WATERFRONT

Come on, come on, now TIF me babe

By Noah Bruce

At its meeting May 4, Portland’s City Council took what mayor Cheryl Leeman termed “an unusual step” when it set up a tax increment financing district (TIF) on both the land and sea side of the city’s waterfront, running from the Eastern Prom to the Casco Bay Bridge.

Unlike the most common form of a TIF where the city returns to a business a portion of its property taxes, this TIF will be different. It will work like this: Any new development in the district valued at over $400,000 will automatically trigger a TIF application which City Council will consider. The council will have the option to TIF the development or not. If they do TIF, the property tax money will go into a low-interest loan fund to be used for development on the waterfront, potentially including dredging, pier work, and parking-lot construction.

The benefit, says councilor Nathan Smith (who voted for the proposal along with councilors Kane, Cloutier, Geraghty, and O’Donnell) is that TIF money is not counted towards the city’s property valuation. As the valuation rises, Portland gets less money from the state and pays more to the county, so the less the valuation the better for Portland.

Leeman (who voted against the TIF) says this is not a valid argument, however, as the amount of “sheltered” money, or money that does not count toward the valuation, “is miniscule.”

Leeman’s main gripe with the TIF is that money that goes into the loan fund is less money for the general fund, which pays for schools, parks, and streets.

“The timing is very bad,” says Leeman. “We’re coming off a budget cycle where we raised property taxes 6 percent. Our revenues were flat. If we give that money to a loan fund, it doesn’t go into the general fund, and it hurts the taxpayers.”

Smith points out Monday’s decision gives the council the option to TIF new developments in the district, but does not require that they do so. He argues that the city has significant plans for the waterfront in the first place so it is not accurate to look at the TIF money as stolen from the general fund. “The thing you’ve got to keep in mind is we have all sorts of plans to do development,” he says.

The new plan varies from the way the city has used the TIF in the past. For one thing, the TIF law passed by the council in 1994 states that only projects worth over $2 million can qualify for a TIF; Monday’s decision changes the amount to $400,000. In the past, TIFs have been given to bring jobs to Portland, as in the case of UNUM, or to revitalize a blighted part of the city, as in the case of Shipyard Brewing. The new TIF plan does not specify where the money will go beyond stating that it will be used in waterfront development.

One potential undercurrent of the decision is the touchy issue of zoning on the waterfront. When asked if zoning had something to do with the TIF plan, Leeman says “I hope not, but I’m sure it had something to do with it.” On June 5, The Portland Press Herald quoted Geraghty as saying “It’s ridiculous to say zoning is the issue.” There is, however, an interesting parallel between voting on the TIF and zoning politics. Councilors who have suggested looking into zoning changes on parts of the waterfront (Leeman, Hibbard) as a way to fund development and especially Oceangate, the proposed home for the Scotia Prince on the current BIW site, voted against the TIF. Council members who are considered anti-zoning changes (Geraghty, O’Donnell) voted for the TIF. The possible implication is that TIF money could be used to fund development, making a zoning change unnecessary, and thereby undermining plans to institute mixed-use development on the waterfront.