HOULTON, Maine — Can the town of Houlton use money sitting in “Tax Increment Financing” district accounts for other purposes?
That was the focus of Monday night’s Houlton Town Council meeting as the group met with Alain Ouellete of the Northern Maine Development Commission Monday evening to discuss some of their options.
A Tax Increment Financing (TIF) district is a public financing method that is used as a subsidy for redevelopment, infrastructure or other community-improvement projects. They are created to use future gains in taxes to subsidize current improvements or projects in a municipality. Some of the purposes include, but are not limited to, infrastructure upgrades, economic development, environmental improvements and recreational trail development.
“TIF districts are established primarily to spur economic growth in a defined area,” stated Town Manager Eugene Conlogue in a written report to the council.
The town currently has five TIF districts with a combined total of about $896,000. Those districts, which were created in 1996, include the North Road, Downtown, Airport, Tate and Lyle and more recently the Shiretown Development (County Yankee) district.
Taxes paid by eligible businesses within each district are set aside for use within that district and do not go into the general fund. Businesses also receive rebated funds known as Credit Enhancement Agreements as part of the arrangement.
So, can the town use any of the funds for other purposes? The answer from Ouellette was “perhaps.”
“You have obligations as part of these five TIFs that are pretty well in stone,” Ouellette said. “You have obligations to repay debt service, so all of those funds have their home. The remaining funds have much to do with the activities contained in each of these districts.”
Ouellette said the town could consider using some of the TIF proceeds if they thought creatively in how they presented their request to the Department of Economic and Community Development. Otherwise, the town would have to create an amendment to their district, which could be both lengthy and costly.
“We don’t take these things very lightly,” Ouellette said. “It does engage a fair amount of time, so you (the town) have to measure the value of these amendments versus the time and expense you will incur.”
Ouellette suggested taking the creative approach before pursuing the amendment path.
Council Chairman Paul Cleary asked if some of the TIF funds that have been designated for “economic development” could be used to pay a portion of the salary for the town’s economic and community development director or some of the fees the town pays to groups such as NMDC or the Shiretown Development Corporation.
“Budgets and tax dollars are getting tighter and people are finding it hard to pay,” Cleary said. “We don’t have any room to raise our mil rate. Is there a way we can pay some of these salaries from the TIF funds?”
“You have some latitude,” Ouellette said. “There will be some questions from the DECD that will have to be answered.”
The town also has a “Downtown Revolving Loan Fund,” that has about $219,000 in its account that has been relatively untouched over the past few years.
The council appointed members Sue Tortello and Wade Hanson to a group charged with working with the town manager and NMDC on a direction to pursue in using the TIF funds.
In other agenda items, the council:
• Learned the town of Houlton officially received a grant of $8,000 under the Project Canopy Assistance Program to remove trees that have overgrown in the downtown area and replace them with different types of trees or shrubs. The town is required to provide an $8,000 match, which can be through in-kind services.
• Accepted a Tax Anticipation Note bid from TD Bank for an amount not to exceed $1.4 million at an interest rate of 0.79 percent.
The next regular meeting of the Houlton Town Council is set for Monday, Feb. 24 at 6 p.m.
