A new special tax district approved for Route 100 in Falmouth is projected to bring in about $21.5 million in revenue for the town over the 30-year life of the agreement and help keep property taxes down.

The tax increment financing district will encompass about 45 acres and include Homestead Farms, a development with 68 condos; Meadow Wind, with 10 duplexes; Harmon’s Lunch restaurant; two office buildings; a residential property that’s being turned into commercial space; and vacant commercial property.

The council unanimously approved the measure March 15. The district goes into effect July 1.

This type of tax agreement with a developer allows municipalities to keep all or part of the property taxes paid from property within the district. In turn, that tax revenue can be used to invest in or maintain infrastructure such as sewer, road work and sidewalks and pay off bonds as part of those projects. The revenue cannot be used for for schools, libraries or general town government expenses.

The plan is for the new district to replace revenues the town will lose when the West Falmouth Crossing tax district expires in fiscal year 2029 and the Route 1 North and South tax districts expire in FY30. More than half of the money generated from the new district would be used to fund road improvements, according to Town Manager Nathan Poore. About 30% will be about evenly split between bicycle and pedestrian improvements and environmental protection.

The projected revenue from the new development without a tax district would be $8.8 million, based on a 2021 study by Camoin Associates, an economic development firm the town hired last year.

“We wouldn’t necessarily have major expenditures for each of those 30 years, so we could put the money in the bank and use it for when the town needs it most,” Falmouth’s Director of Long-Range Planning Theo Holtwijk said. “It would also help us to relieve the general fund to help make stormwater improvements or make road repair improvements … it would help relieve any impacts on the tax rate.”

Any increase in the town’s real estate valuation over the life of the tax agreement will not count toward revenue sharing and school subsidies from the state. Falmouth will receive a larger share of education aid and municipal revenue sharing from Augusta than it otherwise would have and pay less in county tax.

Falmouth resident Lee Hanchett said at the March 15 council meeting that he was concerned that children living in new homes within special tax districts increases school spending, but the property taxes on those homes won’t go to help offset increases in the school budget. That factor should be included in any tax district calculations presented by the town, he said.

John Winslow called the district “an unnecessary gamble with our tax dollars” and said “solid, accurate numbers” and up-to-date property valuations are needed before making a decision. No one at the sparsely attended meeting with less than a dozen residents present spoke in favor of the tax district.

During the meeting, Councilor Jay Trickett said that asking the council to oppose the agreement “is asking us to raise your taxes.”

“We looked at the time that (the existing tax districts expire) and said, wow, it won’t be four or five years after those expire that all of that infrastructure that seems shiny and new is going to start needing maintenance and upkeep. With that, we’re going to need funding,” Poore said.

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