Agenda Economic Development Committee July 1, 2009 Glenburn Town Office 6:00 PM

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1 Agenda Economic Development Committee July 1, 2009 Glenburn Town Office 6:00 PM 1. Acceptance of Minutes May 19, Review Draft Tax Increment Financing policy guidelines A. Development Program/ tax shifts B. Town Council and Legal Review C. Local steps for implementation and timeframe 3. Pine Tree Zone A. Designate size and location B. Review process flowchart C. Municipal documentation D. Review LD 1473 E. Local steps and implementation timeframe 4. Business Park Update 5. Other business 6. Next meeting date

2 ECONOMIC DEVELOPMENT COMMITTEE JULY 1, 2009 MINUTES Mr. Harriman called the meeting to order. Present were; Blake Fryer, Mike Cote, Dana Dahlgren, Katie Gaudette, Jim Tower and Mike Crooker. Mr. Cote motioned that the Minutes of May 19 th be accepted. Mr. Dahlgren seconded the motion. Mr. Harriman said that he had found some errors in those Minutes. In the second paragraph, page 1, line 12, it should read, --would reassure other prospects that the Town wants this business development to happen. In the fourth paragraph, first line, the word, tenants should be replaced with, new businesses. Mr. Fryer moved, Mr. Cote seconded and it was VOTED, to approve the Minutes of May 19 th, as amended. Next taken up was the draft of the TIF guidelines. The introduction is general language that is contained in most TIF guidelines. It clarifies that new businesses coming into the community are not automatically entitled to TIF s. Mr. Harriman has tried to keep the guidelines general, in accordance with impressions he received at the last Committee meeting. They are also flexible and can be modified by the Town Council, if need be. The policy begins with the statement that the Town of Glenburn, with approval of Maine DECD, establish two types of TIF districts. One allows the Town to install public infrastructure through issuance of bonds which would be retired, using tax increment-produced by the investing businesses project that will be utilizing the infrastructure. General Obligation Bonds cannot be used to fund private projects but if the bonds were to be used for roads or utilities, for example, this is acceptable. The second type of TIF is more commonly used where the Town returns part or all of the tax increment to the investing business through a Credit Enhancement Agreement. Mr. Harriman had an example of a CEA with him, for the Committee to review. It lays out the terms and responsibilities for both the business and the Town. The TIF is a cooperative effort. The policy continues by stating that private investors and businesses must demonstrate a need for a TIF. They can be asked to show that the cost of developing an infrastructure on their own, is simply beyond their financial ability. He is not suggesting an in-depth analysis of the business s finances but there should be some kind of eligibility screening in place to determine genuine need. The applicant is responsible for all costs associated with the application, including legal fees and costs incurred by the Town. Mr. Harriman said that in his experience, this initial cost seldom exceeds $5, or $6, but really small businesses may not be able to afford this. If the project happens, applicants may reimburse the Town from increased taxes generated by the project during the first year. If the company s project does not develop, the company will reimburse the Town for the fees and expenses incurred by the Town. The business s finances ought to be in place long before the TIF project goes to Town Meeting. The project shall create increased assessed Παγε 1

3 value since March 31 st, based on the April 1 st tax commitment date. The Town should consider a minimum development cost of about $500, An exception to this might be assurances of a particularly significant number of new jobs which would be created. The term of the TIF will be negotiated between the Town Council and the applicant. The Town should seek to limit the duration of tax re-capture to applicants, to not more than ten years. Projects involving bonds for public infrastructure may be considered for the legal maximum of twenty years. The TIF itself may be for up to thirty years. The number and quality of jobs need to be taken into account. Jobs such as call center employment are not considered prime positions as they may be very transient. The initial evaluation of the TIF projects will be done by the Committee which will then make recommendations to the Town Council. When the Council approves a project, it will work with the ED Consultant in conjunction with an attorney to complete the development and Credit Enhancement program. A Public Hearing on the project shall then be scheduled before going to a Town Meeting. A TIF may provide for an annual administrative fee of up to 2% deducted from the applicant s tax re-capture for the agreement s duration. The policy continues by stating that the Town encourages the use of TIF s for re-capture of real property taxes and discourages the re-capture of personal property taxes. The latter will eventually be phased out on the State level for non-retail businesses. Businesses which engage in retail sales on site will be assessed personal property taxes. Businesses in this category can retrieve these taxes through a separate State program so including them in a TIF, too, will be unnecessary. It could be done, but would likely be frowned upon. The Town shall limit the tax re-capture for an applicant to a maximum of 50% of the new, real property valuation. (Total assessed value, minus original assessed value.) The original is not eligible for TIF. This is over the term of the TIF agreement. The Town may approve a Credit Enhancement Agreement structured to provide benefits that average 50% over the duration of the agreements and provide benefits on a declining basis. Under this arrangement, A TIF could provide 100% benefits during the first year, and Zero percent as of the 10 th year. The CEA shall provide for re-capture of benefits if the business moves to another town. Assignments shall be at the sole discretion of the Town and only allowed if the assignee is bound by the same terms and conditions as the original applicant. The real property left by an assignee who moves to another town does not carry with it, the TIF benefits to a buyer of the property, unless the Town decides otherwise. The Council can override these guidelines if a project merits it and reserves the right to otherwise change the guidelines. Mr. Tower questioned what he thought is a relatively minor role for the ED Committee in this policy. He believes the Committee to be ongoing and active for years to come. Mr. Harriman explained the role of the Committee to review matters and advise the Council on them. Mr. Crooker said that the Committee is presently ad hoc. Mr. Fryer said that at some point, it probably should be a standing committee. Mr. Harriman agreed, but to give it formal authority might require a Charter change. Members of the Committee expressed general agreement that the policy which Mr. Harriman prepared, contains all of the elements which the Committee has previously recommended. Mr. Harriman said that now, he needed to get a feeling for the process which should be followed from this point. Mr. Fryer said that the next step should be to get the draft policy on the Council Agenda. Παγε 2

