Explanation of the Kingfield TIF (Tax Increment Financing District), Credit Enhancement Agreement

 

(Webmaster Note: This page written by Greg Davis, former Administrative Assistant, in 2007/08 during the TIF process)

After a year of study , the Kingfield TIF Committee members provided education and designed the TIF, credit enhancement agreement and bond issue to accomplish identified development goals.

The special TIF Committee included Selectmen John Dill, Neal McCurdy, and Heather Moody and businessmen John Goldfrank, Tom Hildreth and John Witherspoon. Assisting this committee were Greg Mitchell, Eaton & Peabody consultant; and Greg Davis, Kingfield’s  former administrative assistant.

Following a Public Hearing on November 8, 2007, the Special Town Meeting attendees, estimated to include approximately 75 eligible voters, overwhelmingly approved the TIF programs by a voice vote at Webster Hall. Farmington Attorney Paul Mills served as the meeting moderator.

The Tax Increment Financing (TIF) District has been developed as a local tool to promote economic development.

Tax increment financing is a financing program whereby taxes on the incremental new value of development is used to fund economic development programs and projects included in the “development program.”

Why a TIF?

It stimulates private sector investment and job creation. For a town, it shelters impacts and TIF revenues from new taxes used for dedicated economic development programs and projects.

A TIF District has defined geographic boundaries. The proposed Kingfield TIF District includes 38 parcels comprising 249.9 acres with a current total assessed value of $3.69 million.

Poland Spring Development Program

Poland Spring is making a $51 million investment in a new 200,000 square feet bottling facility, which includes:

$21 million in taxable real property (construction of the facility).

$30 million tax exempt personal property (two bottling lines) with state reimbursement.

The facility is built to accommodate two additional bottling lines (if/when this happens it represents another $30 million investment and significant additional jobs).

Jobs (60 net new jobs planned with the two bottling lines).

$4.5 million electrical upgrade that benefits Kingfield too (i.e. less likelihood of experiencing some local power outages).

Town Development Program

The basis of the Town program is the recently adopted Kingfield Comprehensive Plan.

Town Meeting approval of the District Plan was required and obtained Nov. 8, 2007.

Town Meeting action is required for any future financial appropriations from TIF revenues beyond the approval of the initial TIF and associated agreements.

Potential Investments within the Proposed District

Waste Water project to support Poland Spring facility. APPROVED – Nov. 8, 2007 (Includes property acquisition, bond issue)

Village common septic system study and upgrade.

Truck/traffic calming measures for Route 27.

Public works capital equipment.

Fire department capital equipment.

Village sidewalk replacements and upgrades.

Village enhancement plan and capital investments.

Economic development public infrastructure investments.

Wireless Internet access to Village.

Credit Enhancement Agreement with Poland Spring. – APPROVED in the Nov. 8, 2007 Vote – Actual document awaits the final signatures of town officials and Poland Spring representatives – pending.

Revolving Loan Fund for local businesses.

Matching funds for State and/or Federal economic development grant programs.

Town administrative assistant salary (15 %portion).

Annual “Kingfield Days” sponsorships.

Annual “Kingfield Pops” sponsorships.

Ongoing TIF program administration.

The TIF Terms

30-year Term.

Total of $8.9 million (estimate) in new tax revenues captured (real estate only) over that time period.

 

Credit Enhancement Agreement (CEA) with Poland Spring at a fixed 40% (of total captured value) for 30 years – Note: Percentage increases for the first ten years to cover the Kingfield ‘Gateway” ( Bill Gilmore 40.59-acre property acquisition.

 

TIF Revenue Estimates and Uses

$21 million real estate value results in:

Kingfield TIF Program – $5.0 million

Kingfield General Fund – $840,000 captured in last four years

Poland Spring abatement – $3.9 million

$30 million in equipment value is not part of the analysis.

Financial Plan “Sheltering Effect”

With new investment, the real estate valuation goes up, but the State’s “Essential Programs and Services (education) subsidy and Municipal Revenue Sharing subsidy goes down while County tax expenses increase for the community.

A TIF “shelters” captured new value by excluding it from the total municipal value reported to the State for the length of the TIF.

Poland Spring TIF Contributions – Gray Water System Project

Poland Spring donation of $30,000 for engineering costs associated with the project design.

Poland Spring commitment to guarantee municipal debt associated with the system.

Poland Spring agrees to a fixed annual user fee of $70,000 to reimburse Kingfield’s capital and annual maintenance costs (can be applied directly to tax relief, since TIF revenues will cover the actual bond payment for the system’s construction and related property acquisition).

Kingfield purchases a “Gateway” 40.59 – acre property at $350,000 for the waste-water system at a discount from Poland Spring.

Kingfield Gateway

· Poland Spring to carry the cost ($350,000) of the key 40.59-acre “Gateway” property acquisition on behalf of the Town, to be reimbursed through TIF proceeds.

Poland Spring donation of $5,000 to be applied to a real estate option on another key “Gateway” property (totaling approximately 28 acres) for $275,000.

Poland Spring TIF Conditions

Poland Spring commits to register three tanker trucks in Kingfield = Excise Tax paid here on these three vehicles.

Job Goals – Poland Spring commits to create 60 net new jobs with the construction of the frist two bottling lines and to make best efforts to hire residents of Kingfield, Avon, Eustis, Phillips and Strong. Hiring expected to begin February 2008 , through Maine CareerCenters.

Next Steps

The TIF Program boundaries, development program and financial plan have received state and local approval at the Special Town Meeting, on November 8, 2007 at Webster Hall in Kingfield.

Final details of the Credit Enhancement Agreement with Poland Spring are now being worked out and an application to the Maine Municipal Bond Bank for the State Revolving Loan Fund/DEP Clean Water Program has been submitted. Selectmen will consider awarding the engineering design contract for the subsurface system at the Jan. 7, 2008 meeting.

 

Possible Municipal Investment Options with TIF Proceeds (each would require a public town vote):

1. Poland Spring Waste Water Project – TIF income pays debt service, with a user fee arrangement used for tax relief – APPROVED

2. Village Common Septic System study and eventual upgrade

3. Truck/Traffic Calming Measures on Route 27.

4. Public Works Capital Equipment Purchases – Such as Street Sweeper, Plow Truck, Heavy Duty Farm Tractor, etc. – 50% of cost eligble.

5. Fire Department Capital Equipment – New fire apparatus – 50% of cost eligible.

6. Upgrade/replace/extend Village Sidewalk Construction.

7. Village Enhancement Plan and Capital Investment – Including such things as public parking, new street lights, landscaping, creating a commercial building facade program, etc.

8. Public Infrastructure Investments – Road upgrades and extensions, water, three-phase power to support new business development.

9. Computer Equipment to Provide Wireless Internet Access to the Village (capital expense).

10. Credit Enhancement Agreement for Poland Spring Water Company Bottling Plant (part of TIF agreement). – PENDING

Community Wide or Outside the District:

1. Revolving Loan Fund for local business and matching funds for State and federal economic development grant programs. Could include Bus Investment (local match) to support travel to and from Sugarloaf.

2. Town Administrative Assistant – 15% of annual salary paid with TIF funds.

3. Annual Kingfield Pops and Kingfield Days sponsorships.

4. Ongoing consultant support to maintain the TIF program.