An Act To Clarify Tax Increment Financing
Maine Legislature, Session 126, LD 0563
Committee: Taxation
Sponsors: ROCHELO, DUTREMBLE, BERRY, CASAVANT, HERBIG, HOBBINS, KNIGHT, LIBBY, VALENTINO
Amends: 30-A MRSA §5222, 30-A MRSA §5223, 30-A MRSA §5224, 30-A MRSA §5225, 30-A MRSA §5226, 30-A MRSA §5231

Legislative Document 
No. 563 
H.P. 382 
House of Representatives, February 19, 2013 
An Act To Clarify Tax Increment Financing 
Reference to the Committee on Taxation suggested and ordered printed. 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative ROCHELO of Biddeford. 
Cosponsored by Senator DUTREMBLE of York and 
Representatives: BERRY of Bowdoinham, CASAVANT of Biddeford, HERBIG of Belfast, 
HOBBINS of Saco, KNIGHT of Livermore Falls, LIBBY of Lewiston, Senator: VALENTINO 
of York. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  30-A MRSA §5222, sub-§13, as enacted by PL 2001, c. 669, §1, is 
amended to read: 
13.  Original assessed value.  "Original assessed value" means the taxable assessed 
value of a development district as of March 31st of the tax year preceding the year in 
which it was designated by the municipality or plantation. 
Sec. 2.  30-A MRSA §5223, sub-§3, as amended by PL 2011, c. 675, §2 and c. 
691, Pt. A, §31, is further amended to read: 
3.  Conditions for approval.  Designation of a development district is subject to the 
following conditions. 
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 
including a fisheries and wildlife or marine resources project; or 
(3)  Must be suitable for commercial or arts district uses. 
B.  The total area of a single development district may not exceed 2% of the total 
acreage of the municipality or plantation.  The total area of all development districts 
may not exceed 5% of the total acreage of the municipality or plantation. 
C.  The original assessed value of a proposed tax increment financing district plus the 
original assessed value of all existing tax increment financing districts within the 
municipality or plantation may not exceed 5% of the total value of taxable property 
within the municipality or plantation as of April 1st preceding the date of the 
commissioner's approval of the designation of the proposed tax increment financing 
district. 
Excluded from the calculation in this paragraph is any district excluded from the 
calculation under former section 5253, subsection 1, paragraph C and any district 
designated on or after the effective date of this chapter that meets the following 
criteria: 
(1)  The development program contains project costs, authorized by section 5225, 
subsection 1, paragraph A, that exceed $10,000,000; 
(2)  The geographic area consists entirely of contiguous property owned by a 
single taxpayer; 
(3)  The assessed value exceeds 10% of the total value of taxable property within 
the municipality or plantation; and 
(4)  The development program does not contain project costs authorized by 
section 5225, subsection 1, paragraph C. 
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 and plantation 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. 
(1)  The commissioner may adopt rules necessary to allocate or apportion the 
designation of captured assessed value of property within proposed tax increment 
financing districts to permit compliance with the condition in this paragraph.  
Rules adopted pursuant to this paragraph are routine technical rules as defined in 
Title 5, chapter 375, subchapter 2-A. 
(2)  The acquisition, construction and installment of all real and personal property 
improvements, buildings, structures, fixtures and equipment included within the 
development program and financed through municipal or plantation bonded 
indebtedness must be completed within 8 years of the commissioner's approval of 
the designation of the tax increment financing district. 
The conditions in paragraphs A to D C do not apply to approved downtown tax increment 
financing districts, tax increment financing districts that consist solely of one or more 
community wind power generation facilities owned by a community wind power 
generator that has been certified by the Public Utilities Commission pursuant to Title 
35-A, section 3403, subsection 3 or transit-oriented development districts. 
