1. De-MysTIFying Tax Increment Financing (TIFs) Overview of Tax Increment Financing & a Look at New Expanded TIF Districts, Development Programs, and Properties
Jump Start Presentation to Saco City Council
December 10, 2018
Denise Clavette, Director
Emily Cole-Prescott, Econ. Dev. Specialist
Zach Mosher, City Planner
Planning and Development Department

2. Agenda Understanding What TIFs Can Do Development Programs & Terms
TIF Districts
TIF Strategies & Progress
Recommendations

3. Understanding What TIFs Can Do

4. What is Tax Increment Financing
A great tool to catalyze economic development
Allows municipalities to “shelter” increases in valuation (up to 30 years), avoid losses due to state and county fiscal formulas
TIF revenue: can fund infrastructure enhancements related to / required for project development (public or private) and/or project costs; and
A comprehensive development program can fund many municipal projects to enhance the economic development climate
Development program needs to meet statutory requirements and local process

5. Benefits of TIFs
Assist in achieving economic development goals of comprehensive plan, or other planning / vision plans
Attract new investment (i.e. tax dollars), jobs, improve local economy
Accomplish significant infrastructure projects
Tax shift benefits

6. Tax Shift Benefit
TIFs shelter new assessed value from a municipality’s state valuation
The “state valuation” = equalized total assessed value in municipality
The valuation impacts:
State education subsidies
County taxes
State revenue sharing subsidies
Local education contributions to the school district

7. Fiscal Formulas Explained
State Aid For Education Impacts
Based on the State of Maine Essential Programs and Services funding model. Statewide mil rate is applied to a district's state valuation to determine local property taxes for education – the higher the valuation, the more funds that need to be raised locally.
Municipal Revenue Sharing Received by a Municipality
Based on population, taxes raised, and state valuation – the higher the valuation, the less $ of Revenue Sharing received by a municipality.
County Taxes Paid by a Municipality
Based on the municipality’s % share of the County’s state valuation – the higher the share of valuation, the higher the County Tax.

8. What is a TIF District
Geographic boundary is defined (project specific, or area-wide)
Original Assessed Value (OAV)
Development Program is created and managed locally
Applications reviewed for statutory compliance by:
State of Maine Department of Economic and Community Development (DECD)
Maine State Housing Authority

9. TIF Process
Municipality determines % of new valuation, and therefore associated revenues, to shelter within a TIF (up to 100%). What is not sheltered accrues to General Fund.
Sheltered revenues can be used to support municipal expenditures in support of or made necessary by economic development, and/or;
Can be used to ‘incentivize” private investment by a business and/or developer (through Credit Enhancement Agreement – Municipality determines % to be shared and can be any amount between 0% and 100% of all TIF revenues)

10. New $5 Million Value Sheltered
How TIFs Work (Illustrative Purposes Only)
New $5 Million Value Sheltered
Project’s Final Total Value =
$6M
“General Fund”
Base Value of Project = $1M “General Fund”
30 Years
(max. term)
TIF Ends
TIF Created

11. Lost Revenue in Every New Tax Dollar
55% Available to City

12. Use of TIF program in Maine (as of 2017)
482 TIF districts in the State of Maine
Approximately half include at least one Credit Enhancement Agreement (“CEA”)
Special types of TIF districts

13. Special Types of TIF Districts
Downtown TIFs
Transit-Oriented TIFs
Omnibus TIFs
Affordable Housing TIFs

14. Development Programs & Terms TIF Districts

15. Nine TIF Districts in Saco
First Light*
Industrial Park Road Improvements
Spring Hill
Franklin Fuels
Park North / Cascade
General Dynamics
Saco Island Mill Building #4
Mill Brook
Downtown Omnibus District
* In review with DECD

16. Saco’s TIF Districts
Approximately 1,330 total acres, of which about 758 are in the downtown district
Wide variety of development programs
Credit Enhancement Agreements
Many projects and resources have been funded over the years
First community in State of Maine to use the TIF program

17. Saco’s TIF Districts: Acreage Cap
Per 30-A M.R.S.A. §5223 (3)(C), a municipality’s acreage within a TIF District is capped at 5%. No more than 2% of City’s acreage may be in one district.
Downtown Development and Transit-Oriented TIF Districts are exempt from this calculation.
*Source: Downtown (TIF #15) Development Program
TIF Acreage Caps*
Total Municipal Acreage:
24,640
Existing Acreage in TIF Districts which count toward land percentage cap:
574.62
Acreage in Downtown District:
757.8
Total Acreage in Municipal TIFs:
1,332.42
Acreage Percentage toward Cap:
2.33%

