News Column

Houlton exploring creative uses for TIF funding to promote economic growth, lower taxes

February 14, 2014

By Jen Lynds, Bangor Daily News, Maine



Feb. 14--HOULTON, Maine -- Town councilors in Houlton earlier this week questioned an official from a key economic development group in Aroostook County about whether it was possible to use tax increment financing dollars in more creative ways to help spearhead economic growth and lower taxes.

The questions came during a regular council meeting on Monday evening, when Alain Ouellette, planning and development division director for the Northern Maine Development Commission in Caribou, gave the group a workshop on tax increment financing.

The state Department of Economic and Community Development administers the TIF programs under which municipalities can use property tax money to help finance new business activity in a specific portion of a community. Towns can establish TIF zones to help stimulate economic development, guard or create jobs, and encourage investment to bolster business growth.

In one case, business owners on the North Road came before the council a number of times asking to have the city extend water and sewer services for their benefit after businesses along the corridor blossomed substantially over the past decade. The town saw the need but did not have the money to do it until they designated the North Road as a TIF district and forged an agreement with the Houlton Water Co. As a result, some TIF funds were used in 2012 for a $425,000 expansion of sewer and water service on North Road.

At this point, there are five TIF districts in Houlton. Along with the North Road district, there are designated areas located in the downtown, at the Houlton Industrial Park at the airport, at the manufacturing plant Tate and Lyle, and in the Shiretown Development-County Yankee district. Taxes paid by eligible businesses in the district stay in the district, and the businesses also are eligible for benefits such as credit enhancement agreements, which return a portion of the TIF revenues to the business over a period of time.

During the recent meeting, Chairman Paul Cleary asked Ouellette if it were possible for the town to use TIF funds to pay a portion of the salary for the town's economic and community development director or for some of the fees the town pays to groups such as the Northern Maine Development Commission. The question came less than a month after the municipality passed a $9.8 million budget that most likely will raise taxes when the mill rate is set this summer.

"Budgets and tax dollars are getting tighter, and people are finding it harder to pay," Cleary said, as he spoke of the increasing budget and tax rate. "Is there a way we can pay some of these salaries from the TIF funds?"

Ouellette said that there was a possibility that could happen, and he felt the town had some "latitude," there. He added that the Department of Economic and Community Development would have questions the town would need to answer before doing so.

First, though, he told the group, the city was obligated to the five TIF districts and the financial responsibilities that come with them. At the same time, he encouraged the council to explore ways to connect with the Department of Economic and Community Development and pursue the matter of different ways to use TIF funding.

The council decided to go in that direction, and appointed members Sue Tortello and Wade Hanson to work with Town Manager Gene Conlogue and Northern Maine Development Commission on how to move forward with using the TIF funds.

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(c)2014 the Bangor Daily News (Bangor, Maine)

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Source: Bangor Daily News (ME)


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