CUMBERLAND — The Town Council on Monday unanimously approved the expansion of one of the town’s five tax increment financing districts.
The decision potentially paves the way for a biotechnology company that could bring up to 100 jobs to town.
TIF district No. 3, on the northwest side of Route 1, would be expanded north to include another eight lots. The growth would facilitate the move to Cumberland of Maine Standards Co., now based in Windham.
The company, which employs 50 people and expects to grow to 100 employees in the next five years, would construct a 30,000- to 40,000-square-foot building on a 7.5-acre property between Powell Road and Tuttle Road.
Expansion of the TIF district does not change zoning or allowable uses. It instead allows Cumberland to offer tax incentives for businesses to locate in town, as well as facilitating infrastructure expansion in the corridor, Town Manager Bill Shane has said.
The Maine Department of Economic and Community Development must also approve the expansion. Shane said the town must submit its application no later than mid-February, and he expects to hear by the end of March whether it has been approved.
“My feeling is, this is good economic development; I don’t think it’s a long shot,” he said. “It’s a reasonable request, and I think Maine DECD will look at it that way.”
Maine Standards signed a credit enhancement agreement with the town in March 2011 for a property further south on Route 1, within the existing third TIF district. The company ultimately chose to look elsewhere and is now eyeing the northern location.
The agreement is not lot-specific, Shane said on Tuesday.
TIF district No. 3 will expire in about 24 years, Shane has said. New property tax value, or tax increment, would be created on a property within the district’s boundaries after development there of a site. If Maine Standards moves in, new value created after it builds its facility would be sheltered by Cumberland, as opposed to adding to the town’s valuation.
That sheltering would avoid an increase, in this case, in Cumberland County’s tax assessment to the town. It would also avoid a decrease in state subsidy to the Cumberland-North Yarmouth school district, which could otherwise be triggered by a rise in Cumberland’s valuation.
The county tax assessment and school revenue appropriation are based on a community’s total valuation minus the increment in its TIF districts. Tax revenue sheltered through the TIF district, about 50 cents on the dollar, have to go toward economic development projects.
A TIF district allows a town to offer tax incentives, called credit enhancement agreements, to businesses. Maine Standards would receive up to a 50 percent tax rebate each year until it has reached a cumulative rebated tax amount of up to $500,000.
The value of the land where Maine Standards would move is a little more than $500,000, Shane said. The building – the increment the town would capture – could be about $2.5 million or $3.5 million, depending on whether the project is phased in or built all at once, he noted.