That recommendation, which officials said would result in a net gain of $200,000 for city taxpayers, came after several residents voiced opposition to a 10-year extension of a tax increment financing and credit enhancement agreement for the ice arena at 203 Whitten Road.
The agreement’s history dates to 2011, when the building’s roof collapsed. At the time, owner Peter Prescott applied for a 20-year, 100% tax increment finance and credit enhancement proposal to help rebuild the facility.
The City Council voted to reduce the agreement from 20 years to 10 years, with the option to renew after the May 2022 expiration.
TIF districts allow municipalities to shelter property tax increases that would have occurred through new development.
The original assessed value of the arena was $254,200 when the agreement was approved in 2012. The arena’s assessed value for fiscal 2022 is $3,089,500. Through the TIF agreement, the $2.8 million worth of increased value is not factored into state and school funding formulas, resulting in more money for the community.
Through the credit enhancement agreement, the funds are paid back to the developer to help defray project costs.
The original extension proposal would see 95% returned to the ice arena for the first six years, and drop to 85%, 75%, 65% and 55% for the final four years.
According to financial estimates, $52,104 would be returned to the developer each year, and the community would see a $37,791 benefit through the TIF.
Some in favor of the TIF said the difference would be made up through the arena’s benefits to the community and surrounding business. The arena supports multiple youth sports programs, hosts blood drives and helps with food bank donations.
The original proposal saw more opposition than support during a public hearing Monday, at which residents strongly rejected the idea of using public funds to help the business stay afloat.
Due to the backlash, councilors unanimously voted to reject the proposal and asked the finance committee to revise the amended extension so it would not negatively impact local taxes.
After about 45 minutes of discussion, the committee agreed Wednesday to bring the credit enhancement agreement down to 50% for the next 10 years, resulting in a net gain for the city of $191,000.
Prescott declined Thursday to comment on the matter until the City Council votes on the agreements next month.
Committee members Kate Dufour and Maureen AuCoin recommended extending the TIF for another 20 years, for its maximum life of 30 years, and keeping the credit enhancement agreement to an additional 10 years, as originally proposed.
AuCoin said extending the TIF to a total of 30 years could yield a far greater community benefit.
The extension of the TIF’s lifespan could result in an estimated net gain of $500,000 in revenue for the city, committee members said.
“When you look at that potential difference, and when you look at what we’ve already given in the past 10 years as a credit enhancement to the developer, it almost pays for itself,” AuCoin said.
Revenue generated through this agreement can only be spent on projects related to the downtown TIF district. One property included in this district is the town’s historic fire station, which the city has recently agreed to keep and renovate as a potential space for the Hallowell Police Department. One estimate for restoring the building was more than $3 million.
“That’s one of the hot topics we’re talking about right now,” AuCoin said. “The city has voted to keep the building, and we’re going to have to invest in that.”
Committee member Michael Frett said while he supported the additional extension of the TIF to a total of 30 years, he was apprehensive about the revision due to the controversy surrounding the original amendment.
“I feel that if we come back and start talking about 20 years, with an extension of the (credit enhancement agreement) for 10, the conversation is going to focus on the 20 years, and it’s going to turn ugly because it’s going to be looked upon as somehow we are costing the taxpayers more for longer,” Frett said.
The amended extension of 50% for an additional 10 years would not be finalized until the City Council considers the finance committee’s recommendation, scheduled for March 7.