[HISTORY: Adopted by the Board of Selectmen of the Town of Madison
as indicated in article histories. Amendments noted where applicable.]
[Adopted 12-28-1998]
A.
Tax increment financing (TIF) is a state-sanctioned economic
development incentive tool which allows municipalities to use all, or a portion
of, the new property taxes that result from a commercial investment project
within a designated district to assist in that project's financing. To accomplish
this, the municipality has the option of issuing bonds which are retired using
the tax increment, or paying the tax increment directly to the investing business
to cover project costs through a credit enhancement agreement (CEA). When
CEAs are utilized, municipalities incur no financial liability for the costs
of the TIF project. In accordance with state law, TIF districts may be designated
for a period of up to 30 years. Bonds may be issued under this program for
up to 20 years. The municipal legislative body and the State of Maine, Office
of Economic and Community Development, must approve TIFs.
B.
Since increased value within the TIF District is not
included in the state valuation, the TIF designation allows the Town to avoid
decreases in revenue sharing and increases in the school and county assessment,
which would occur if the value of the improvements was not sheltered by the
TIF. The state law allows the municipality to pass along to the investing
business the benefits of that sheltered value at no net financial loss to
the municipality as well as any additional portion of the taxes assessed on
the increased value that the Town deems appropriate. The balance of the taxes
on the increased value, which the Town retains, may be designated as a Development
Fund Account.
A.
The purpose of this policy is to articulate to existing
or potential businesses Madison's desire to encourage and support economic
development that is determined by the Board of Selectmen to be compatible
with the Comprehensive Plan and/or existing local ordinances and which provides
a community benefit.
B.
Notwithstanding compliance with any or all of the guidelines
below, the creation of a TIF District is a policy choice to be evaluated on
a case-by-case basis by the Board of Selectmen, and upon the Board's recommendation,
placed upon an Annual or Special Town Warrant for approval at Town Meeting.
A TIF is not a right under Maine law and meeting the state TIF requirements
or the criteria established in the policy does not create a right or entitlement
for any applicant.
C.
In the absence of extraordinary circumstances, the burden
of establishing the public value of a TIF shall be placed upon the applicant
and the application must substantially meet the criteria contained herein.
The Board, however, reserves the right to bring any TIF proposal (regardless
or whether it meets the criteria below) to Town meeting for public vote provided
a majority of the Board believes that acceptance of the TIF is in the best
interest of the Town of Madison.
A.
The authority for creation of Tax Increment Financing
Districts is established in 30-A M.R.S.A. §§ 5222 through 5224.
B.
This policy may be modified at any time by a majority
of the Board of Selectmen after the Board has entertained comments and concerns
at a properly advertised public hearing to be held prior to, or simultaneously
with, the Board meeting at which the proposed amendment will be considered.
A.
A TIF application may only be approved at a Town Meeting.
Whenever practical, a TIF application shall be considered at the Annual Town
Meeting. However, if the Board determines there is clear and pressing community
need to act immediately, or if the applicant provides evidence that delayed
approval will be detrimental to the proposed project, the application may
be voted upon at a Special Town Meeting.
B.
A TIF shall only be presented to the public for vote
if a majority of the Board recommends adopting the TIF District. In the event
the Selectmen desire to present to the public a proposal which is different
from the original application, the Selectmen shall work with the applicant
to create a proposal which is agreeable to all parties concerned and the negotiated
proposal shall be submitted to the public for vote (see note below).
C.
The TIF Article to be voted upon shall contain language
giving the Board of Selectmen the authority to modify the CEA during the term
of the agreement provided such modifications are in accordance with the provisions
of this policy and such changes do not increase any annual tax benefit to
the applicant.
D.
NOTE: Nothing herein shall be interpreted to be contrary
to the public's right to petition to place an issue on a Warrant for public
vote under 30-A M.R.S.A. § 2522.
A.
