Selectman Jo Cameron introduced Paul Gibbons, Gibbons and Calderwood, attorney representing Edgecomb, Jim Fitch, Woodard and Curran, the town’s engineer for the water and sewer project and Attorney Erik Stumpfel, Eaton Peabody, a consultant on Tax Increment Financing.

Paul Gibbons said that the Sheepscot owners plan to bring water and sewer to Edgecomb contracting with Wiscasset for sewer and water on their own which will increase the value of their property. This will result in more tax revenue for Edgecomb. However, the sewer line which they are planning is not sufficient for additional use by Edgecomb and if Edgecomb wanted to connect to the sewer and water lines at some future time, the size of the line would be too small and it would be too expensive for Edgecomb to hook up to it. Wiscasset is in favor of providing sewer and water to Edgecomb at the present time; this may change in the future as the demand from new development increases in Wiscasset.

Tax Increment Financing affords a mutually beneficial opportunity for the Town of Edgecomb and Sheepscot. Sheepscot is paying $1 million to bring the water and sewer lines to the inn and restaurant property and has agreed to increase the size of the sewer line to accommodate Edgecomb if a TIF district is approved and to give the system to the Town. Under a TIF, the taxes on the increased value of Sheepscot as a result of the availability of water and sewer are sheltered. These funds can be used partly to reimburse Sheepscot for its costs and the remainder will go to the Town. Edgecomb has an opportunity to have water and sewer brought to the town without any financial risk. There is also the opportunity to expand the water and sewer lines to commercial properties on Route 1 which will increase property values and increase tax revenues.

Under a TIF district, a developer would borrow money for a project such as the sewer and water lines. As the property value increases as a result of this improvement, taxes are increased. The difference between the taxes on the original value and on the new value is sheltered and some of this money is returned to the developer to pay off his loan. Once the water and sewer lines are paid for, no additional money goes to the developer. If there is no increase in value, the cost of the improvement is the developer’s problem. An advantage of the TIF is that the increase in assessed value of the Town as a result of development under a TIF district is not used by the county in its assessment for county taxes, nor is it used by the State in calculating revenue sharing or school funding. Under a 20-year TIF, the sheltered revenues will repay the developer for the sewer line and there will be money left over for the Town to expand the sewer line or use for other purposes. Taxes on the increased value will resume at the end of the 20-year TIF period.

Although there is no financial risk, there is a risk, although small, of the line breaking, and if Edgecomb owned the line, it would be responsible. Jim Fitch said that most rivers in Maine have some utility lines that run under water and breakages are very rare even with the materials that were used years ago. Wiscasset has requested the construction of the lines be monitored by the engineering firm of Woodard and Curran to insure that proper construction techniques are used as well as proper materials.

Q. How would you repair a leak?
A. Divers would be used in deep water. The line would be uncovered and the leak would be repaired with a clamp.

Q. How was the leak in Freeport fixed?
A. The line breakage in the mud flats at Freeport was discovered quickly as a result of constant monitoring. The line was a cement asbestos pipe which is no longer used as it can be crushed easily. The DEP, the clam warden, the DMR were notified and the clam flats were closed for two weeks. The line was repaired and operational in two days.

Q. Were there any fines?
A. There were no fines. The breakage was beyond the control of the Freeport Sewer System, and they responded quickly to repair the line.

There will be two inter-local agreements. One will be with the Town of Wiscasset for the sewer line under which Edgecomb will be a customer with a meter just as any other customer in Wiscasset. Edgecomb will own the line from Edgecomb to the Wiscasset shore. Edgecomb will pay an impact fee and user fees at the same rate as any Wiscasset customer.

Tax Increment Financing was created by the Maine legislature in 1977. Before that date towns would issue bonds to finance infrastructure projects. As property values increased, the state would decrease state aid, revenue sharing and school funding, and county taxes would increase. With the TIF, if a town funds development with the new taxes if receives, the taxes from the increased value will not be counted toward county assessments, school funding and revenue sharing. This encourages development without penalties. The first TIFs were used for municipal infrastructure projects with the hope that new development would be attracted because of those improvements. Later developers began using the TIFs for reimbursement for their expenses.

In Edgecomb, for instance, Sheepscot will pay for the water and sewer to be brought from Wiscasset. The Town has no financial risk. Zoning allows greater density with public sewer and water. The new development will bring in new property taxes and the increase in taxes will be used to reimburse the developer for his costs with the balance of the new taxes going to the Town for specified projects. It is estimated that as a result of this development $8.8 million in new value will be added which equals $90,000 in new taxes per year. This is the money that will be divided 55% to the developer to reimburse his costs and 45% to the Town. If the Town establishes the TIF district, the new taxes generated in that district over the next 20 years will be $2.1 million and the developer would be reimbursed $1.2 million if the town approves the TIF district. If the TIF district is approved and Sheepscot pays for the water and sewer extension and the development does not happen, Sheepscot will not be reimbursed.

