2017-04-13 / News

Downtown property owners taxed more?

By Garrick Hoffman
Staff Writer

BIDDEFORD – Downtown Biddeford could have its own independent improvement district if the idea garners support by the community and city council. Downtown property owners don’t pay more in taxes than those in the rest of the city, but under this new proposal they would, said City Manager Jim Bennett.

An additional tax of 49 cents per $1,000 would be placed on downtown property owners for the first transitional year. For example, a property downtown worth $285,200 in fiscal year 2018 would see an increase in taxes of $139.75 per year if the district was implemented.

Bennett proposed the formation of the Downtown Improvement District with Mayor Alan Casavant at the Heart of Biddeford office on Main Street on Monday, April 10 at 11 a.m. before about 12 people who represented a mix of business and property owners. A second meeting was held later at 3 p.m.

Bennett said the district would be modeled after Portland’s Downtown Improvement District, which he described as very successful, as well as Bangor and other similar districts throughout the country. If approved it would be in full effect by July 1, 2018.

According to materials provided by Bennett, the formation of the district, which is included in the upcoming budget cycle, would involve the creation of an independent board by Dec. 31. In addition, $27,500 in funding for beautification would be spent during the upcoming budget year; $10,000 would be spent for promotions and marketing; $15,000 would be earmarked for events and activities that Heart of Biddeford traditionally organizes; and $54,116 would be allocated for cleaning and maintaining downtown.

Services such as snow removal by the city will continue, Mayor Alan Casavant said, but Heart of Biddeford Director Delilah Poupore said businesses are responsible for shoveling out spaces in their immediate proximities. The tax increase would alleviate this responsibility by having the city do this work.

“(The tax) would be about what else they need that would be above that need (of snow removal),” Casavant said.

“This is a vehicle for downtown businesses and downtown building owners to say, ‘We want extra services that we’re currently not getting, and we’re willing to pay for it,” Bennett said. “What it does is two things. It makes everyone downtown have to pay, and it ends up in a situation where (taxes are) 100 percent deductible versus 50 percent deductible. One hundred percent of what they pay us as property tax is deductible. If they make any donations to the organization over and above that, then that would be subject to whatever IRS rules are.”

Bennett said each year the organization would submit a budget request to the city for funding, accompanied with goals for the funding. The city council would authorize the budget upon review and consideration. The funding would then be raised as an additional property tax on real estate and personal property within the district, the boundaries of which are not yet determined. The funds would then be transferred to the organization for intended uses.

Bennett said the idea is being proposed now because of the upcoming fiscal year budget.

“In an era when municipal funding is constantly being squeezed by such pressures as state government raiding municipal revenue sharing and requiring additional mandates without funding, the provision of supplemental downtown amenities is often unable to be funded by traditional sources. This is the case in Biddeford,” according to materials.

Casavant said it’s also being proposed because of pressures stemming from other demands around the city, such as the Riverwalk and a parking garage.

The city council has not discussed the Downtown Improvement District, and has just begun reviewing the budget, Bennett said.

Reactions were mixed.

Kim Roseberry, who has owned property at 160 Main St. for 12 years, said she didn’t think timing for the proposed organization is right because Biddeford’s downtown is still trying to make progress. Roseberry lives upstairs in her property and rents out the downstairs as business space, which she said she believes will be adversely affected because it will need to absorb the additional tax because she can’t absorb it all.

“I don’t think the downtown is at a point where the businesses and building owners can absorb additional costs,” she said. “I think you may have potential of stymieing progress we’re seeing and the momentum that we’re seeing in the downtown. There’s a lot of spaces that are empty still. Portland and Bangor – they’re very full downtowns, very vibrant economies. There’s real potential. You’re just going to place an extra burden that’s going to filter down to our businesses.”

Seth Harkness, who is renovating 17 Alfred St. and has renovated multifamily properties for 10 years outside the downtown, said he looks at the idea in a perspective opposite of Roseberry’s.