Sec. 3.  30-A MRSA §5224, sub-§2, ¶H, as enacted by PL 2001, c. 669, §1, is 
amended to read: 
H.  The duration of the program, which may not exceed a total of 30 tax years from 
the date of designation of the district; and 
Sec. 4.  30-A MRSA §5225, sub-§1, ¶A, as amended by PL 2011, c. 101, §12, is 
further amended to read: 
A.  Costs of improvements made within the tax increment financing district, 
including, but not limited to: 
(1)  Capital costs, including, but not limited to: 
(a)  The acquisition or construction of land, improvements, public ways, 
buildings, structures, fixtures and equipment for public, arts district, new or 
existing recreational trail, commercial or transit-oriented development district 
use. 
(i) Eligible transit-oriented development district capital costs include but 
are not limited to:  transit vehicles such as buses, ferries, vans, rail 
conveyances and related equipment; bus shelters and other transit-related 
structures; benches, signs and other transit-related infrastructure; bicycle 
lane construction and other bicycle-related improvements; pedestrian 
improvements such as crosswalks, crosswalk signals and warning 
systems and crosswalk curb treatments; and the nonresidential 
commercial portions of transit-oriented development projects. 
(ii)  Eligible recreational trail-related development district capital costs 
include but are not limited to new or existing trails, including bridges that 
are part of the trail corridor, used all or in part for all-terrain vehicles, 
snowmobiles, hiking, bicycling, cross-country skiing or other related 
multiple uses, signs, crosswalks, signals and warning systems and other 
related improvements. 
(iii)  Eligible development district capital costs for public ways include 
but are not limited to scenic turnouts, signs, railing and other related 
improvements;. 
(iv)  Eligible commercial development district capital costs include but 
are not limited to industrial development, businesses and apartment 
buildings and condominiums located in a tourist and resort area and all 
capital costs of such development projects; 
(b)  The demolition, alteration, remodeling, repair or reconstruction of 
existing buildings, structures and fixtures; 
(c)  Site preparation and finishing work; and 
(d)  All fees and expenses that are eligible to be included in the capital cost of 
such improvements, including, but not limited to, licensing and permitting 
expenses and planning, engineering, architectural, testing, legal and 
accounting expenses; 
(2)  Financing costs, including, but not limited to, closing costs, issuance costs 
and interest paid to holders of evidences of indebtedness issued to pay for project 
costs and any premium paid over the principal amount of that indebtedness 
because of the redemption of the obligations before maturity; 
(3)  Real property assembly costs; 
(4)  Professional service costs, including, but not limited to, licensing, 
architectural, planning, engineering and legal expenses; 
(5)  Administrative costs, including, but not limited to, reasonable charges for the 
time spent by municipal or plantation employees in connection with the 
implementation of a development program; 
(6)  Relocation costs, including, but not limited to, relocation payments made 
following condemnation;  
(7)  Organizational costs relating to the establishment of the district, including, 
but not limited to, the costs of conducting environmental impact and other studies 
and the costs of informing the public about the creation of development districts 
and the implementation of project plans; and 
(8) In the case of transit-oriented development districts, ongoing costs of adding 
to an existing transit system or creating a new transit service and limited strictly 
to transit operator salaries, transit vehicle fuel and transit vehicle parts 
replacements; 
Sec. 5.  30-A MRSA §5225, sub-§1, ¶C, as repealed and replaced by PL 2011, c. 
