MACHIAS, Maine — Nearly the last article voted on during Tuesday’s annual town meeting appropriated $23,983 for the downtown tax increment financing district.
The district, which was first discussed in 2004 and adopted in 2006, was created to ensure that Machias Savings Bank would continue to locate its headquarters in Machias and employ local people. In this case, Machias Savings Bank used the money that otherwise would have been paid in new property taxes to expand and update its downtown facilities.
The TIF district extends from Short Street to the Machias River bridge, and includes two municipal parking lots, two Machias Savings Bank parking lots, a field and a campus of the bank’s buildings.
According to a chart of payments provided by Town Manager Chris Loughlin, Machias Savings Bank would have paid $622,234 in new taxes over the 20-year life of the TIF without the tax break. The bank will end up paying about $310,211 over the 20 years.
For the first two years of the TIF, for example, Machias Savings Bank paid zero taxes on its new or improved properties on its campus. But with the passing of each year, the amount paid by the bank has gradually increased, with the additional tax revenue earmarked for economic development in Machias.
Loughlin explained that under the TIF, the amount that Machias Savings Bank pays in property taxes increases incrementally each year until after 20 years it is responsible for the entire yearly tax on the new or improved property.
The goal of the TIF, Loughlin said this week, is to keep well-paying jobs and businesses in Machias, while setting up a dedicated fund for economic development.
“This allows Machias to capture new revenues dedicated to improving the town’s infrastructure and economic development initiatives,” Loughlin said.
For the 2010-2011 fiscal year, the TIF amount paid by Machias Savings Bank was $4,120. Loughlin said voters at town meeting last year authorized $3,000 of that amount to be used to fund Downtown Revitalization Committee efforts, which included a decorative fence on Route 1. This fiscal year, the bank is expected to pay $4,782. During Tuesday’s annual town meeting, voters approved giving the revitalization committee another $3,000 from that amount.
Loughlin said that as the TIF payments grow larger, however, the selectmen will be forced to make some plans for its use. “This is a great opportunity to generate funding for economic development,” Loughlin said. “It will provide us with the flexibility in the future that a small town like Machias might not have. In six years, that fund will be generating $30,000 a year.”
Right now, with the small amount of funding, the Downtown Revitalization Committee has focused its efforts on small projects to beautify downtown Machias and make it more inviting. But Loughlin said that as the funding grows, more extensive planning will be necessary.
Loughlin said that although there has been no discussion by the Board of Selectmen regarding expanding the TIF district, he expects that discussions regarding future use of the funds will be a topic the board will tackle this year.
“We really need to develop a plan to deal with those increasing funds,” he said.