2018-10-12 / Front Page

Finance hearing delayed

By Duke Harrington Staff Writer

Scarborough town councilors have bought the extra time local activists say is needed to review the largest subdivision project in town history. The added time was sought to study a potential $81 million tax refund to project developers. The extra length of rope may, however, come at a cost. That was made clear during the the town council meeting on Oct. 3.

For more than two months, developer Rocco Risbara has pressed the council for passage of a Tax Increment Financing (TIF) district and associated Credit Enhancement Agreement (CEA) he says is vital to redevelopment of the Scarborough Downs property.

That deal would return to Risbara and his partners as much as 40 percent of property taxes on everything they build at the site over the next 20 years. The money, Risbara has promised, will be put back into the project to help fund infrastructure needs for each subsequent stage of development.

Risbara has warned that some of the manufacturing companies he has on the line for Phase II of development could bail if he cannot guarantee an ability to lay in roads and utilities those firms will need. Time and again he has said the TIF/CEA needs to be voted in by mid- to late-October.

At first, the town was on track to meet that demand, having scheduled a public hearing for Oct. 3 and a final council vote on Oct. 17. That was in late September, before details of the CEA were made public, and it took several weeks of closed-door negotiating to chisel those figures in.

At its Oct. 3 meeting, the council was slated to conduct what seemed a perfunctory vote, to finally set an official public hearing on the TIF and CEA for Sept. 24. But several councilors, echoing the call from members of activist group SMARTaxes, tried to pump the brakes, saying they wanted to see more third-party evaluation of the numbers before scheduling that hearing.

Finally, after 2½ hours of workshop review, public comment, and council debate, Risbara was called to the podium and asked if pushing the hearing off to Nov. 7 would end the deal.

“The timeframes are going to hurt us,” Risbara said. “I got an email on my way here tonight. [It said] ‘a decision will have to be made by this team very likely Friday’ for the biggest user we have potentially for the light industrial part [of the development]. The email said we would be talking on Friday. It’s us or another town. That’s a fact.

“[More] time is going to hurt us,” Risbara repeated. “Our users are here now.”

What followed was several moments of uncomfortable silence as Town Manager Tom Hall and council chairman Bill Donovan conferred sotto voce off mic. After nearly a full minute, councilor Chris Caiazzo broke the silence.

“So, how ‘bout them Pats?” he said.

Eventually, the council went ahead and voted 5-2, with Caiazzo and councilor Shawn Babine opposed, to set the hearing for Nov. 7.

Caiazzo has been the most vocal supporter on the council of the Downs development and the associated TIF/ CEA. Babine said he felt confident in numbers and predictions already generated by Risbara’s partners, town officials, and the Scarborough Economic Development Corporation (SEDCO).

Risbara said that if he and his partners cannot get the CEA they are looking for, on the timeframe they need, they will be forced to shift from the town’s preference for more commercial development, to what the market would prefer, which is more single family homes. That, he says, would mean a drop in assessed value of what would be built on the Downs property, from $615 million to $215 million, meaning a corresponding drop in anticipated tax revenue.

Final council votes on the TIF and the CEA have not yet been scheduled. Three residents pressed Donovan during public comment to provide a timeline. Donovan said no date has been set.

The SMARTaxes group has stumped to delay any final vote until at least early December, after two, and possibly three new councilors are seated.

Caiazzo and Babine are running for state legislature and will exit at the end of their current terms. That’s a state of flux Caiazzo took pains to comment on during the Oct. 3 debate.

“From all of the public input I have heard, apparently I am the big, bad wolf,” he said. “So, I appreciate the desire to not allow me to have a vote on this, for whatever reason that is. And I’m comfortable with that, to be honest with you.”

Caiazzo then cautioned his peers against “paralysis by analysis.”

“You cannot ever predict every single variable to the nth degree,” he said. “So, if you continue to delay in hopes of getting better and better data, I am fearful we will have another Haigis Parkway on our hands because of the inability to act by this body is going to force the developer, whomever that may be, to either get out, because they cannot realize the goals that they had, or, at worst, be stuck with an albatross, like Haigis.”

