Published Date Written by Craig LyonsAs a City Council committee prepares to finalize a revised tax increment financing policy for Portland, it's still trying to iron out where a cap should be set on the benefits to developers realized through credit enhancement agreements.
The City Council's Housing and Community Development Committee continued reviewing revisions to Portland's tax increment financing policies Wednesday night, and heard comments that the proposed cap on credit enhancement agreements is set too low.
The TIF policy that's under development is trying to move the city away from CEAs — which tend to be site specific — and leaning toward larger TIF districts that maximize the benefits to the city through a wider area to divert money for infrastructure improvements and economic development projects.
Greg Mitchell, the city's director of economic development, said the policy sets a term limit of 20 years for CEAs and caps the benefit to developers at 50 percent. The 50 percent cap is on the average developer benefit that's realized during the duration of the CEA.
Mitchell said the policy is limiting somewhat since state law does allow for longer term lengths and doesn't put a cap on the percentage of money that goes to a developer.
The cap that was included in the policy is designed to both benefit the city but still meet the needs of a developer, Mitchell said.
During the meeting, Mitchell presented the committee with a chart of the active CEAs that showed if they would meet the standards proscribed in the new policy. Only three of the 16 CEAs met both the caps on the term and percentage that goes to the developer.
Councilor Ed Suslovic said he agrees that the potential cap for CEAs should increase.
"I think 70 percent and 20 years makes more sense," he said.
Looking through the list of projects, Suslovic said he sees a number of good developments that wouldn't have been feasible with the caps.
"That to me sold me on the 70 percent," he said.
Councilor Kevin Donoghue said he's not going to support moving the percentage cap to 70 percent but might consider extending the cap on the lengths of the CEAs.
Councilor Nick Mavodones said the council as a whole has been clear that it wants to see a cap on CEAs. He said a set cap helps remove some of the politics and lobbying out of the decision making on the agreements.
"We're going to have a fixed duration and fixed percentage," Mavodones said, but he's open to there being some flexibility on what's currently been proposed.
Drew Sigfridson, president of the Maine Real Estate and Development Association, said he'd caution the committee about instituting caps for the credit enhancement districts, in case an opportunity arises that needs more flexibility and is tough to pass up.
"I don't think it's wise to create a policy now that in the future we have to throw away or contradict," he said.
Sigfridson said looking at the data of existing CEAs, it was interesting to see that few of them would qualify for a TIF under the proposed policy. He said if the percentage cap that's given to developers were increased slightly to 70 percent, most of the projects would have qualified.
"That might be a reasonable compromise," he said.
Joan Fortin, a resident and attorney, said she likes the overall direction that the policy is taking but the committee should focus on removing unnecessary hurdles to developers.
Fortin said she doesn't think the city needs to set the caps and can decide if one is necessary during the review process. She said the committee should either get rid of the cap or move it up.
The committee intends to make a final recommendation to the full council at its next meeting.
Earlier in the meeting, the committee endorsed the process that's planned to be used to sell the former Nathan Clifford School.
While the guidelines for the sales are being established, the city is working on a conditions assessment and establishing the building as a local historical landmark.
A re-use task force developed the possible guidelines and criteria for the reuse of the 100-year-old school building.
The process to select a developer will include the following steps: issuance of a request for qualifications; appointing a review committee for the applications; the committee reviews the RFQs and recommends the top three development teams; the request for proposals is issued; the review committee selects the top developer; the HCDC reviews the proposal and makes a recommendation that goes to the council; and the council reviews the proposal and votes whether to direct the city manager to negotiate a sale.
In its recommendations, the task force developed a multi-tiered review process to find the best future use. The process includes a request for qualifications, a request for proposals and a review process that ranks the submissions using primary and secondary criteria.
The task force's report — which the council accepted in December — encourages the city find future uses that are either education or research oriented; community uses; incorporate publicly-accessible open space or play areas, low-impact commercial or institutional uses; or a creative mixed-use development. Underlying the encouraged uses is the see that a future development works within the school's current R5 zoning designation, though other proposals will still be considered.