The Town of Madison TIF mechanism shall be utilized as
an economic development incentive for the Town's existing businesses as well
as for attracting desirable new commercial establishments to the area. The
Board shall accept and review TIF applications for projects creating $100,000
or more of new taxable value. When determining whether the project should
be presented to the public for approval, the Board shall consider the value
of the proposed improvements and increased/retained employment or other public
benefits in relationship to the size, profitability and business environment
of the applicant. The Board may determine that a modest financial investment
and creation of one or two new quality jobs constitutes significant growth
(and community benefit) for a particular small business; however, the Board
may require a proportionally larger economic development effort from larger
businesses.
B.
In order to minimize risk to the citizens of Madison,
tax increment financing will be provided through credit enhancement agreements
only, except that the Board of Selectmen reserves the right to initiate a
public infrastructure TIF project which requires bonding. The applicant utilizing
a credit enhancement agreement must provide any and all documentation requested
by the Town that will protect the Town's economic and financial position,
and/or that confirm both the letter and the spirit of the underlying credit
enhancement agreement between the applicant and the Town.
C.
The applicant may propose that any amount up to 100%
of the additional tax value generated by the proposed activities be sheltered
from Madison's tax valuation for any period up to 20 years. Absent any extenuating
circumstances, the term of the TIF shall not exceed the expected longevity
of the improvements proposed. The Board may approve incentives to businesses
on a straight line (i.e., 100% of incremental value retained by applicant
in years one through five; 75% retained in years six through 10; 50% retained
in years 11 through 15) and may recommend separate schedules for real property
and personal property within the same TIF District.
D.
Up to 85% of the financial benefit associated with the "captured value" as defined in the state TIF guidelines may be utilized for the benefit of the commercial applicant. The Board shall determine the appropriate percentage based on the community benefit of the project. The number of quality jobs created/retained and the value of public infrastructure improvements (which will serve businesses other that the applicant) will be among the Board's top priorities when determining the appropriate percentage. (See performance standards and approval criteria sections of this policy: §§ 729-9 and 720\9-8, respectively.) The remaining "captured value" retained by the Town shall be placed in a development fund to benefit further economic development through revolving loan funds, matching grants to encourage facade upgrade and/or improve areas of slum and blight or upgrade of public infrastructure which will enhance future economic development. Use of the retained captured value will be determined on a case-by-case basis.
E.
The credit enhancement agreement (CEA) shall provide
for a recapture of the benefits if the project should move to another municipality
prior to the end of the TIF term. CEA assignments will be allowed only for
conventional, commercial financing purposes and where the proposed assignee
agrees to be bound by the same terms and conditions as the original applicant.
The initial application shall contain a written statement confirming that:
(1)
The applicant agrees, if the TIF District is approved,
to notify the Town in writing prior to any transfer of ownership of real or
personal property within the district; and,
(2)
The applicant will obtain from the new owner a written
agreement to accept the provisions of the TIF and credit enhancement agreement
as presented to and approved at Town Meeting.
F.
In accordance with the state assessing standards and
30-A M.R.S.A. § 5224, Subsection 4A, nothing in this policy allows
or sanctions unequal apportionment or assessment of the taxes to be paid on
real property within the Town of Madison. Furthermore, all real and personal
property within the tax increment-financing district shall be assessed real
and personal property taxes equitably with real and personal property taxes
assessed elsewhere in the municipality. The Board of Assessors shall make
a determination regarding the "frozen" or existing value of the proposed district
(based solely upon accepted assessing standards) prior to making final determinations
regarding the TIF application. The applicant must provide verified documentation
as to the value of the fixed assets, being real and personal property, as
of the date of the acceptance of the application.
G.
Economical necessity to fund the proposed project is
a factor that should be considered when evaluating a TIF proposal.
