What Happened?
Hancock County, Maine, approved financial agreements with a wind energy provider that could generate millions in revenue. The agreements call for a tax increment financing district, a resulting property tax payment agreement and a community benefit agreement.
Goal
Hancock County has created financial agreements with a First Wind subsidiary as part of the Maine Department of Environmental Protection’s wind turbine project which will bring 17 wind turbines with 3-megawatt capacity to two townships in the county. The creation of the tax increment financing district, property tax payment agreement and community benefit agreement will enable the county to generate $11 million over the next 30 years, the Bangor Daily News reported.
Break It Down
Under the agreements, the property tax on the wind turbine facilities will generate the $11 million, $5.82 million of which will go to county coffers while the First Wind subsidiary will keep $5.12 million of the revenue. For the first 20 years of the agreement, the wind developer will retain 70 percent of its annual tax payments to Hancock County, which will receive 30 percent. Then in the last 10 years of the agreement, the county will receive 100 percent of all property tax revenue, the Bangor Daily News reported.
All property tax revenue collected by the county will be reinvested into other projects in the tax increment financing district such as:
- Promotion of recreational opportunities
- Environmental protection
- Roadway improvements
- Fire protection
Hancock County is willing to concede 70 percent of the property tax revenue in the first 20 years in order to attract investors to the project and sustain the plan for the duration of the agreement.
The county also created a community benefit agreement with the wind developer that could generate $200,000 in revenue annually for 20 years. These funds can be used for other public projects in or outside the tax increment financing district.
Financial Agreements in Action
Racine, Wisconsin, is embarking on a similar path toward redeveloping one of its districts. The city has created the Tax Increment Finance District 18 to provide funding to transform its downtown riverfront. Once known as Machinery Row, the industrial sector will be converted into a commercial-residential development costing an estimated $65 million.
According to the Journal Times, the tax increment financing district will enable the city to use revenue from property taxes on new developments in the area to pay for improvement projects required during the transformation such as:
- Private developments
- Environmental cleanups
- Road construction
- Building demolition
The city said the redevelopment projects cannot be funded by private investment alone, thus a TIF district is necessary.
Huntington Station, New York, also created a community benefits agreement with a master developer and community representatives to define how fees collected from revitalization projects will be reinvested into community-based projects. Newsday reported the community benefits agreement will dictate the fate of about $400,000 in fees paid out by the developer to the city.
Huntington Station officials will work collaboratively with the master developer, residents, business leaders and civic group representatives to select specific programs to receive funding. The goal is to meet the needs of as many community members as possible.
New Ways to Use Taxes
Gov1 has reported on a variety of strategies to fund projects including new market tax credits or federal tax credits.