BAR HARBOR — Last week’s news that the Ledgelawn Apartments complex will be converted from year-round to seasonal worker housing got many residents talking about a dearth of affordable year-round housing options.
The economic development committee (ED) of the HUB of Bar Harbor also has been discussing that issue. As part of those conversations, Town Manager Cornell Knight offered to invite Jay Hardy, a former state economic development official and a specialist in tax increment financing (TIF), to meet with the committee.
The TIF program, Hardy told the committee earlier this month, allows a municipality to designate a geographically defined district in which all or a portion of newly generated tax revenues may be allocated to support development within the zone. Creation of a program would be a town council decision, but must be approved by the state Department of Economic and Community Development.
“You’re essentially freezing the value at the existing assessment before [new] development takes place and then take the taxes from the new development, called captured assessed value, and use that money to support development within the district,” Hardy said.
The captured assessed value “becomes sort of stealth value,” he said, because it’s not included in the state’s calculations of the town’s valuation, which is used to calculate county taxes or school assessments. He noted that the Maine constitution requires all classes of property to be taxed on an equal basis.
Hardy also discussed the use of special assessment districts to fund infrastructure improvements.
Possible uses of TIF funds discussed in the meeting include creation of an affordable housing fund to offset costs for property owners who agree to offer year-round rentals, or support for the HUB.
“I’m sure every member of the ED committee, if asked, may have a separate idea for what projects may be most suited for such a program,” committee member Kyle Shank said. “A TIF is just a tool that’s been discussed several times in our ED meetings as one to put in the ‘tool belt’ for how we can best do some projects for the benefit of the town.”
“Let’s say you were trying to entice people to build apartments (not necessarily apartment buildings),” Planning Director Bob Osborne told the Islander. “A TIF district might be a mechanism to do that as well, if you take a bit of those funds and hand them back to the developer.”
Osborne said that the high cost of land here and building density in the downtown area might mean a smaller margin of increased value than other communities see.