The Scarborough Town Council held a public hearing considering amendments related to Tax Increment Financing (TIF) and Credit Enhancement Agreements (CEA) as part of a broader effort to facilitate new developments in the area, including the expansion of a school site.
TIF, a financial tool widely used by municipalities, enables the leveraging of property taxes from new development within a specified district to fund designated projects. Under this plan, a portion of the new taxes generated in the area can be allocated to finance projects for up to 30 years. It is worth noting that all assessed real property values within a TIF District are added to the general tax rolls at the conclusion of the TIF term.
Jon Anderson, Town Council chair, said “Both of these items are seller requirements as part of the option agreement to purchase the land for the school site.” Anderson emphasized the town’s intention to derive financial benefits from TIFs while enhancing economic development and the quality of life for its residents. These benefits, Anderson said, encompass both short-term and long-term advantages.
Under consideration by the council is a third amendment to the Scarborough Downtown Omnibus Municipal Development and Tax Increment Financing District and Development Program. The first reading for this order is scheduled for Wednesday, Oct. 18. Addressing an amendment to the Credit Enhancement Agreement between the Town of Scarborough and Crossroads Holdings LLC is also being considered, with the first reading also slated for Oct. 18.
The TIF boundary expansion to include Crossroads-owned land, where a school site is planned, is a crucial aspect, Anderson said. Currently, the TIF includes sections of Oak Hill and the Downs, but the proposed expansion would add 35 acres of contiguous land owned by Crossroads. “The benefit of the TIF change will essentially expand our ability to shield new revenue from county taxation and increase the likelihood of a more favorable state reimbursement than if we excluded it from TIF,” he said.
Discussions with the Department of Economic and Community Development (DECD) at the state level are ongoing to determine if a school building could be eligible for TIF revenues, which could potentially reduce future tax impacts, Anderson said.
The other amendment involves incorporating the 35 acres into the Credit Enhancement Agreement with the Downs. This arrangement means that for any new tax revenue generated from these acres, the Downs will be eligible to receive 40% back, provided they meet the performance requirements stipulated in the agreement.
However, this will only apply to the new value on the 23 acres separate from the school, as the school itself is tax-exempt.
These amendments are separate from a zoning action being considered to change the 35 acres from VR4 to CPD zoning. This change aims to create zoning consistency, particularly as the school will be situated on two differently zoned parcels. Adjustments to buffering within the CPD zoning are also being made to accommodate the planned school site.
“Personally, and not the position of the council, I support all of these changes,”Anderson said. “The rezoning and TIF of the Crossroads owned parcel will make us better off in the long run financially, than if it stayed the same, even with paying the CEA. These changes were initially discussed during negotiations with the Downs and are seen as beneficial to Scarborough taxpayers, he said, allowing for lower-cost service options and addressing the need for a consolidated school in the community.
One concern, Anderson said, particularly related to zoning changes, is the potential for increased growth due to differing residential density requirements. However, he said, it also opens up opportunities for commercial development, which aligns with expressed interests from the Downs in a mix of commercial and residential properties. Notably, this excludes large industrial buildings, which are currently limited to the Innovation District.
For more detailed information on TIF districts and related developments, interested parties can visit the Town of Scarborough website at: https://www.scarboroughmaine.org/stay-connected/municipal-projects/tif-districts.
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