Still, the council instructed Hall to request a review of the financial predictions — how much the town might realize in tax revenue from Downs redevelopment over the next 30 year, with and without the CEA, and how much in might cost to provide municipal services to the homes and businesses built there. That review will be conducted by Cape Elizabeth-based Brinn Consulting, which in September reviewed Risbara’s market analysis of what can be built on the site.

The council also had set aside Oct. 10 for a workshop to settle how much of the town’s take from TIF proceeds should roll directly into its general fund, and how much, of any, should be placed in a special TIF reserve account. And money set aside in such a fund is generally restricted in how it can be used, such as for infrastructure and economic development projects in or directly serving the TIF district.

Hall has said a downtown TIF has additional allowances, such as for a planned municipal project to convert the existing Scarborough Downs grandstand clubhouse into a community center.

That Oct. 10 meeting has since been canceled. Donovan said Tuesday evening there were too many conflicts with other meetings already scheduled for that night at town hall. Although the listing was not yet on the town’s online calendar, Donovan said the workshop was rescheduled for 6 p.m. on Wednesday, October 24.

The 500-acre Scarborough Downs property at the geographic center of town was purchased in January for $6.7 million by Crossroads Holdings LLC, a partnership of William, Marc, and Rocco Risbara of Risbara Bros. Construction, and brothers Peter and Richard Michaud, the Risbara’s partners in their Maine Properties real estate company.

Crossroads’ plan calls for construction over the next 30 years of as much as $615 million in new taxable value, in homes, shops and light industrial sites. That’s enough, Risbara says, to net the town $11 million per year in new property and excise taxes, based on the current mil rate.

The Downtown TIF would cover the Downs property, along with the Oak Hill shopping district, the adjacent municipal campus, and the Route 1 corridor that links them together. For the 30-year life of the TIF, the town would be able to effectively shield all new development in that 800-acre region from tax assessment by the Maine Revenue Service, potentially saving the town millions of dollars in school costs and county taxes it would otherwise be on the hook for, based on local property values. Separate from but linked to the TIF is the proposed CEA, which would return to the Crossroads partners as much as 40 percent of all new property taxes paid on anything they build at the Downs portion of the TIF district.

That 40 percent return could drop to as low as 25 percent in years 11-20 of the project, if certain construction targets are not met, but a bonus of 10 percent is possible in years 21-30, for a total projected return of $81 million.

While the state Department and Economic and Community Development must approve the TIF district, Donovan has said the CEA is strictly a contract between the town and the developers.

In its projections, the Crossroads partners have said they anticipate full build-out of the Downs at Year 30 of the TIF to include 1,986 housing units (including apartments, duplex buildings, and senior housing in addition to a 750 unit cap on single family homes), 1.15 million square feet of commercial space (including offices, retail stores, lodging, senior care, and community sports), and 775,000 of manufacturing space (including production, research, and warehousing).

The Scarborough Economic Development Corporation has predicted that all of that new development will spawn between 2,260 and 3,350 jobs in town.

According to numbers released Crossroads, the new tax revenue of all the planned construction will add up to $615 million in 2018 dollars. A town projection is more conservative, at $581 million, and that includes up to $55 million in new excise taxes as well as property taxes. It also anticipates an average 3 percent annual growth in the town tax rate.

SEDCO’s numbers predict that the Downs development will swell Scarborough’s population 18.1 percent over the next 30 years, including 347 new school age children. The cost to educate those children, as well as provide public safety and municipal services to those new residents, including what will be eight miles of new public roads, is expected to boost the annual budget for those particular line items 11.9 percent, to $69.1 million in 2018 dollars.

Based on that, SEDCO says that the town will still be ahead of the game on new tax revenue less cost of services to the tune of between $41.9 and $59.2 million at Year 20, and between $71.8 and $105 million at Year 30 — the bookends of the estimate being the use of marginal cost and average cost analysis.

While some councilors, including Katy Foley and Peter Hayes admitted to a certain amount of figure fatigue in all of the complex numbers released so far, never mind the additional analysis they’ve asked for, all agreed none of them as a personal, political stake in the outcome.

Given term limits, not one member now on the council who might vote on whether or not to create a Downtown TIF and adopt CEA deal will still be in office when revenue from the district starts to roll in.

“We’ll all be gone by then,” Donovan said.

Staff Writer Duke Harrington can be reached at news@scarboroughleader.com.

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