Many communities in Maine use Tax Increment Financing (TIF) to accomplish their economic development goals, but many don't even consider it. Maine Municipal Association partnered with the Development Council of Maine and Maine Development Foundation to survey municipalities, TIF users and not, about opinions of TIF. The survey’s primary purpose was to learn if legislative changes to the law would encourage non-participating communities to use TIF. The results indicate that while there is room for some improvements to the law, most communities that do not use TIF are simply small, rural communities that are unlikely to gain much through a tax increment approach. Despite that finding, there is clearly an opportunity to increase the use of TIF, especially by increasing education around the tools use and process. Below is a quick summary of the major themes from the survey.
How TIF is being used:
- “Economic Development” is the most common type of TIF District, well ahead of “Downtown”, “Affordable Housing”, and “Transit-Oriented” TIF districts.
- Credit Enhancement Agreements (with private businesses and developers) along with infrastructure improvements are the most common uses of TIF.
- Some communities are near or approaching their maximum TIF abilities, under the 5% of taxable value limit set by law.
- Of the communities that use TIF, most are “selective” in their approach towards using the tool, however 26% use TIF “aggressively.”
Why some communities are not using TIF:
- The most common answer is that some communities just don’t believe there is enough economic development activity to warrant using TIF, especially among smaller rural communities.
- The majority of non-TIF using communities had no problem with other communities using TIF, however, 26% expressed concern about the fairness of the tax-sheltering impacts to their own communities.
- Understanding and perception of TIF was reported to be fairly low, especially among the general public. Municipal officials have used hearings, workshops, newsletters, websites, brochures, and others to keep people informed – but results have been mixed.
- The officials that oversee their community’s TIF program were asked to weigh in on the TIF development and implementation process. Suggested improvements included changes that would limit restrictions on using TIF both in terms of the number and size of TIF districts and uses of TIF revenues.