18. Saco’s TIF Districts: Valuation Cap
Per 30-A M.R.S.A. §5223 (3)(C), a municipality’s valuation within a TIF District is capped at 5%. No more than 2% of City’s valuation may be in one district.
Downtown Development and Transit-Oriented TIF Districts are exempt from this valuation cap.
TIF Valuation Caps*
Total Taxable Municipal Valuation:
$2,042,312,592
Total OAV of Existing Municipal TIF Districts:
$19,037,900
OAV of Downtown TIF District:
$395,250,156.70
Valuation Percentage toward Cap:
00.93%
*Source: Downtown (TIF #15) Development Program

19. First Light Development Program District 71-1-1 OAV: $62,400
Acreage: 10
Term: 30 years, from July 1, 1997 – June 30, 2028*
FY 2019 Q1 Fund Balance: $55,670
CEA with First Light: 40% of captured assessed value for five years**
Program Highlights: Can be used to fund acquisition, improvement and development of land for additional industrial parks
Funded Projects: Funds applied to City’s economic development program for a variety of programs, including acquisition of industrial park land
*With DECD for review of term extension.
**This was reduced to four years, with the fifth year applied to the City’s fund, with DECD’s approval.
71-1-1

20. Industrial Park Road Improvements
Development Program
District
OAV: $5,169,200
Acreage: 33.07
Term: 20 years, from July 1, 2008 to June 30, 2028
FY 2019 Q1 Fund Balance: $917,836
CEA: Peoples Choice Credit Union: Payments made to company to offset costs of traffic improvements, capped at $100,000
Program Highlights: To fund costs of various traffic improvements in the area of Industrial Park Road
Funded Projects: Street and site improvements along Industrial Park Road; CEA with Peoples Choice Credit Union
ROWs not shown

21. Spring Hill Development Program District OAV: $5,746,000 Acreage: 135
Term: 20 years, from July 1, 2002 to June 30, 2022
FY 2019 Q1 Fund Balance: $1,317,811
Program Highlights: Costs for traffic mitigation fund for Rte. 1 improvements
Funded Projects: Contributed to traffic mitigation fund
ROWs not shown

22. Franklin Fuels Development Program District OAV: $167,500
Acreage: 6.86
Term: 30 years, from July 2, 2008 to June 30, 2039
FY 2019 Q1 Fund Balance: $68,607
CEA: Currently, with White Rabbit LLC, limited to incremental taxes from new actual value, capped at $125,000
Program Highlights: Funds costs associated with Credit Enhancement Agreement with White Rabbit LLC; can fund operations and programming associated with various economic development initiatives
Funded Projects: CEA with White Rabbit LLC

23. Park North Development Program District OAV: $5,516,400
Acreage:
Term: 30 years, from July 1, 2008 to June 30, 2038
FY 2019 Q1 Fund Balance: $145,778
CEA: Park North Development LLC, first $200,000 of incremental value paid to company; follows 70% company and 30% City for next 30 years, until end of TIF District
Program Highlights: Currently, the second largest TIF District in Saco; may be used to fund economic development programs and revolving loan fund capitalization
Funded Projects: Developer is expanding sewer infrastructure and road improvements

24. General Dynamics Development Program District OAV: $5,900 Acreage: .11
Term: 6 years, from July 1, 2014 to June 30, 2020
FY 2019 Q1 Fund Balance: $0
CEA: General Dynamics, capped at $100,000
Program Highlights: Reimbursements to developer capped at $100,000 total, based solely on .11-acre section of property
Funded Projects: Incentivized General Dynamics to expand facility in Saco

25. Saco Island Mill Building #4
Development Program
District
OAV: $280,000
Acreage: 5.04
Term: 30 years, from July 1, 2015 to June 30, 2045
FY 2019 Q1 Fund Balance: $53,450
CEA: Chinburg Properties; 80% to company in years 1 through 8; 60% in years 9 through 30, capped at $5 million
Program Highlights: May support costs associated with Shuttle bus service, PACTS sign project, Multi-modal train platform, and economic development programming for the City and regional entities
Project Funded: Incentivized redevelopment of mill building into apartment housing for the City and region

