FARMINGDALE — Residents said they felt more informed, but were still concerned, after listening to state officials explain how town tax breaks would work for a company proposing to build a natural gas pipeline in central Maine.
The municipal tax increment financing district has been requested by Kennebec Valley Gas Co. and it will go to a referendum vote on June 22, the day before the annual Town Meeting.
State officials explained the tax break to about a dozen people during a public hearing Tuesday night at Hall-Dale High School.
“I still don’t think this is particularly a good deal for the town,” said resident David Cyr, who conceded there are benefits to having natural gas run through Farmingdale but remains unconvinced that the town should grant a tax break.
This is the second time that voters have been asked to give a tax break to Kennebec Valley Gas Co., which plans to run a natural gas line from Richmond to Madison. Townspeople overwhelmingly rejected the deal by a show of hands at a special town meeting in December.
The Portland-based company is requesting tax increment financing deals from the 12 communities affected by the project. Cities and towns in the proposed gas line corridor are being asked to return 80 percent of property taxes to the company the first 10 years and 60 percent the next five years for the $80-$85 million project.
Several communities, including Augusta, Gardiner, Waterville and Hallowell, have said yes to the tax break. Others, such as Sidney and Richmond, have said no.
Laura Santini-Smith, tax incentives program director at the state Department of Economic and Community Development, gave residents an overview of the tax program.
Santini-Smith told residents that the tax break, called a TIF, starts with the municipality and is used as a tool to bring in new property taxes and to shelter those taxes within the TIF district.
Mike Rogers, supervisor of municipal services at Maine Revenue, told the group that if the TIF is approved by the town and the Department of Economic and Community Development, then the equating value of property to generate that tax would not go into the town’s state valuation.
The town also has the option of putting the resulting property tax money in its general fund, Rogers explained, at which time would not be sheltered and school subsidy, revenue sharing and county taxes would be adjusted accordingly. When the TIF expires, the valuation goes into the town’s annual statistics.
Richard Silkman, a principal of Kennebec Valley Gas Co., also presented the company’s plan to residents again, fielding questions about why the company needs a tax break.
“We need that tax payment back to finance the project,” Silkman said, adding that it takes time for residents and businesses to complete a conversion to natural gas.
Kennebec Valley Gas Co. will not install a distribution line in Farmingdale if the town doesn’t approve the tax break in June, Silkman said, reiterating what the company said after the first voter rejection in December.
Each town also has the opportunity to negotiate the credit enhancement agreement that is part of the TIF. For example, if the town wants a distribution line to go to a certain neighborhood and five or six residents are committed to using natural gas, Kennebec Gas Co. will bring the line to that area, Silkman said.
Cyr said it would be helpful to be a part of those negotiations and to have that information available to residents before the June vote.
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