(1)
Justification for economic need should be demonstrated
by one of the following scenarios:
(a)
A need to offset infrastructure costs unique to the site;
or
(b)
A need to offset economic advantages available to the
commercial applicant if it should build or expand outside of Madison; or
(c)
The unavailability of sufficient private or other public
funding sources to meet the full capital investment needs of the corporate
entity seeking assistance; or
(d)
The need for assistance in meeting the costs of implementing
improved technology for the business to become or remain competitive in the
global market.
(2)
The Board of Selectmen reserves the right to consider
other scenarios offered by the company making the proposal if, in its best
judgment, they feel doing so is in the best interest of the community.
H.
Financial capability to complete the project must be
fully documented prior to the Board of Selectmen's review as follows:
(1)
A letter from a financial institution, governmental agency,
or other funding agency indicating a commitment to provide a specified amount
of funds and the uses for which those funds may be utilized.
(2)
In cases where funding is required but there can be no
commitment of money until approvals are received, a letter of intent from
the appropriate funding institution indicating the amount of funds and their
specified uses will be accepted.
(3)
The most recent corporate annual report indicating availability
of sufficient funds to funds to finance the development together with explanatory
material interpreting the report.
(4)
Evidence indicating availability of funds if the developer
will personally finance the development.
I.
Applicant must comply with all statutory and regulatory
guidelines of the Town and state.
J.
All proposed projects must be consistent with the Town
Comprehensive Plan, if such Plan has been approved prior to the date of application.
K.
All costs of the project that are included in the TIF
proposal must be documented through invoices and other appropriate records
from nonaffiliated companies. Payments of project costs to affiliated companies
will be disallowed unless the applicant makes full disclosure of the relationship
between the parties of the Town in writing prior to public approval of the
district.
L.
The applicant must declare in the TIF application all
state and local economic development programs for which the applicant intends
to apply over the term of the district. This disclosure must include information
regarding applicant's intent to participate in programs including, but not
limited to, employment tax increment financing (ETIF), STIF and business equipment
property tax reimbursement program (BETR). After TIF approval, if the applicant
is awarded any state or local economic development incentives (such as those
listed above or any newly created programs) which were not disclosed in the
application, the Board reserves the right to reconsider the terms of the TIF
District and, if appropriate, renegotiate the terms of the CEA. Applicants
are advised to coordinate with the Town before applying for state or local
economic development incentives that were not fully disclosed in the original
application.
M.
All applicants will be required to sign a professional
fee consent form agreeing to reimburse the Town for all reasonable outside
professional costs, such as legal and accounting, incurred as a result of
the tax increment financing proposal, whether or not the TIF District is approved.
In addition, any reasonable out-of-pocket expenses incurred by the Town in
connection with the tax increment financing proposal will be reimbursed by
the applicant, whether or not the TIF District is approved including, but
not limited to, expenses related to calling a Special Town Meeting, advertising,
printing and postage.
N.
If the tax increment financing proposal is approved,
an annual administrative fee equal to 1% of the incremental taxes reallocated
back to the project will be charged by the Town and credited to the general
fund to offset annual administrative costs and overhead associated with overseeing
the TIF District.
Applicants are encouraged to develop applications in consultation with
the Town. Members of the Board of Selectmen, Planning Board or Code Enforcement
Office may be involved in these preliminary discussions, even when they may
be involved in a subsequent review of the application. All TIF applications
must:
A.
Provide enough detail to clearly describe the scope of
the project, beneficiaries and costs;
B.
Include a detailed description of any public improvements
to be financed using captured funds, and information regarding how the funds
will be spent;
C.
Compare the impact of the proposed activities on the
SAD No. 59 and county assessment and on state revenue sharing that is based
on tax valuation, both with and without a TIF District;
D.
Clearly describe the benefits of the TIF to the applicant;
E.
Provide a statement explaining the impact of proposed
project upon the general community;
F.
Present all data required by the state, 30-A M.R.S.A.
§§ 5222 through 5224; and
G.
