CHAPTER 650
H.P. 1739 - L.D. 2445
An Act to Amend the Laws Governing Municipal Tax Increment Financing to Encourage Downtown Investment
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 30-A MRSA §5252, sub-§2, as enacted by PL 1987, c. 737, Pt. A, §2 and Pt. C, §106 and as amended by PL 1989, c. 104, Pt. C, §§8 and 10, is further amended to read:
2. Captured assessed value. "Captured assessed value" means the valuation amount by which the current assessed value of a tax increment financing district exceeds the original assessed value of the district. If the current assessed value is equal to or less than the original there is no captured assessed value amount, as a percentage or stated sum, of increased assessed value that is utilized from year to year to finance the project costs contained within the development program.
Sec. 2. 30-A MRSA §5252, sub-§§4-A and 4-B are enacted to read:
4-A. Downtown. "Downtown" means the traditional central business district of a community that has served as the center of socioeconomic interaction in the community, characterized by a cohesive core of commercial and mixed-use buildings, often interspersed with civic, religious and residential buildings and public spaces, typically arranged along a main street and intersecting side streets and served by public infrastructure.
4-B. Downtown development district. "Downtown development district" means a tax increment financing district located in the municipality's downtown area, as defined in an approved downtown redevelopment plan consistent with the Department of Economic and Community Development's quality downtown criteria established pursuant to rules of the department.
Sec. 3. 30-A MRSA §5252, sub-§5, ¶B, as enacted by PL 1987, c. 737, Pt. A, §2 and Pt. C, §106 and as amended by PL 1989, c. 104, Pt. C, §§8 and 10, is further amended to read:
B. For a development program for a tax increment financing district, the statement must also include:
(1) Estimates of captured increased assessed values of the district;
(2) The portion of the captured increased assessed values to be applied to the development program as captured assessed values and resulting tax increments in each year of the program; and
(3) A statement of the estimated impact of tax increments financing on all taxing jurisdictions in which the district is located.
Sec. 4. 30-A MRSA §5252, sub-§5-B is enacted to read:
5-B. Increased assessed value. "Increased assessed value" means the valuation amount by which the current assessed value of a tax increment financing district exceeds the original assessed value of the district. If the current assessed value is equal to or less than the original there is no increased assessed value.
Sec. 5. 30-A MRSA §5252, sub-§8, ¶A, as amended by PL 1997, c. 220, §2, is further amended to read:
A. The term "project costs" does not include the cost of facilities, buildings or portions of buildings used predominantly for the general conduct of government or for public recreational purposes. These facilities and buildings include, but are not limited to, city halls and other headquarters of government where the governing body meets regularly, courthouses, jails, police stations and other State Government and local government office buildings, recreation centers, athletic fields and swimming pools. Facilities and buildings used by State Government may be included as project costs if located in approved downtown development districts.
Sec. 6. 30-A MRSA §5252, sub-§8, ¶B, as amended by PL 1999, c. 272, §§4 and 5, is further amended by amending subparagraph (11) to read:
(11) Costs associated with developing new employment opportunities; promoting public events; advertising cultural, educational and commercial activities; providing public safety; establishing and maintaining administrative and management support; assisting in mitigating any adverse impact of a district upon the municipality and its constituents; funding economic development programs or environmental improvement programs developed by the municipality; marketing the municipality as a business location; and such other services as are necessary or appropriate to carry out the development program if the activities and programs generating such costs are provided for in the development program and bear a reasonable relationship to the improvements or activities within the district or the impacts on the district; and
Sec. 7. 30-A MRSA §5252, sub-§9, as enacted by PL 1987, c. 737, Pt. A, §2 and Pt. C, §106 and as amended by PL 1989, c. 104, Pt. C, §§8 and 10, is further amended to read:
9. Tax increment. "Tax increment" means that portion of all those real and personal property taxes assessed by a municipality, in excess of any state, county or special district tax, upon the captured increased assessed value of property in the development district.
Sec. 8. 30-A MRSA §5253, sub-§1, as amended by PL 1995, c. 669, §2, is further amended to read:
1. Districts. The municipal legislative body may designate development districts within the boundaries of the municipality. Before designating a district, the municipal legislative body or the municipal legislative body's designee shall hold at least one public hearing. Notice of the hearing must be published at least 10 days before the hearing in a newspaper of general circulation within the municipality. The conditions in paragraphs A to E do not apply to approved downtown development districts.
A. At least 25%, by area, of the real property within a development district must meet at least one of the following criteria:
(1) Must be a blighted area;
(2) Must be in need of rehabilitation, redevelopment or conservation work; or
(3) Must be suitable for industrial or commercial sites.
B. The total area of a single development district may not exceed 2% of the total acreage of the municipality. All development districts may not exceed 5% of the total acreage of the municipality. The boundaries of a development district may be altered only after meeting the requirements for adoption under this subsection.
C. The aggregate value of equalized taxable property, as defined in Title 36, sections 208 and 305, of a tax increment financing district determined as of the April 1t preceding the date the designation of the district becomes effective, plus all existing tax increment financing districts determined as of the April 1st preceding the date the designation of each such district became effective, may not exceed 5% of the total value of equalized taxable property within the municipality as of the April 1st preceding the date the designation of the development district becomes effective. However, excluded from the calculation of this limit is any district involving project costs in excess of $10,000,000, the geographic area of which consists entirely of contiguous property owned by a single taxpayer and the assessed value of which exceeds 10% of the municipality's total assessed value. For the purpose of this paragraph, "contiguous property" includes a parcel or parcels of land divided by a road, power line or right-of-way.
