2015.03.09 Council Agenda Item 07

Town staff has prepared draft documents outlining a proposed Ocean View / Natural Gas Tax Increment Financing (TIF) District. The Town Council and Council Finance Committee have discussed this matter at several meetings in the past month. This public hearing is to get feedback from the public regarding the proposed TIF District and Development Program. The Town Council will then consider an order to adopt the TIF and submit a formal application to the Maine State Department of Economic and Community Development (DECD).

The TIF District consists of approximately 355 acres and proposes to capture increases in assessed real estate values associated with the new OceanView development and Natural Gas Line installation by Summit Natural Gas from 2015 to 2044 (30 year term). The Town must apply to DECD for approval of the TIF. An application package, titled OceanView - Natural Gas Tax Increment Financing District and Development Program (attachment 1) includes a complete description of the TIF along with supporting documentation.

The State of Maine permits the sheltering of the incremental valuation of property within a TIF district for up to 30 years. Sheltering is fiscally advantageous for the Town of Falmouth as it avoids losses in state aid to education and state municipal revenue sharing and increases in the Cumberland County Tax Assessment. Revenues are kept in a separate TIF fund and can only be used by the Town for designated economic development related purposes and not the General Fund. But, as can be seen in several attachments, there are a significant majority of projects proposed in this TIF that will be eliminated from the Town's Capital Improvement Plan, which will result in less funding needs in the General Fund.

The Town commissioned Camoin Associates to conduct a fiscal analysis of having the proposed TIF district versus not having this district (see attachment 5). This attachment identifies more tax revenue that the other supporting documentation because some of the projected new values have decreased since the submission of this report. These changes do not materially change the impact of creating a TIF district.

Attachment 2 is a summary list of all projects proposed in the TIF. This list is also found as a Exhibit G in attachment 1. This attachment also includes some changes most recently recommended by DECD which offered to provide a preliminary review of the proposal. These changes are depicted as underlined and crossed out text. Staff will review the rationale behind the changes at the meeting.

Attachment 3 is a list of projects by year throughout the 30 year term of the TIF. Attachment 4 is a financial work sheet which describes the annual beginning and ending balance of the proposed TIF.

The Town Council has not yet determined a final list of projects but will do so at the conclusion of the Public Hearing. Once the Town Council is ready to vote on the proposed TIF, they will act on the order which is attachment 11.

Following the Council’s request on February 23, staff developed an updated Capital Improvement Plan that illustrates how this proposed TIF can help achieve a flat mil rate (as the mil rate relates to the CIP) in future years. Mil rate stability and a reduction can be achieved in the first few years by reducing the balance of the CIP Street Improvement reserve fund. Reducing this fund is sustainable because the proposed TIF will be a new fund which can be relied upon to fund street infrastructure projects which will reduce the reliance on the CIP fund balance.  Attachments 6 through 10 help illustrate the changes in the CIP which will help reduce the amount of property taxes needed to fully fund a responsible CIP. Staff will review these documents with the Town Council and public at the March 9 meeting.

A PowerPoint presentation has been added to this package on 3/9/2015.

Attached are:

1. OceanView - Natural Gas Tax Increment Financing District and Development Program
2. Project List (with DECD edits)
3. Project List by Year
4. Financial Worksheet (balance summary)
5. Fiscal Analysis by Camoine Associates
6. CIP Program Summary with TIF Related Adjustments
7. CIP Appropropriation Schedule With Projected Mil Rate
8. CIP - Summary of Adjustments Related to TIF
9. CIP Street Reserve Detail Balance Projections
10. CIP Street Reserve Project List by Year
11. Order
12. PowerPoint Presentation