“Maybe those places are so vibrant because they’ve gotten together and done something like this and created an environment attractive to business,” he said. “It’s true there’s empty store fronts and part of the reason may be because, although there’s a general sense that things are happening in Biddeford and it’s on the upswing, there’s still a certain feel of neglect and a lack of attention to detail throughout the downtown, which might make people hesitate to take that first step. I think people like to invest in a community that’s investing in itself, that’s making those efforts to welcome new businesses.”

Jon Tarbox, owner of 22 Pearl St. and a Bradbury Street building, has concerns similar to Roseberry’s.

“When you’re talking about . . . downtown Portland, (it’s a) far cry from downtown Biddeford,” he said. “My uncle owns a lot of real estate in downtown Portland. They can afford that and absorb that, but a smaller community like Biddeford – we still have drug problems here on Main Street. You can put a skirt on a pig, and it’s still a pig.”

Sue and Grady Sexton, who own Grady’s Radio & Satellite TV and a four-unit apartment building next to it, also were concerned. Sue Sexton said the move would be frivolous, and that she’s concerned about tax increases after the first year.

“If for this year they set the amount at 49 cents per $1,000, in the future budgets that 49 cents will change depending on what this group tells the council that they want to see for next year,” she said. “It’s not going to be 49 cents per $1,000 the next year; it’s going to be more. I know that. It’s a frivolous expense, and too much power for a group to dictate how much we have to pay.”

She said if the idea came into fruition, she’d be worried about increasing rent for her tenants.

“If you’re young and making X-amount of dollars and find a decent place to live at $675 heated … how much do we take? How much do they make? Do we take three-quarters of what they make for the month and not leave them any money to eat? We’re not like that,” she said. “We’re not out to get rich, and if (Biddeford implements the organization) and I have to go up on my rent to make up the difference, who’s going to stay? Every other apartment in the district will be going up, so they’re just going to go somewhere else because we’re going to price ourselves right out of business. It’s very frustrating.”

Grady Sexton said the Biddeford Crossing TIF – or Tax Increment Financing district that generates revenue typically designated for economic development projects in downtowns – of $877,000 is earmarked for downtown. He asked Bennett how much of that is being used for downtown improvement, unless the money is being funneled somewhere else.

Bennett said the TIF is already used to pay for RiverWalk, the repayment of the purchase of the former Maine Energy Recovery Co. site and other infrastructure. He also said TIF money will be earmarked for a parking garage.

Bennett said he proposed shifting funds from the TIF away from supporting personnel and other costs in the next two or three years exclusively for infrastructure.

Grady Sexton said he is not only concerned about increasing rent, but concerned about other property owners as well.

“Forty-nine cents isn’t a whole bunch of money,” he said, “but not everyone sitting there today is in good financial shape. A lot have big investments and are hoping they can recoup some of the money.”

Under the proposed tax, Bennett said Doug Sanford and Nathan Szanton, owners of Pepperell Mill Campus and The Lofts at Saco Falls, respectively, would pay about $3,000 each.

Pepperell Mill, with a projected value of $5,518,100 in fiscal year 2018, would see an increase of $2,703.87, according to proposal materials. The Lofts at Saco Falls, with a projected value of $6,541,400 in fiscal year 2018, would see an increase of $3,205.29.

“(Sanford and Szanton are) obviously not thrilled with the dollar amounts,” Bennett said. “I’m not sure where they’re going to end up landing about whether or not the concept is a good concept or not. They’re still evaluating.”

Sanford could not be reached for comment as of deadline.

Bennett said that if there is not enough support, he would concede.

“I’m not falling on any sword for this,” he said. “If the people of downtown don’t want it, that’s fine. I think it’s a good thing and I think it can work; it has worked well in other communities. But if it’s an idea that’s too early and maybe needs to be laid up, that’s OK. It’s something I’m not ready to charge up the hill and plant a flag at the top of the hill for.”

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