January 22, 2013

Limits on tax breaks up for vote in Portland

A city committee will also discuss Wednesday whether Congress Square Park will remain a park.

By Randy Billings rbillings@pressherald.com
Staff Writer

PORTLAND – A City Council committee is scheduled to vote Wednesday on recommendations to limit the way the city uses property tax breaks to encourage development.

click image to enlarge

Dawn York of South Portland picks up trash in Congress Square Plaza on Tuesday, May 22, 2012. A City Council committee is scheduled to vote Wednesday, Jan. 23, 2012 whether Congress Square Park will remain a park, or be sold to the Eastland Hotel and become a ballroom.

Shawn Patrick Ouellette / Staff Photographer

The Housing and Community Development Committee also is expected to discuss the future of Congress Square Park, where the owners of the Eastland Park Hotel would like to build a ballroom.

On the tax issue, committee members could decide to recommend limits to the City Council on how much property tax can be reimbursed to developers. Options include capping payments at 50 percent of the tax assessment over 20 years or 70 percent over 30 years.

Since early last summer, the committee has been looking at changes to the tax increment financing program, which allows the city to return property taxes to developers to offset development costs.

The city has mainly used the program to subsidize specific developments at the request of developers. It is now poised to adopt a policy that would cap such tax breaks and dedicate more of those tax dollars to certain neighborhoods, rather than individual developers.

The idea of dispersing the reimbursed taxes neighborhood-wide has support from councilors and developers, said Greg Mitchell, the city's economic development director.

There is more disagreement about the issue of caps.

State law allows municipalities to return 100 percent of property taxes from new development to a developer. The committee has been looking at capping that benefit at 50 to 65 percent of taxes over a 15- to 20-year period.

Drew Sigfridson of Portland, a real estate broker who is president of the Maine Real Estate and Development Association, said the group supports using the tax revenue for area-wide districts. But he cautioned against adopting unnecessarily strict caps that could tie the city's hands.

"I just don't think we should create a policy that in the future we may want to discard," Sigfridson said.

The real estate association is advocating for a 70 percent cap on taxes returned to developers over a 30-year period for larger developments that may need added incentives, Sigfridson said.

City Councilor Nicholas Mavodones, who chairs the committee, said he, too, would prefer to have a higher percentage to preserve flexibility.

"I've never really had a problem voting on TIFs on a case-by-case basis," he said.

But a committee member, Councilor Kevin Donoghue, said he would "happily support" the 50 percent cap over 20 years -- limits also supported by Councilor John Anton, who leads the Finance Committee.

Donoghue said officials have not used the flexibility in the TIF policy wisely and a "firm limit" is needed. "We need to have a reservation price -- a point beyond which we do not go," he said.

The committee also will discuss the future of Congress Square Park, an area of concrete and brick next to the Eastland Park Hotel where public drinking and urination are common.

A task force recommended improving the parcel and keeping it public. However, the hotel's new owner approached the city about building a ballroom on the property.

Rockbridge Capital, the new owner, submitted preliminary plans for the ballroom but ran into opposition from the committee, as well as neighborhood associations and advocates for the homeless.

The Ohio-based company said in August that it would draft a new plan, but it is not clear whether it ever submitted one.

A Rockbridge official did not return emails and calls for comment. Mitchell, the city's economic development director, would not say whether Rockbridge has submitted a new plan or made a formal offer to buy any portion of the square.

The city now must decide whether to allow development in the square or proceed with improvements as a park, say Mavodones and City Councilor David Marshall, who represents the district but does not serve on the development committee.

"If there is a proposal, we need to take some action on it quickly," Mavodones said. "If not, we have a space we need to do something with."

Said Marshall: "I'm not expecting to see something that's reflective of what the public has wanted because we haven't seen any steps in that direction from the developer. I'm ready to move on."

Staff Writer Randy Billings can be contacted at 791-6346 or at:

rbillings@pressherald.com

Twitter: @randybillings

 

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