PORTLAND — A swath of peninsula properties from State Street to Washington Avenue could fall into two new tax increment finance zones that could set aside $1 million in funds for the next 20 to 30 years.

“It is a global way to approach addressing downtown area-wide public infrastructure needs, instead of doing it on a site-by-site or neighborhood basis,” city Planning Director Greg Mitchell said Tuesday.

Mitchell presented the proposed Downtown and Transit Oriented Development districts to the City Council Housing and Community Development Committee on May 28.

“These are not for developer tax breaks,” the committee chairman, City Councilor Kevin Donoghue, said Monday. “I expect these will come out of the committee in August.”

Tax increment finance zones are set up to capture increased valuations on properties with the intent of dedicating the additional funds to pay for infrastructure projects or even salaries for staffs in municipal departments.

In the past, TIFs have been established in the city to help developers recoup costs, while also generating money for the city.

On Monday, the City Council had a first reading of a new housing-related TIF for an Avesta Housing project at 134 Washington Ave. The TIF is expected to return more than $200,000 to Avesta over 20 years.

Public comment and a council vote on the TIF and associated credit enhancement agreement are scheduled for June 16.

Donoghue said the intent of the Transit Oriented Development District, extending along Congress Street, is to improve public transportation through the corridor and to reduce waiting times for buses to 15 to 20 minutes.

The new TIF districts would fit between the existing Waterfront TIF District along Commercial Street and the Bayside TIF District. Mitchell has also proposed to expand the Waterfront and Bayside districts.

The Bayside TIF now extends along Marginal Way from Somerset Street to Franklin Street. It could be expanded to include the northern side of Cumberland Avenue.

The Waterfront Capital Improvement zone along West Commercial Street would be enlarged to include the area where the International Marine Terminal will be expanded.

Based on the city holding on to $20 per $1,000 of assessed valuation increases in the zone for fiscal year 2015, Mitchell estimates the city could set aside $1 million, with $100,000 earmarked to pay operating costs for Creative Portland, as much as $150,000 for sidewalk repairs in the district, $300,000 for Economic Department salaries, and $200,000 for improving mass transportation services along Congress Street. Additional transportation funding could come from the Thompson’s Point TIF district.

The Creative Portland and Economic Department salaries are now paid from funds in the Arts District and UNUM TIFs. Mitchell recommended the Arts District TIF be eliminated, except for a credit enhancement agreement governing development of the former Baxter Library on Congress Street. The Unum zone is set to expire next year.

The wider scope of TIFs is somewhat unprecedented in the city, but not uncommon in neighboring communities, including South Portland and Scarborough, as a method of providing funding for capital improvements and infrastructure work.

By setting aside valuation increases, the TIFs could also prevent losses in state education and revenue sharing aid based on city property valuations.

Mitchell’s estimates of how much revenue can be generated are preliminary, he said, because the exact TIF boundaries remain unsettled. After approval by the City Council, the zones would also need review by the Maine Department of Economic and Community Development for compliance with state laws.

David Harry can be reached at 781-3661 ext. 110 or [email protected]. Follow him on Twitter: @DavidHarry8.

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