Provide any additional information the Board of Selectmen
deems necessary to review and evaluate the application.
A.
Applicants are advised that the process of reviewing,
evaluating and scheduling a TIF application for public vote may take up to
60 days. Applications will be accepted at any time; however, applications
submitted less than 60 days prior to Annual Town Meeting may require a Special
Town Meeting, at the Selectmen's discretion. Notwithstanding an applicant's
need to present a TIF application when the business is ready to proceed with
the proposed project, the Town prefers such applications be voted upon at
Annual Town Meeting, whenever possible.
B.
The Board of Selectmen shall solicit nonbinding recommendations
regarding the TIF proposal from the following: Town Manager, Community Development
Director, Assessor's Assistant, Planning Board, Code Enforcement Officer,
Treasurer and any other department head or outside agency whose operations
may be affected by the proposal or who may offer relevant advice.
C.
The Town Manager, Assessor's Assistant and Treasurer
shall be responsible for verifying completeness of the application and verifying
the assessment, tax shift and other calculations submitted by applicant. The
applicant and/or its consultant will be given the opportunity to make an oral
presentation to the Selectmen at a regularly scheduled Board meeting and the
Town Manager shall advise the Selectmen regarding the major elements of the
proposal and the costs and benefits to the community.
D.
The Town will hold a public hearing to solicit public
comments and questions regarding the TIF District either immediately prior
to the Town Meeting or at a public hearing held no earlier than 30 days prior
to the Town Meeting in which the public will vote upon the TIF proposal. The
public hearing shall be advertised in a newspaper of general circulation in
the Madison area at least 10 days prior to the public hearing.
E.
When the application will be considered at the Annual
Town Meeting, an Article containing the appropriate wording shall be included
in the Annual Town Warrant and posted in the customary manner. When a TIF
application will be considered at a Special Town Meeting, the Town shall advertise
that meeting in a newspaper of general circulation in the Madison area on
at least two occasions, one occasion at least two weeks prior to the Special
Town Meeting date, and another occasion some time between the meeting date
and two weeks prior to the meeting date. The applicant shall pay advertising
costs.
F.
If the public approves the TIF proposal, the Town shall
submit the application, after any required public hearings, to the State of
Maine Office of Economic and Community Development for final approval within
15 days of the public vote.
The following criteria shall be used to determine the public benefit of the application and whether or not the proposal should be placed before the voters for consideration. It is not mandatory that all criteria be met. The Board may negotiate with the applicant regarding specific elements of the application in an effort to create an amended proposal. (In addition to the provisions contained in this section, the Board of Selectmen shall use § 729-9, Performance standards, below to determine the recommended percentage of financial benefit associated with the captured value to be utilized for the benefit of the applicant.)
A.
Does the application meet the "basic provisions" outlined
above?
B.
Does the project create or retain long-term permanent employment with wages equal to or higher than the local average? (See § 729-9, Performance standards, below.)
C.
Will any new jobs created be advertised and promoted within Madison? (See § 729-9, Performance standards, below.)
D.
Does the proposal improve the general economy of the
community?
E.
Will the improvements have a net positive impact on Madison's
business community after considering all factors, including effects on established
businesses?
F.
Does the project minimize traffic impacts and is it designed
in a manner that does not contribute to commercial sprawl?
G.
Are the structures to be built, if any, which are visible
from a public road, compatible with the surroundings with regard to style
and setting and in compliance with the Comprehensive Plan as well as state
and local ordinance?
H.
Does the project create public infrastructure facilities that have applications beyond the particular development such as traffic upgrades, public parking facilities, etc.? (See § 729-9, Performance standards, below.)
I.
Does the project improve and/or broaden the tax base?
J.
Does the proposal improve blighted buildings or areas
in need of redevelopment?
K.
Does the proposed district support community projects
or create public benefits such as granting access to open spaces, creating
student internships, providing job training, supporting local contractors
and suppliers?
L.
