A new development district that runs the length of Route 236 within South Berwick means that 100% of new property tax dollars generated in that area will be kept by the town for the next 30 years, beginning July 1.
The Transit Oriented Tax Incremental Financing district, commonly referred to as a TIF, encompasses the Route 236 corridor from the Berwick town line to the Eliot town line, including a portion of the streets and roads directly accessible to Route 236.
The district, approved by the state in March, includes 802 acres of commercial and residential property with a current assessed value of $142.8 million. It is the second TIF district in town. The first, the Punkintown district located in the Central Maine Power corridor parallel to Route 236, was approved in 2011.
Maine cities and towns normally retain only 30% of property tax dollars generated locally; the remainder goes to state, school and county funding. In a TIF district, all property taxes collected as a result of any increase in the value of property in that district stay with the town.
The Punkintown district had a valuation of $3.8 million in 2011. In 2021 it was valued at $26.9 million, and last year generated about $400,000 in revenue.
TIF accounts can fund 100% of positions related to economic development as well as a pro-rated amount of town staff salaries where their work relates to economic development, according to Denise Clavette, the town economic development director. That position was created in 2022, and the $112,500 salary is fully funded by revenue from the Punkintown district.
The combined total of that salary along with pro-rated economic development salaries of other town employees — town manager, town manager’s executive assistant, assistant town manager/finance director, finance assistant, planner, code enforcement officer, planning assistant, assessor and assessing assistant — is approximately $300,000 annually, she said.
In the future, revenue from both the Punkintown and the Transit-Oriented TIF districts can be used for salaries related to economic development. This year, those salaries are funded solely by the Punkintown district, according to Clavette. They offset the cost to locally raised taxes and are not in addition to it, she said.
Clavette used the example of a salary of $80,000 pro-rated from the TIF at 20% — $64,000 would be funded from locally raised taxes and $16,000 would be funded by revenue from the TIF.
“The town loses 70% on every tax dollar, so it behooves the town to fund economic development related salaries out of the TIF fund, since 100% of the TIF funds remain in South Berwick,” she said.
A town’s eligibility for a transit-oriented TIF is based on it having an existing or planned transportation route, according to Clavette. In South Berwick, a COAST bus makes a round trip between the town center and the Portsmouth Naval Shipyard five days a week.
Economic development efforts may include a wide range of projects to improve transit-related access to existing businesses and attract new business. Projects may include traffic control, additional or improved parking, lighting, sidewalks and bike paths. TIF funds may also be used for the installation of 3-phase power for industries, internet broadband, underground utilities, recreational space and public benches.
Funds from TIF revenue go into a dedicated TIF account and are used primarily for projects within the district, but also can be used for other identified development projects throughout town, said Clavette. All TIF funds must be expended by the specified end date, in this case 30 years.
New funds from the Punkintown TIF district are expected to go to traffic improvements on Route 236, a downtown revitalization plan, and signage both on roads and in town, she said. Funds from the Transit-Oriented TIF district will target upgrading downtown façades and other downtown improvements, she said.