4 It could be placed on the July 16 th Agenda. The presentation should have about 45 minutes allotted for it. There was a consensus that the presentation should begin at 6:15 PM. Mr. Fryer motioned that the draft Economic Development Policy for the Town of Glenburn be recommended to the Council and presented to the Town Council at a workshop preceding the July 16 th Council meeting. Mr. Tower seconded the motion The vote was unanimous. From there, it will be reviewed by the Town Attorney, go to a Public Hearing and a Special Town Meeting. Regarding Pine Tree Zones, there has been recent legislation which, in essence, added two counties not previously included (Cumberland and York). The purpose of Pine Tree Zones is to entice certain select businesses to Maine. Financial services, advanced technologies, manufacturing, forestry, agriculture, aquiculture, composite materials, bio-technology, environmental technology, information and precision manufacturing are examples. Basically, businesses which add value to a raw product are targets. They have to be businesses which produce new jobs not there before. A business moving into Glenburn with existing jobs, would not qualify. A number of steps have to be followed, beginning with a formal letter to DECD. After that, certification has to take place. Each zone in a Pine Tree Zone has acreage allocated to it and divided among various towns. For Glenburn to get on board, it has to go to a steering committee, followed by a public hearing, a resolution and a town meeting. After this, the steering committee allocates acreage to the town. Mr. Harriman suggested that Glenburn get involved, asking, for example, for fifty acres. The Town could go back later, if more were needed. The Town has to identify the area where the acreage would be located. This can be changed. To obtain the employee benefits, employees have to be paid a certain wage, the total compensation package has to meet the program guidelines and that is around $28, This figure can include health benefits, vacation time, etc.. A really significant benefit is that if a qualifying business came to Glenburn, it would not have to pay sales tax on any construction material or equipment. There is a small savings on electricity costs. There are also State income tax benefits. Energy costs are a significant obstacle in Maine. Mr. Harriman provided the Committee with a flow chart on the steps to establishing a Pine Tree Zone, creating one in a new town, or adding to existing acreage. Also a sample resolution. The cost of getting all the steps completed and getting the application to the steering committee, would likely not exceed $ The Bangor Region Development Alliance has marketer the area Pine Tree Zones and expect new comers to contribute at least a token amount toward their applications. He said that he did not think that a Town Meeting would be needed for Glenburn to pursue the Pine Tree Zone, just a Council resolution and a public hearing. The first step should be for the Committee to recommend some designee areas. Committee discussion then focused on Mr. Tower s proposed industrial park site, and adjacent property owned br Bruce Nason. Mr. Tower said that total combined acreage for the two properties, was 240 acres. Fifty acres, from the frontage on Broadway, running inward, could be designated. A recommendation framed by the Committee for the Council to consider would be that fifty acres on the land known as the Simpson Farm, and bordering on Broadway, inward, be applied for as a Pine Tree Zone. Ms. Gaudette made this motion, which was seconded by Mr. Fryer. It was voted, unanimously. The Committee agreed that this resolution be brought to the Council at its July 165 th meeting, along with the TIF Policy. It was agreed that to accommodate for this additional material, the start of the Council workshop before the regular meeting, be pushed back to 6:00 PM. Mr. Harriman said that last week, he phoned to inquire about the status of a Community Planning Παγε 3

5 grant. The selection process has been completed, but no results were being released, yet. If he hears of anything before the Manager, he will send out an . Mr. Tower said that under the Stimulus Act, the SBA guidelines have been changed. They used to guarantee 80% of a loan, now they will cover 90%. Also the SBA used to charge a nominal amount (0.75%) to cover the cost of their guarantee This charge has been waived. He said that he has been encouraged by the changes and has inquired about applying for a loan. An entity has indicated an interest in utilizing a site benefitting from the portion of the site abutting the railroad line. It is a fairly large parcel of land. Mr. Harriman said that he had heard that there was some Economic Stimulus money that would be channeled into DECD during the next funding round. This may be upwards of $3 million, with the lions share going to infrastructure projects. Eligible projects must be shovel-ready. Mr. Tower said that he has invited Mr. Harriman to sit in on a meeting with the individuals involved with this venture. This meeting has not yet been scheduled. A discussion of paving project funding took place. Mr. Harriman encouraged all Committee members to attend the July 16 th workshop with the Council. As to future meetings, he asked if the third Wednesday of the month was good for everyone. The consensus was that this was good. Therefore the next Committee meeting would be August 19 th. Glen Quintell has moved from Town, so that a vacancy needs to be filled. Mr. Harriman encouraged everyone to suggest a possible replacement to the Council. There being no further business before the Committee, Mr. Fryer moved and Mr. Dahlgren seconded that the meeting be adjourned Παγε 4