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Maximizing Revenue Benefits Through Municipal Tax Increment Financing (“TIF”) City of Gardiner, Maine Joan M. Fortin, Esq. Charles Lawton, Ph.D. – Planning Decisions, Inc. February 4, 2009 . Legislative Findings. Provide new employment opportunities Improve and broaden the tax base - PowerPoint PPT Presentation
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February 4, 2009
Maximizing Revenue Benefits Through Municipal Tax Increment
Financing (“TIF”)
City of Gardiner, MaineJoan M. Fortin, Esq.
Charles Lawton, Ph.D. – Planning Decisions, Inc.
Legislative Findings
• Provide new employment opportunities
• Improve and broaden the tax base
• Improve the general economy of the state
Program Summary
• Allows municipality to “capture” new property tax value
• Property taxes on new value are “TIF Revenues”
• TIF Revenues can be used to fund a wide variety of authorized project costs
Benefits to Municipality
• Attract new investment (i.e., tax $$$)• Examples: City of Lewiston & Town of Lincoln
• Significant infrastructure projects• Example: Town of Edgecomb & City of Bangor
• Tax Shelter (i.e., the “tax shifts”)• Examples: City of South Portland, City of Bangor &
Town of Eliot
Tax Shelter Benefits
• TIFs shelter new value from a municipality’s “State Valuation.”
• A municipality’s State Valuation effects 4 important areas of municipal finance:
1. State Education Subsidy,2. County Taxes, 3. State Revenue Sharing Subsidy, and4. Local Education Allocation.
Types of Municipal TIFs(under Subchapter 1 of Chapter 206 of Title 30-A)
• Traditional Municipal TIF • Can be located anywhere in municipality
• Downtown Municipal TIF• Located in the traditional central business district • Must be described in a downtown redevelopment plan• Some statutory limits do not apply
Authorized Project Costs: 30-A M.R.S.A. Sec. 5225
• Project costs “inside” the TIF district
• Project costs outside the TIF district, but “directly related to or made necessary by” the TIF district
• Costs of economic development, environmental improvements or employment training within the municipality
Ineligible Project Costs
• Buildings or facilities used for the general conduct of government or for public recreational purposes• City halls
• Jails
• Recreation centers
• Athletic centers
• Swimming Pools
TIF Criteria & Program Limits
• 25% of area blighted; need of rehabilitation, redevelopment or conservation (N/A for downtown TIF)
• Acreage Cap (N/A for downtown TIF)
• Value Cap (N/A for downtown TIF)
• Municipal indebtedness ceiling (N/A for downtown TIF)
• Term limits
Procedure for Creating a TIF District
• Public notice
• Public hearing
• Vote by legislative body
• Designation of TIF District• Development Program for the District• Downtown TIF must also include downtown redevelopment plan
• Approval by Commissioner of DECD
Funding Project Costs
• Credit enhancement agreements
• Municipal bonds
• Setting aside TIF revenues
TIF Accounts & Accounting
• Development program fund
• Project cost account
• Development sinking fund account
Gardiner’s TIF History
• TIF Policy created in 1999 by Council• Amended 2003
• Downtown TIF (2003)
• Libby Hill TIFs• Harper’s (2000)• Pine State (2004)• EJ Prescott (2005)
• Associated Grocers TIF (2006)
Tax Shelter Benefits Downtown E.g..
Tax Year Beginning TIF Revenue
Intergovernmental Losses Avoided = State Contribution
to DT Development City
Contribution City Share
4/1/03 $29,396 $11,931 $17,465 59% 4/1/04 $106,635 $50,707 $55,928 54% 4/1/05 $127,120 $57,667 $69,454 54% 4/1/06 $124,989 $56,672 $68,317 54% 4/1/07 $127,380 $57,667 $69,713 54% 4/1/08 $296,906 $180,400 $116,506 49% 4/1/09 $317,974 $198,639 $119,334 46% 4/1/10 $339,123 $211,852 $127,271 44% 4/1/11 $360,907 $225,460 $135,447 43% 4/1/12 $383,345 $239,477 $143,868 42%
Tax Shelter Benefits Downtown E.g..
$2.2 million TIF revenue$1.3 million from state.
Libby Hill Area Wide TIF District
• 22 Lots in Libby Hill Area Wide Business Park• 10 Lots from Phase I of Business Park TIF• 12 New Lots• Dennison Lubricants has already located on Lots 10 & 11
• $1.5 million in new value• Additional $1.5 million development within 5 years
• 30-year TIF Term
• Streamlines the Incentive Process
• Incentive for Future Development
Financial Benefits to City of Gardiner
• TIF Revenue to Municipal Project Cost Account• Projected at $26.7 million over 30 years
• Tax Shift Benefits• Projected at $19 million over 30 years
Thank you.
Joan Fortin, Esq. • [email protected]• (207) 228-7310
Charles Lawton, Ph.D. – Planning Decisions, Inc.• [email protected]• (207) 363-3541