26. Mill Brook Development Program District OAV: $2,090,500*
Acreage: 61.06
Term: 30 years, from July 1, 2015 to June 30, 2045
FY 2019 Q1 Fund Balance: $26,169
CEA: Maine Molecular, 80% to company in years 1 through 10; 0% thereafter
Program Highlights: Can fund capital costs of recreation trail improvements and road improvements within 2 miles of the District
Funded Projects: CEA with Maine Molecular Quality Controls
*Technical correction pending review by DECD, from 2017 locally approved amendment
ROWs not shown

27. Downtown Omnibus Development Program District OAV: $395,250,156.70
Acreage: 757.8
Term: 30 years, from July 1, 2017 to June 30, 2047
FY 2019 Q1 Fund Balance: -$19,796
Grants: Cutts Avenue (Economic Development Grant)
Program Highlights: Provides the City and the Downtown with the widest amount of funding options and opportunities for public improvements throughout all of the City’s TIFs
Funded Projects: Funded first payment of economic development grant for Cutts Avenue project; growth in coming years may fund a wide variety of projects, as shown on next slides detailing Development Program

28. Downtown Development Program
Within District/Municipality
Within Municipality
Streetscape Improvements
Design, construction, installation of 3-phase power & Broadband/4G LTE costs
Reimbursement agreements with developers/companies
Waterway seawall
Waterway dredging
Marina infrastructure construction along Saco River
Economic development agencies (Saco Main Street & Chamber) operations & program funding
Bus shelters and transportation amenities
GIS mapping (maintenance & upgrades)
Workforce skill development/training costs
Environmental improvement costs
General economic development, including prorated salaries and portions of salaries for positions that work on TIFs

29. Downtown Development Program Cont’d.
Within/Outside District & Within Municipality
Within/Outside District
Prorated municipal equip. costs
Sidewalk rehabilitation/extension, parking improvements, lighting, crosswalks, central parking facility
Underground utilities
Road & intersection improvements
Pro-rated costs of public safety building & public safety equipment/infrastructure related to development within District
Capital costs of improvements
Trail connections & improvements
Storm water & drainage improvements
Sewer infrastructure
Energy & gas transmission
Prorated costs of Harbormaster’s Office
Piers, floats, tourist boater amenities
Marina infrastructure

30. TIF Strategies

31. Strategic TIF Next Steps for Saco
Integrate TIF use with core objectives: tax base growth, job growth, workforce development, economic diversification, place making, community and downtown development
Go beyond use of TIFs for business incentives – shift focus to funding for public infrastructure and projects to support economic development (long-term)
Extensions of TIF Districts to 30 years
Potential boundary expansions of current TIF Districts (where it makes sense to do so)

32. Progress Toward Next Steps
Completed comprehensive analysis of current TIF Districts, Development Programs, Credit Enhancement Agreements, and Grants
Hosted Jump Start TIF Meeting with City Administrator and City Staff, to obtain team-oriented objectives and citywide collaboration
Completed parcel review with Planning & Development Director, Economic Development Specialist, and City Engineer for potential transit district
Continue to track and report progress; guide all with planning and policies

33. Recommendations
Amend and modify existing TIF Districts to create a comprehensive development program for all districts:
First Light (TIF #1): Development Program amendment
Industrial Park (TIF #5): 10-year extension & Development Program amendment
Spring Hill (TIF #7): 10-year extension & Development Program amendment
Franklin Fuels (TIF #8): Development Program amendment
Park North (TIF #9): Development Program amendment
Mill Brook (TIF #14): Development Program & possible boundary amendments
Create a transit-oriented TIF District
Postpone creating new TIF district(s) to maximize Captured Assessed Value (CAV)
Ready Seafood TIF District and CEA

34. DECD Approval Letters First Light Industrial Park Road Improvements
Spring Hill
Franklin Fuels
Park North
General Dynamics
Saco Island Mill Building #4
Mill Brook
Downtown Omnibus

35. Credit Enhancement Agreements & Economic Development Grants
First Light Technology, 1998
Peoples Choice Credit Union, 2009
White Rabbit LLC, 2016
Park North, 2013
General Dynamics, 2014
Chinburg Properties, 2015
Maine Molecular Quality Controls Inc., 2015