675, §3, is amended to read: 
C.  Costs related to economic development, environmental improvements, fisheries 
and wildlife or marine resources projects, recreational trails or employment training 
within the municipality or plantation, including, but not limited to: 
(1)  Costs of funding economic development programs or events developed by 
the municipality or plantation or funding the marketing of the municipality or 
plantation as a business or arts location; 
(2)  Costs of funding environmental improvement projects developed by the 
municipality or plantation for commercial or arts district use or related to such 
activities; 
(3)  Funding to establish permanent economic development revolving loan funds 
or, investment funds or grants; 
(4)  Costs of services and equipment to provide skills development and training 
for residents of, including scholarships to educational institutions, for jobs 
created or retained in the municipality or plantation.  These costs may not exceed 
20% of the total project costs and must be designated as training funds in the 
development program;  
(5) Quality child care costs, including finance costs and construction, staffing, 
training, certification and accreditation costs related to child care;  
(6)  Costs associated with new or existing recreational trails determined by the 
department to have significant potential to promote economic development, 
including, but not limited to, costs for multiple projects and project phases that 
may include planning, design, construction, maintenance, grooming and 
improvements with respect to new or existing recreational trails, which may 
include bridges that are part of the trail corridor, used all or in part for all-terrain 
vehicles, snowmobiles, hiking, bicycling, cross-country skiing or other related 
multiple uses; 
(7) Costs associated with a new or expanded transit service, limited to: 
(a) Transit service capital costs, including but not limited to:  transit vehicles 
such as buses, ferries, vans, rail conveyances and related equipment; bus 
shelters and other transit-related structures; and benches, signs and other 
transit-related infrastructure; and 
(b) In the case of transit-oriented development districts, ongoing costs of 
adding to an existing transit system or creating a new transit service and 
limited strictly to transit operator salaries, transit vehicle fuel and transit 
vehicle parts replacements; and 
(8)  Costs associated with the development of fisheries and wildlife or marine 
resources projects; and 
Sec. 6.  30-A MRSA §5226, sub-§3, as amended by PL 2011, c. 101, §17, is 
further amended to read: 
3.  Effective date.  A designation of a tax increment financing district is effective 
upon approval by the commissioner.  The operational functioning of the tax increment 
financing district may, however, not begin until the tax year following the tax year in 
which the effective date falls if the municipality or plantation designating the district 
determines its budget and assesses its taxes before the effective date of the district or if 
the municipality or plantation chooses to start the operational functioning of the tax 
increment financing district in a later tax year.  Notwithstanding the 30-tax-year limit 
under section 5224, subsection 2, paragraph H on the duration of tax increment financing 
districts, a municipality or plantation may continue to spend tax increment financing 
district revenues on approved projects within a development program for a total of 3 
years following the final tax year of the tax increment financing district.  A designation of 
a development district other than a tax increment financing district is effective upon 
approval by the municipal or plantation legislative body. 
Sec. 7.  30-A MRSA §5231, as amended by PL 2011, c. 101, §24, is further 
amended to read: 
§5231.  Bond financing 
The legislative body of a municipality or plantation may authorize, issue and sell 
bonds, including, but not limited to, general obligation or revenue bonds or notes, that 
mature within 20 30 years from the date of issue to finance all project costs needed to 
carry out the development program within the development district.  The plantation or 
municipal officers authorized to issue the bonds or notes may borrow money in 
anticipation of the sale of the bonds for a period of up to 3 years by issuing temporary 
notes and notes in renewal of the bonds.  All revenues derived under section 5227 or 
under section 5228, subsection 1 received by the municipality or plantation are pledged 
for the payment of the activities described in the development program and used to 
reduce or cancel the taxes that may otherwise be required to be expended for that 
purpose.  The notes, bonds or other forms of financing may not be included when 
computing the municipality's or plantation's net debt.  Nothing in this section restricts the 
ability of the municipality or plantation to raise revenue for the payment of project costs 
in any manner otherwise authorized by law. 
SUMMARY 
This bill makes changes to the tax increment financing laws to accomplish the 
following. 
1.  It amends the definition of "original assessed value" to provide that it means the 
taxable assessed value of a development district. 
2.  It eliminates the adjusted $50,000,000 cap on bonded indebtedness for tax 
increment financing districts within a county and the requirement that acquisition of real 
and personal property financed by municipal indebtedness must be completed within 8 
years of the approval of a district. 
3.  It clarifies the 30-tax-year permissible duration of a development program related 
to a tax increment financing district. 
4.  It expands the capital costs allowed for an eligible commercial development 
district and the costs allowed for skills development and training for jobs created or 
retained in the municipality or plantation where a development district is located and 
permits the use of funds for economic development grants. 
5.  It permits a municipality or plantation to delay the operational functioning of a tax 
increment financing district until the tax year following the tax year in which the district 
takes effect. 
6.  It expands from 20 years to 30 years the allowable maturation period for bonds 
issued by the legislative body of a municipality or plantation to finance the cost of a 
development program within a development district.