SCARBOROUGH — On Nov. 4, the Scarborough Town Council will make a decision to implement a proposed credit enhancement agreement policy, which will create a more objective approach to the application process.

Councilors workshopped the policy, brought forward by the Finance Committee, on Oct. 21, discussing how the policy would impact future CEA deals.

As defined by the proposed policy, a CEA is a contract between a municipality and a developer or business, serving as a mechanism to assist development through the use of all or a percentage of the “tax revenues generated by the new investment to pay certain authorized project costs with payments made directly to the developer or business.”

An example of two recent CEA agreements that received approval from the Scarborough Town Council include a $2.25 million tax break agreement with WEX, Inc and a 20-year, 75-percent reimbursement rate agreement for a $14 million senior living facility called Jocelyn Place.

The proposed policy, worked on and recommended by the Finance Committee, would require applicants seeking a CEA with the town to complete a scoring sheet, Councilor Betsy Gleysteen said.

A clear distinction between TIF, Tax Increment Financing, and CEA was made clear in the policy because the two terms are often confused with each other, she said.

According to the policy draft, a development project is only qualifiable for a CEA if it meets three out of six specific objectives, such as if he project is a public infrastructure project identified as needed by the community or an
identified public benefit for the community; the development project cannot move forward without the infrastructure support; or the development project itself will create or retain significant and sustainable employment opportunities.

The policy does not include affordable housing CEAs, Town Manager Thomas Hall said.

“There was some talk at the committee level that there may need to be companion policies for other types of CEAS, the affordable housing kind, but this policy was not drafted with that in mind,” he said.

Councilor Peter Hayes said that the policy also serves as a way for the council to look at past and future deals that all have the same objective standards.

“The anticipation is we may get more of these applications down the road as we do these sort of deals and economic development,” he said. “What we wanted to do is maybe create a more objective way for them to come through the pipeline rather than subjective, at least have some mechanism that the staff can use to determine whether it should be brought forward.”

Gleysteen said that CEA documentation will be helpful for everyone, including residents.

If passed, she said, “We have a document we can go back and fill in — ‘Step one, this occurred on this date; Step 2, this is who was involved. We will have a document tool. So if a council changes over or if a finance committee changes over, or residents want to see what we did, we’ve got the steps in place. It’s not just, ‘Well, these guys are getting favoritism,’ ‘These guys don’t get favoritism.’ No, people went through a similar process.”

Councilors expressed support for the policy and the scoring tool.

“I think it’s a nice addition,” Councilor Don Hamill said. “I think it would be a useful tool to screen applicants. I don’t really lie in fear that it’s going to be seen as a hurdle for serious applicants to get over. I kind of like those features and those aspects for it.”

Another discussion point was the question of when the Town Council needs to get involved in the application process.

Using past CEA agreement approvals as examples, Councilors Ken Jennings and Gleysteen said that they would like to see more communication with the council during the process.

“The ones we did were largely driven by power points,” Gleysteen said. “Government by power points quite frankly drives me crazy because it’s really hard to go back and figure everything out.”

The Finance Committee, when drafting the policy, wanted to create a balance, but not every part of the process needs the Council, said Councilor John Cloutier.

“The concern was we didn’t want to open the floodgates, and we didn’t want everyone to feel like they have an entitlement to a CEA from us,” he said. “We thought that having at least a little bit of the pre-work done by the town manager with some discretion to say, ‘Hey, you know what? This isn’t worth our time,’ or, ‘You know what? Maybe,’ and then he bounces it off leadership. If something looks like there’s actually going to be an application, then that’s the trigger. Then the council would be kind of engaged.”

There was a public hearing for this proposed policy but no resident spoke on the Oct. 21 meeting.

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