Will this project encourage other businesses to invest
in their buildings, purchase equipment or create jobs?
This section shall utilized to evaluate the appropriate percentage of
financial benefit associated with the captured value to be utilized for the
benefit of the applicant.
A.
If the infrastructure improvements proposed under the
TIF are likely to directly encourage additional businesses to relocate or
expand within Madison: or, if the TIF proposal will create new public service
or training endeavors (i.e., higher education facilities such as a University
of Maine satellite site), the Board should consider awarding additional credit
enhancement percentage points to the proposed agreement. General speculation
regarding possible future development due to the proposed upgrade will not
hold as much weight as professional opinions from KVCOG, Community Development
Director or other knowledgeable sources.
B.
For proposed TIF applications retaining or creating quality jobs, which are paid equal to or higher than the local average, the Board may consider providing the applicant with a value of $4,000 annually per job retained or created. This amount may be made in addition to any amounts or percentages awarded pursuant to Subsections A and C of this section.
C.
To obtain an incentive for retained jobs the applicant
must provide clear and convincing documentation that the TIF approval will
provide the financial incentive which will make the difference between relocating
or going out of business. A pro forma or business plan will be required to
show that the applicant is seriously considering a viable alternative location.
D.
Both the retained jobs and newly created jobs shall be
monitored by the Town on a monthly, quarterly, semiannually or annual schedule
as determined appropriate by the Town. In the event that any approved TIF
District does not meet its job creation/retention obligations under these
standards, the Board of Selectmen reserves the right to renegotiate the CEA
to reduce the tax benefit to the applicant accordingly.
[Adopted 12-28-1998]
A.
For a TIF application to be considered by the Town's
Department of Economic Development, the Economic Development Committee, or
the full Board of Selectmen, the application must meet a majority of the following
guidelines.
B.
Notwithstanding compliance with any or all of the guidelines,
the creation of a TIF district is a policy choice to be made by the Madison
Board of Selectmen on a case-by-case basis; a TIF is not a right under Maine
law and meeting these guidelines does not create a right or entitlement to
any applicant.
A.
In order to minimize the risk to the citizens of Madison,
tax increment financing will be provided via credit enhancement agreements
only. The applicant must provide any and all documentation that will protect
the Town's economic and financial position, and/or that confirm both to the
letter and spirit of the underlying agreement between the applicant and the
Town.
B.
The Town's share shall not exceed 75% of the incremental
taxes over the life of the district.
In all instances, applicants requesting tax increment financing must
demonstrate:
A.
The Town's participation is economically necessary and
involvement by the Town is needed in order to the project to be undertaken.
Justification for economic need and Town involvement must be demonstrated
by:
(1)
A need to offset infrastructure costs unique to the site;
or
(2)
A need to offset economic advantages available to the
corporate entity if it should build (or expand) outside of Madison; or
(3)
The unavailability of sufficient private or other public
funding sources to meet the full capital investment needs of the corporate
entity seeking assistance.
B.
The project creates a significant new tax value equal
to or greater than $2,000,000 or a significant employment impact.
C.
Financial capability to undertake project must be evidenced
prior to review.
D.
Compliance with all statutory and regulatory guidelines
of the Town and state.
All applicants must, at a minimum, comply with the following conditions:
A.
For any employees employed in the state, the employer
may not discriminate, with respect to wages, benefits or terms and conditions
of employment between full-time employees and other employees, except that
benefits may be prorated based on the amount of time worked. This subsection
does not prohibit variations in the rate of pay based on a difference in employee
seniority.
B.
The employer must offer health insurance coverage to
all employees employed in the state on the same financial terms, except that
employees who are not full-time permanent employees may be offered coverage
on a prorated basis based on the amount of time they work.
C.
The employer must provide to all employees employed in
the state a pension plan that includes an employer contribution of at least
3% of gross pay.
D.
