- For Municipalities: Tax Increment Financing Law - Near Miss at the Legislature
- May 26, 2015 | Author: Joan M. Fortin
- Law Firm: Bernstein Shur - Portland Office
- You may have heard recently that the Maine Legislature was considering a bill that would have created significant problems for municipalities who use, or plan to use, tax increment financing as part of their economic development toolbox. The good news is that on April 27, 2015, the Joint Standing Committee on Taxation voted “ought not to pass” on LD 581, An Act to Clarify the Municipal Development District Law. An important takeaway from the short life of LD 581 is that even TIF bills that appear to have a positive purpose could have a devastating impact on Maine’s TIF program if those bills are passed into law without careful scrutiny. LD 581 was not designed to target any particular industry, but would have effectively eliminated most of the credit enhancement agreements municipalities enter into today. Some of the problematic provisions of LD 581 included the following restrictions:
- Onerous job creation requirements for credit enhancement agreements which would have been impossible for most developers to meet
- Provisions that would have limited the use of a credit enhancement agreement to only those TIF programs located in an area designed as a blighted area in a municipal comprehensive plan
- Provisions that would have limited credit enhancement agreements to property “owners” even though many credit enhancement agreements are entered into with leaseholders
Had it been passed into law, the bill would have taken away the local control that communities currently enjoy in setting economic development policies and practices for their own communities. The Bernstein Shur Municipal and Regulatory Practice Group and the Bernstein Shur Legislative Practice Group coordinated efforts on behalf of various clients to oppose the bill and educate the Joint Standing Committee on Taxation about the impact of the bill.