Bucksport town councilors recently voted unanimously to provide significant financial assistance to Whole Oceans, LLC in support of plans to build a land-based Atlantic salmon aquaculture project on the former Verso Paper Co. site. Their action designated the newly acquired Whole Oceans property as a Municipal Development and Tax Increment Financing TIF District, which will allow for the sheltering of additional property taxes assessed on the estimated $189 million of infrastructure investments over the next 20 years.
The primary purpose of tax increment financing is to create new employment, improve and broaden the tax base and improve the general economy of the state. For the Whole Oceans project in Bucksport the TIF designation hits the mark. The project proposes to make substantial property and equipment investments on a site that presents the community with tough challenges and unique opportunities. New jobs will be created and a portion of the TIF revenues will fund Bucksport’s community-wide economic development efforts.
Even though the Maine TIF program was appropriately used in the Bucksport case, it is an economic tool with many serious flaws. By its design tax increment financing distorts state aid to local education, municipal revenue sharing and county tax assessments by fashioning a tax shift. In the case of the Bucksport/Whole Oceans project the shift over the 20-year term of the TIF is calculated to total $8.4 million. Communities using the TIF program should be sensitive to the secondary impacts on other communities. Municipalities should insist on transparency with documented evidence of a project’s public benefit and capacity to deliver on the statutory goals. We have seen enough TIF projects that were no more than an economic shakedown, pitting one community against its neighbor and used to extract a direct subsidy for the project developer without producing any lasting return to the citizens of the community.
The four recommendations to improve TIFs in Maine outlined in the January 2018 Maine Law Review article titled “Tax Increment Financing in Maine” by Michael G. Walker are worth considering. They are:
- Limit the size of the TIF benefit that goes directly to the private developer and insist that a portion of the funds go to public infrastructure improvements.
- Shorten the allowable duration of TIF agreements.
- Mitigate the impact on surrounding communities.
- Leverage TIFs to achieve specific goals.
We congratulate Bucksport’s prudent and careful utilization of the TIF program while also encouraging legislators to consider making smart changes to the program.