The employer may not pay an employee an hourly wage that
is less than the prevailing wage for that occupation in the state as determined
by the Commissioner of Labor or a living wage, whichever is higher. For the
purposes of this subsection "living wage" means an income calculated on a
calendar year basis that is greater than the average annual per capita income
in the labor market area in which the employee is employed.
E.
The employer must develop and implement a closing and
layoff policy, which must, at a minimum, require that the employer will not
close, relocate or eliminate jobs without providing at least six-months' notice
to the state and the unit of local government that provides the economic development
incentive, without engaging meetings with state and local government officials
and local unions to explore alternatives and without engaging locally in at
least one public hearing in the affected community.
F.
If an employer sells a business that has qualified for
an economic development incentive, the purchaser is subject to this section
for five years beyond the termination of the economic development incentive
or for a length of time equal to the period during which the business received
the economic development incentive if that period was less than five years.
The purchaser must conform to the terms of any existing collective bargaining
agreement between the former employer and any of that employer's employees.
Although an applicant need not meet each of the following criteria,
they will be used to determine the level of participation by the Town.
A.
The project assists an established business in the Town
of Madison, thus creating or retaining employment;
B.
The project creates long-term, permanent employment;
C.
The project improves a blighted area in need of redevelopment,
or an area identified as a priority by the Town;
D.
The project creates public infrastructure facilities
which will have application beyond the particular development such as traffic
upgrades, public parking facilities, etc.
E.
If not from the beginning on the district, then as soon
as is financially possible, the project will support community projects or
create public benefits such as granting access to open spaces, creating student
internships, providing job training, supporting local contractors and suppliers,
etc.
The Town will act as a clearinghouse and coordinate all activities regarding
tax increment financing proposals. Working with potential applicants, the
Town will:
A.
Provide information on tax increment financing;
B.
Discuss project proposals and accept preliminary applications
from applicants;
C.
Review preliminary applications based on policy guidelines;
D.
Advise applicants on findings of the Town staff's review;
E.
Following a review and evaluation of an application,
the Town Manager will make a written determination whether to accept or reject
the application. The written decision approving an application and the application
will be sent to the Economic Development Committee of the Board of Selectmen
for review and a recommendation (Decisions rejecting an application will also
be sent.);
F.
Provide assistance, if required, when the Economic Development
Committee makes its recommendation to the full Board of Selectmen;
G.
Submit application to the state, based on the direction
of the Board of Selectmen;
H.
Monitor ongoing public and private investment
in the development project.
A.
An investment that qualifies the employer for an economic
development incentive of $250,000 in one year over 10 years must be disclosed
to the Commissioner and the Legislature. Annually, an employer receiving an
economic development incentive shall submit a written report to the Commission
disclosing the employer's level of employment in the state and the effect
on employment as a result of the economic development incentive, assessing
the public benefit resulting from the economic development incentive and identifying
any provisions of this section with which the employer is unable to comply.
The State Tax Assessor shall keep a record of and provide an annual report
to the Legislature on the amount of public funds expended and the revenues
foregone through tax exemptions, credits or abatements, grant payments or
real estate transfers to provide economic development incentives. That report
must include a breakdown that shows the amount of subsidy received by each
employer.
B.
Preliminary tax increment financing application will
be provided by the Town Manager's Office, 26 Weston Avenue, Madison, Maine
04950.
C.
All applicants must pay a $250 nonrefundable application
fee at the time of submission. If tax increment financing is approved, an
annual administrative fee equal to 1% of the incremental taxes reallocated
back to the project will be charged.
D.
All applicants will be required to sign a legal fee consent
form agreeing to reimburse the Town of all legal costs incurred as a result
of the tax increment financing proposal, whether or not tax increment financing
is approved.
E.
In addition, any out-of-pocket expenses incurred by the
Town of Madison in connection with the tax increment financing proposal will
be reimbursed by the applicant, whether or not tax increment financing is
approved.