D. The aggregate value of municipal general obligation indebtedness financed by the proceeds from tax increment financing districts within any county may not exceed $50,000,000, adjusted by a factor equal to the percentage change in the United States Bureau of Labor Statistics Consumer Price Index, United States City Average, from January 1, 1996 to the date of calculation.
E. The designation of captured assessed value of property within a tax increment financing district is subject to the following limitations.
(1) The Commissioner of Economic and Community Development shall adopt rules necessary to allocate or apportion the designation of captured assessed value of property within tax increment financing districts in accordance with these limitations.
(2) The acquisition, construction and installment of all real and personal property improvements, buildings, structures, fixtures and equipment within the district contemplated by the development program and to be financed through municipal bonded indebtedness must be completed within 5 years of the designation of the tax increment financing district by the Commissioner of Economic and Community Development.
F. Before final designation of a tax increment financing district, the Commissioner of Economic and Community Development shall review the proposal to ensure that the proposal complies with statutory requirements and shall identify tax shifts within the county where the tax increment financing district will be designated. A designation under this subsection is effective upon approval by the municipal legislative body and, for tax increment financing districts, upon approval by the Commissioner of Economic and Community Development. In the case of downtown development districts, the State Planning Office and the Department of Transportation shall review proposals and provide advice to assist the Commissioner of Economic and Community Development in making decisions under this paragraph. If the municipality has a charter, the designation of a development district must not be in conflict with the provisions of the municipal charter.
Sec. 9. 30-A MRSA §5254, sub-§1, as amended by PL 1991, c. 431, §7, is further amended to read:
1. Captured assessed value. The municipality may retain all or part of the tax increment generated from the increased assessed value of a tax increment financing district for the purpose of financing the development program. The amount of tax increment to be retained is determined by designating the amount of captured assessed value to be retained. When a development program for a tax increment financing district is adopted, the municipal legislative body shall adopt a statement of the percentage of captured increased assessed value to be retained as captured assessed value in accordance with the development program. The statement of percentage may establish a specific percentage or percentages or may describe a method or formula for determination of the percentage. The municipal assessor shall certify the amount of the captured assessed value to the municipality each year.
Sec. 10. 30-A MRSA §5254, sub-§3, as amended by PL 1997, c. 220, §3, is further amended to read:
3. Development program fund; tax increment revenues. If a municipality has elected to retain all or a percentage of the retained designated captured assessed value under subsection 1, the municipality shall:
A. Establish a development program fund that consists of the following:
(1) A development sinking fund account that is pledged to and charged with the payment of the interest and principal as the interest and principal fall due and the necessary charges of paying interest and principal on any notes, bonds or other evidences of indebtedness that were issued to fund or refund the cost of the development program fund; and
(2) A project cost account that is pledged to and charged with the payment of project costs as outlined in the financial plan and are paid in a manner other than as described in subparagraph (1);
B. Annually set aside all tax increment revenues on retained captured assessed values and all state tax increment revenues payable to the municipality for public purposes and deposit all such revenues to the appropriate development program fund account in the following priority:
(1) To the development sinking fund account, an amount sufficient, together with estimated future revenues to be deposited to the account and earnings on the amount, to satisfy all annual debt service on bonds and notes issued under section 5257 and the financial plan; and
(2) To the project cost account, an amount sufficient, together with estimated future revenues to be deposited to the account and earnings on the amount, to satisfy all annual project costs to be paid from the account;
C. Be permitted to make transfers between development program fund accounts as required, provided that the transfers do not result in a balance in the development sinking fund account that is insufficient to cover the annual obligations of that account; and
D. Annually return to the municipal general fund any tax increment revenues remaining in the development sinking fund account in excess of those estimated to be required to satisfy the obligations of the development sinking fund account after taking into account any transfers permitted by paragraph C. The municipality, at any time during the term of the district, by vote of the mu-nicipal officers, may return to the municipal general fund any tax increment revenues remaining in the project cost account in excess of those estimated to be required to satisfy the obligations of the development project cost account after taking into account any transfer permitted by paragraph C. In either case the corresponding amount of local valuation may not be included as part of the retained captured assessed value as specified by the municipality.
Notwithstanding the provisions of section 5253, subsection 1, paragraph F and any other provision of law, in the case of investments exceeding $100,000,000 in shipyard facilities in districts authorized prior to June 30, 1999, revenues must be set aside and deposited by the municipality to the appropriate development program fund account and expended to satisfy the obligations of the accounts without the need for further action by the municipality by appropriation or otherwise. Unless otherwise provided by the municipality in connection with its approval of the district, tax increment revenues on all captured assessed value may not be taken into account for purposes of calculating any limitation on the municipality's annual expenditures or appropriations and the payment of tax increment revenues on captured assessed value is not subject to any limitation or restriction on the municipality's authority or power to enter into contracts with respect to making payments for a term equal to the term of the district.
Effective August 11, 2000, unless otherwise indicated.
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