August 7, 2012

Council OKs tax breaks for two Portland projects

But councilors say a system is needed to assess tax increment financing districts, which critics call giveaways to wealthy companies.

By Dennis Hoey
Staff Writer

PORTLAND — Taxpayers criticized tax breaks that city councilors granted Monday night for two development projects, saying the council should not be giving financial aid to corporations.

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Supporters said the tax breaks will stimulate economic development on the city's eastern waterfront and generate new tax revenue.

The council voted 6-2 to approved a tax increment financing district for Fore India Middle Street LLC, with Councilors John Anton and David Marshall voting against the proposal.

It voted 5-3 in favor of a TIF district for the Bay House project off India Street, with Anton, Marshall and Councilor Kevin Donoghue dissenting.

Councilors agreed that the city needs a better system for assessing the value of TIF requests. Critics say tax increment financing has evolved into giveaways to companies that don't face financial hardships or would develop their projects regardless of tax incentives.

"I have to ask myself, 'Do we really want to miss out on an opportunity to gain new tax revenue?' My position is no," said Councilor Edward Suslovic. "It's a pretty small price we are paying to leverage a return in taxes alone."

He said, however, that the city must develop a better system for evaluating TIF applications.

He suggested that requests be graded on how much they benefit the public -- a major criteria of the state's law for tax increment financing.

In a typical agreement, a percentage of the property-tax revenue from new development is returned to the developer to offset the cost of the project or for some agreed-upon purpose.

One application that went before the council Monday night drew attention because Fore India Middle LLC sought a TIF agreement to cover the cost of installing underground utilities -- a city requirement. The developer said the cost of underground utilities could go as high as $1 million.

The plan calls for a five-story, 180,000-square-foot, mixed-use project with retail space, three levels of office space and 18 residential condominiums on the site of the former Jordan's Meats plant.

The request did not impress John Newton, a Matthews Street resident who spoke against both requests.

"It's a poor use of our tax money," Newton said. "We should have a (TIF) policy in place before we give out tax breaks to the wealthy."

Bay House will be developed by the Village at Oceangate LLC. The plan calls for two buildings with 94 market-rate apartments, a parking garage and 5,700 square feet of retail space.

The project will be built on the site of the former Village Cafe. The developer bought the site in 2007 but the downturn in the economy delayed the project.

The developers sought tax increment financing to cover the cost of installing sidewalks and making utility improvements -- a cost they estimate at just over $1 million.

Marshall said he had reservations about giving a tax break to Bay House. That TIF will be nullified if the developers ever convert the apartments to condos.

"This particular agreement doesn't reach any level of serving the public good," Marshall said.

Staff Writer Dennis Hoey can be contacted at 791-6365 or at:


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Today's poll: Tax Breaks

Do you think Portland should be stricter in granting tax breaks to individual businesses through the TIF program?



View Results