2015-11-27 / Community

City hopes to use TIF funds for broadband

By Duke Harrington
Staff Writer

SOUTH PORTLAND — What at first appeared to be a boilerplate decision to amending how TIF funds can be spent turned into a protracted, sometimes testy debate on cultural values at Monday’s workshop session of the City Council.

On the table was a proposal to take money in tax increment financing (TIF) accounts tied to development at Texas Instruments, Fairchild Semiconductor, Hannaford Supermarkets and the Long Creek Watershed District, and funnel those funds into buying fire trucks and expanding the city’s broadband Internet network.

However, amending the TIF contracts to allow spending on those items requires approval from the Maine Department of Economic and Community Development.

A TIF is a contract thought to spur economic development by returning to a company a portion of the property taxes it would normally pay for any new construction. The remaining new tax money is then targeted by the city to either support infrastructure needs created by the new development, or to support additional economic development. As an added benefit, the new development is shielded from state assessments for a period of years, which can affect everything from property taxes to school subsidies.

At its Nov. 23 workshop, councilors unanimously supported seeking approval to spend TIF dollars on increasing local Internet speeds. The city’s ongoing expansion of local fiber optic networks, undertaken last year in partnership with GWI, was seen as vital to attracting new businesses. Because that new network also will benefit private residents, TIF money can’t be used to cover South Portland’s share of the entire project, Gailey said, but can pay for a substantial portion.

However, the purchase of a new pumper and a ladder truck to serve the western side of South Portland was seen by many councilors as more of a maintenance issue.

City Finance Director Greg L’Heureux argued the trucks count as infrastructure needs because they are needed to protect the TIF investments of businesses in the area. Shoshana Cook Mueller, an attorney with the Portland firm Bernstein Shur, who handles TIF contracts for South Portland, said many municipalities use TIF funds to not only buy fire trucks, but sometimes the equipment on those trucks.

Still, Councilor Patti Smith said she feared using TIF money to buy fire engines might “open a Pandora’s box” of similar purchases, usually funded as part of the city’s operating or capital improvement budgets.

L’Heureux said that’s precisely where the truck purchases would come from, if not paid for with TIF dollars. Given an aging fleet, the purchase can’t be put off for much longer, he said, and the cost is bound to affect property tax bills in a big way, given the minimum $400,000 cost of a pumper and the $1 million-plus price tag of a ladder truck.

“If the council so desires that it doesn’t want this to be an allowable use [of TIF funds], the offset is a raise in property taxes. That’s what’s going to result,” he said.

That comment drew a quick response from Councilor Claude Morgan.

“I just don’t appreciate that commentary,” he said. “That sounds like a threat from staff that if we don’t buckle in here, you’re not going to cooperate with us in the budget process.

“You’ve been selling us all night on the importance of this and we are telling you this is not in our values, and I think you’ve got to respect that,” Morgan said.

The question of values came up repeatedly during the debate, with several councilors saying they were not inclined to use TIF money for capital purchases, just because they could, or because other towns and cities may do it.

“I’m glad to hear other councilors are concerned about this, because it doesn’t feel right,” Mayor Linda Cohen said. “I would feel better about using the TIF money if it was an emergency need, because it is an allowable use.

Cohen then compared using TIF money to buy a fire truck, as opposed to building a road or sidewalk, to using a home equity loan to buy a car.

“I’m not going to buy a car and put that back on my house, I’m going to put that money back into the value of my home. And, to me, a TIF is supposed to do the same thing,” she said.

City Manager Jim Gailey said he would move forward with soliciting approval of the TIF amendment to fund broadband expansion, but acknowledged fire truck funding seemed to be a dead issue.

“Thank you for the dialogue,” he said.

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