The commission says changing the TIF districts will improve Holton’s finances

HOUULTON, Maine — October 28, 2024 — Former president of Southern Aroostook Development Corp. Peter Chase and SADC chief executive Johanna Johnston presented a report to Holton City Council on the cost of tax increment financing to urban areas on Monday evening. (Kathleen Phalen Tomaselli | Houlton Pioneer Times)

HOLTON, Maine – The final report of the Holton Tax Increment Financing Committee, presented to the City Council Monday night, concluded that changing the city’s TIF districts will benefit the city financially for years to come.

The council appointed a committee earlier this year to evaluate the city’s current TIF program and determine whether it has created an economic development advantage for the city, as well as determine a way forward.

After many meetings, the committee concluded that renewing the expiring districts and continuing others, with a change in size and/or focus, over the next 10 years would help the city retain and attract new business and significantly fund needed infrastructure projects.

A TIF is a public financing method used to subsidize infrastructure and other community improvement projects by capturing future tax incentives as a result of growth and investment made in designated areas.

In the past, the council has not been as active in examining how TIF funds have been used, and last spring several experts recommended that the city take a closer look at how the districts operate and how the city uses the funds generated.

The TIF program, implemented in the mid-2000s, has contributed to economic development, job growth, job retention and new commercial development, according to the committee. Specifically, the assessed value of the North Street TIF District increased from $10 million to $30 million.

However, committee member Peter Chase said the city has been using the funds collected much less aggressively than it should have been, and that has resulted in a significant TIF balance.

“Taking those costs into account, it lowers your town’s assessment, and the state uses that overall assessment of the city when it determines what it does in terms of county taxes, school subsidies, and state revenue sharing,” Chase said. “That’s why it’s so important.”

The committee recommends various changes to TIF spending, reducing the area in several TIF districts to create future districts, and changing the permitted use categories for the downtown district to better utilize it for infrastructure improvements.

“Committee members believe these changes will make the TIF program better serve taxpayers and ensure continued economic growth,” Chase said.

Members of the TIF Review Committee include Councilors James Peters and Chris Robinson, City Manager Jeremy Smith, City Assessor Teresa Duff, Peter Chase and Doug Hazlett of the Southern Aroostook Development Corp., and two public members, Jim Brown and Cameron Clark.

City Director of Community Development Nancy Ketch, SADC Executive Director Johanna Johnston and Councilor John McLaughlin have been added to the committee.

With the recommended modifications, TIF districts will provide funds for critical public safety and infrastructure needs, encourage new business expansion, ensure downtown remains competitive against new commercial districts, provide financing for critical bond payments, and provide additional assessment revenue from by the county, according to the TIF committee

In addition, the districts will increase state revenue sharing, reduce the impact of district taxes and reduce the city’s share of education costs, Chase said.

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