SCARBOROUGH — On Nov. 4, the Scarborough Town Council voted in favor of a new policy for the approval process of credit enhancement agreements, which can serve as a guideline for developers and future councils.

A credit enhancement agreement, or CEA, is a contract between a municipality and a developer or business within a Tax Increment Finance District (TIF District), according to the policy. Either a percentage or all of the new value tax revenue generated by a project  go towards the developer or business involved in the agreement.

The policy, brought forward by the Finance Committee in October, introduces a scoring system that serves as a decision-making guide as well as a outline of the application process and requirements for when a CEA is applicable to a developer or business.

Developers can use the policy for a reference, said former Councilor Peter Hayes.

“This is really an attempt to just kind of create a process and a blueprint as we move forward and we may have applications for more CEAs — to help developers to know what the criteria is and what we’re looking for and also help town councils down the road have at least a starting point where there’s more objectivity to how we may arrive at a decision,” he said.

The proposed location for WEX’s new office is on Main Street in the Downs District. Courtesy Town of Scarborough

Earlier this year, the council approved a CEA with WEX, Inc. for a $2.25 million tax break on a $45 million project, an office building in the Downs District.

Although CEAs aren’t the most common agreements, the policy will assist future councils, said Councilor John Cloutier.

“It’s part of our duty to try to help future councils avoid some of the difficulties we may have come through, and I think this does a pretty good job of giving some guidance for what is inherently a non-structured or non-typical process,” he said. “CEAs don’t come up all the time, and they’re never all the same. It’s not a vanilla-type item.”

Councilor Jean-Marie Caterina said that while she initially had concerns about some portions of the policy and its overall intent, she would support the decision as long as councils are not required to follow the policy if it doesn’t make sense to do so in a specific situation.

“It’s somewhat redundant and potential for some limitation on creativity in times where we need to be creative,” Caterina said.

Cloutier agreed with Caterina, he said.

“It’s a guide,” he said. “If it doesn’t make to use it for a unique situation that comes up, then future council certainly has that option.”

The Scarborough Rules and Policies Committee as well as the Finance Committee have been working on the approved TIF CEA policy, and Council Chair Paul Johnson said that he believes the final product is “infinitely better” than what he saw months ago.

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