and having the opposite effect on the tax rate.
If no changes are made to the TIF, the tax rate would go down about 2 cents, to $1.15 per $1,000 of assessed property, because under the present terms, beginning in 2009, the amount of revenue captured in the TIF goes down to 50 percent for the last 10 years with the remaining 50 percent going to the State of Maine Unorganized Territory account.
Bob Gilmore, a Freeman Township resident, said the tax increase was a concern.
“I think about the elderly folks in the county who are struggling with tax bills already,” Gilmore said.
Cleveland stressed that the one cent increase is based on the county continuing to operate at its current budget, with the same county assessment. Even if the county does not accept the terms of the amended TIF, there is no guarantee that the tax rate wouldn’t go up for other reasons.
On top of the additional revenue the county would receive under the proposed amended TIF, TransCanada has agreed to establish a new Economic Enhancement Agreement. Under this new agreement, the county would get an additional $3 million over 12 years through voluntary payments made by TransCanada. The money can be used for economic development throughout the county.
Additional amendments are proposed for the TIF’s existing development program, which outlines for the county what specific unorganized territory development programs and projects the TIF money can be used for.
Cleveland said under state TIF regulations, there is a broad category of what the money can be used for. However, if a TIF does not have a program or project category listed in the agreement, the county cannot use it for that purpose.
New proposed amendments to the development program include being able to use TIF funding for telecommunications infrastructure for the unorganized territory, such as cellphone towers and high-speed internet; a portion of county staff salaries and professional services; media and advertising costs for tourism and marketing; environmental improvements; recreational trails; as well as public safety costs.
The proposed amendments also include the establishment of a revolving loan fund that will stay in place even after the TIF agreement expires. The fund would be used to dispense grants or loans to businesses that are looking to move to, or expand within, the unorganized territory. As the loans are repaid, the money would be put back into the fund to ensure it can be used for future loans once the TIF expires.
“This is an opportunity to take hold of your future,” Cleveland said.
A second meeting will be held Sept. 7 at the Carrabassett Valley Library, also at 5:30 p.m. After an Oct. 4 public hearing, which will be held at the Franklin County Superior Courthouse, county commissioners will vote on the proposed changes. If commissioners approve the amendments, the changes will go before the Maine Department of Economic and Community Development, which has final approval over county TIF agreements.
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