Wednesday, December 11, 2013
PORTLAND — Members of the City Council’s Housing and Community Development Committee decided Wednesday that property tax breaks for developers should not be tied directly to the number of jobs that a project will create.
“I’m against setting hard and fast requirements,” Councilor Edward Suslovic said. “I’m a big fan of maximum flexibility.”
Consequently, the committee indicated it would rather see developers present detailed jobs information as part of any application for a TIF – or Tax Increment Financing – which funnels a portion of property taxes from new developments into the financing of those projects or to pay for public improvements around this projects.
The issue has been on the committee’s agenda for months and more meetings are expected before a policy is recommended to the full council.
For years, Portland has largely relied on the types of TIFs that benefit developers directly, but another policy proposal would emphasize distributing tax dollars on a neighborhood-wide basis, rather than back to a specific development.
Targets for the area-wide program include India Street, Riverside Street, Franklin Street and the downtown area, said Greg Mitchell, the city’s economic development director. Area-wide TIFs already exist in Bayside and the Arts District.
While jobs won’t have a direct effect on the size of a tax break, they will be important, Mayor Michael Brennan said. “I think a stronger application would be one that really has thought about using local contractors and providing wages and benefits that are keeping with the local economy,” he said.
State law currently caps the amount of land a municipality place in a TIF district at 5 percent, because it affects state funding. As new value is added in a community, state subsidies are reduced, while county taxes increase.
TIFs allow municipalities to maintain its education subsidies and revenue sharing from the state and prevent an increase in county taxes.
Mitchell said, absent a TIF, the city loses 40 cents over every new tax dollar generated.
There are two exceptions to the TIF limits, those covering downtown areas and transportation corridors.
Councilors generally supported creating a downtown TIF that would cover the Arts District, an existing TIF district that totals 50 acres and $231 million in value.
Putting the Arts District in an unlimited downtown TIF would free up 60 percent of the city’s TIF capacity, Mitchell said.
The Arts TIF is the only funding stream for the Creative Portland Corp., but Mitchell said their funding could be maintained.
“This is in no way intended to not continue that level of investment,” Mitchell said.
Councilor Kevin Donoghue said he’d like to see the Bayside district extended to encompass Portland Street – an area that needs more investment.
Donoghue also recommended lowering the baseline threshold for affordable housing projects. Currently, only projects adding $2 million value can be considered for a TIF.
“I want to be extremely proactive in encouraging the development of affordable housing,” Donoghue said.
The current proposal suggested 50 percent cap on property tax reimbursements for no more than 15 years. But more work needs to be done before those limits are set.
Councilor Nicholas Mavodones Jr. encouraged the city to reach out to local developers for input on the revisions. The committee meets again on Nov. 14.
Staff Writer Randy Billings can be contacted at 791-6346 or at: