CONTRIBUTORS

Don’t forget, tax increment financing deals can make the difference in attracting business

Posted Feb. 26, 2014, at 12:44 p.m.
An artist's rendering shows a new, 51,315-square-foot, 11-story outfitting building proposed by Bath Iron Works.
Courtesy Bath Iron Works
An artist's rendering shows a new, 51,315-square-foot, 11-story outfitting building proposed by Bath Iron Works.

The two-part series of articles Feb. 19 and 20 on tax increment financing by Naomi Schalit of the Maine Center for Public Interest Reporting has left each of us perplexed and concerned.

We are board chair and president, respectively, of a regional chamber of commerce with 815 business members spanning 21 communities in Penobscot County. And what has us perplexed is the choice of topic at this time.

The fact that there are supporters and detractors of TIFs, as they are known, is not new. In our respective careers (Andy’s 30-year career as a lawyer who has regularly worked with communities on projects that sometimes include TIFs and John’s 20-year career as a business journalist and an opinion editor in Maine), the issue has found its way into the public debate numerous times, with the recurring theme of whether Maine should try to compete in this way for jobs and investment.

More substantially, what has us concerned — and those concerns are shared by the economic development practitioners and community leaders with whom we work closely — is that the articles take a definite point of view, and it is one that could prove harmful to Maine’s economic future.

In the series, scant weight is given to the “but for” reality. That is, there is little or no acknowledgement that TIFs have made the difference in many critical economic development projects in Maine. The articles selectively quote academic studies critical of TIFs generally, but that hardly makes the case that they haven’t made a difference here in Maine.

What would our economic landscape look like if Cianbro didn’t open its facility in Brewer, or General Electric couldn’t maintain a plant in Bangor? And can you imagine if, to our south, Bath Iron Works couldn’t stay competitive, or the massive investment that is now the Texas Instruments plant in South Portland hadn’t happened?

And where would the Bangor region be without a mechanism to invest in the infrastructure of its thriving mall district, its waterfront or the Main Street district that now includes the gleaming new Cross Insurance Center?

The articles depict TIFs as a program run amok, yet no community can designate more than 5 percent of its geography or 5 percent of its tax base as eligible for them.

And much is made of the fact that, when a community sets property tax money aside for specific projects or offers that money as an incentive for investment, those tax dollars are not counted when computing state aid. This, the argument goes, leaves other towns and cities subsidizing the TIF.

But often projects undertaken with a TIF benefit whole regions, not just one community. The Cianbro site in Brewer or the GE plant in Bangor employ hundreds of people, depending on the production cycle. Those well-paying jobs are held by people throughout our region — people who in turn pay taxes in other towns and cities.

Even the one good point made in the articles — that, ideally, information about TIF programs ought to be easier to find online — gets wrapped in a tone of conspiracy that suggests that somehow these deals didn’t go through a public process or get reported in the local news.

There is no doubt that communities have to be good negotiators when developers come to call, especially given that local communities here rely on only property taxes for their revenue. In our hyper-competitive world, communities, states and countries are pitted against one another when it comes to attracting investment.

Perhaps in an ideal world this wouldn’t be the case. And indeed, in that world TIFs might not make sense. But we don’t live in that world. We live in the one where choosing to do nothing with economic incentives is choosing not to compete for jobs and investment.

Like all government programs, TIFs are not perfect. They require a level of sophistication from our public servants and some savvy when it comes to providing enough incentive, but not too much.

But TIFs have, and can, make a positive difference. We think it would be a mistake for communities not to pursue investment with TIFs.

Andrew Hamilton is the board chair of the Bangor Region Chamber of Commerce, and John Porter is its president and chief executive officer.

 

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