Under the inter-local agreement, Edgecomb would own and operate the sewer line. There will be a single meter measuring the flow from Edgecomb to Wiscasset. Edgecomb will pay the same sewer rates as other Wiscasset users. Edgecomb will bill the users of the sewer system (Sheepscot initially) to recover the cost of paying Wiscasset sewer rates and for maintenance of the line.

The other inter-local agreement will be with the Wiscasset Water District. The Public Utilities Commission has authorized the extension to Davis Island. The Water District will own the lines and will charge water usage to customers on Davis Island at the same rate as the Wiscasset customers are paying. It will also be responsible for the maintenance of the line. Because the line will be paid for up front, Wiscasset Water District cannot assess customers for the cost of putting in the line. Edgecomb residents will not be required to connect to the water system. If for any reason Wiscasset Water District decides to terminate all its water service to Davis Island, Edgecomb has the option to purchase the line for $1. All these conditions are in the inter-local agreement.

The $800,000 in new taxes which will go to the Town as a result of the new development can be put into the general fund, but all the advantages of sheltering will be lost. Or these funds can be sheltered and put into a capital reserve project account for extension of the sewer and water lines on Davis Island and further to Route 1.

Q. Could the Town use that money for something else if it was desperately needed?
A. It would require Town Meeting approval to amend the use.

Q. Who owns the pumps?
A. All the sewer facilities from the main meter on the Wiscasset side will be owned by the Town of Edgecomb.

Q. Who would pay for extending the lines?
A. Edgecomb would build the pump station using taxes created by the TIF and connect it to the Sheepscot lines. The Town would own and operate it.

Q. Does the Town own the property where the pump station will be located?
A. No, but there have been talks with the owner and it is possible that an agreement can be made which would benefit the owner as well as the Town.

Q. Will the Town need a staff to read meters, do billing, etc.?
A. The sewer ordinance which will be on the warrant will govern how rates are set which will be enough to cover Wiscasset’s charges and also the administration and maintenance of the system. If Sheepscot doesn’t pay, a lien can be filed against the property. Similarly, the Wiscasset Water District can file a water lien if bills are not paid.

Q. Will a full-time staff person be required?
A. Not initially, but with extension of the lines, the Town will have to decide what is needed.

Q. How will the Town connect to the Sheepscot lines?
A. There will be stubs in the lines to Sheepscot for extending the lines to other parts of Davis Island and to Route 1.

Q. How long will the TIF last?
A. The maximum is 30 years; however, this proposal is for 20 years. Potentially all of Davis Island could be served by Wiscasset Water District and the sewer could be extended all the way down Route 1.
     A study has been done to estimate the water and sewer needs of the school, the firehouse and Route 1 if it were completely built up with hotels, restaurants, homes and commercial establishments. The need was estimated to be 31,000 gallons which is in addition to the 20,000 gallons reserved for Sheepscot. Wiscasset has agreed to reserve 51,000 gallons per day for Edgecomb. Sheepscot’s current license is for 4500 gallons per day. If the Sheepscot property is fully developed, it is estimated that 20,000 gallons will be needed.

Q. What is included in the TIF district?
A. The district initially will include the two Sheepscot properties plus a designated route for the water and sewer line. The TIF district can be amended to include other properties which would receive TIF benefits but only by Town meeting. A TIF district can not exceed 2% of the town’s land area and all TIF districts can not exceed 5% of the town area. It is more advantageous to do TIF projects separately than to combine them. The Town can control development by zoning; it can channel it by the use of TIFs.

Q. What can Edgecomb use the TIF dollars for?
A. TIF funds cannot be used solely for recreational purposes, but a transportation facility such as a public landing or dock that served commercial and recreational uses could be funded if it were within the TIF district. TIF funds can be used for infrastructure inside and outside the TIF district. Environmental projects, general economic development activities, job training, and a direct financial incentive to a developer to do a project in the district can also be funded by TIF funds. The funds should be used within the 20-year period, and the use will have to be approved at Town Meeting.

Q. Do TIF funds accrue interest?
A. Yes, they can be invested the same way any other Town money is invested, but it is not clear whether the interest has to be used for the program fund.

Q. Could this result in development that the town doesn’t want?
A. Uses are controlled through zoning. And extensions of the sewer and water have to be approved by Town Meeting. The Town has enacted ordinances over the past three years to regulate and direct zoning. Commercial development is encouraged on Route 1 and protections have been put in place to control it.

Q. Isn’t Edgecomb really buying the lines by giving the tax dollars back to Sheepscot?
A. Sheepscot only gets reimbursed if the tax dollars materialize. However, 30% of those tax dollars would go to the county and state without the TIF. Moreover, the Town will own the lines even if there is no increase in taxes.

Q. How do we know Wiscasset will not raise the rates?
A. The contract with Wiscasset sets the terms of the agreement including rates. It will be for 40 years. The contract will benefit Wiscasset as well as Edgecomb.

Q. What if Wiscasset doesn’t have excess capacity in the future?
A. Wiscasset has a 1,000,000 gallon capacity, currently it is licensed for 660,000 gallons per day. It is currently using about 1/3 of that capacity. So even with development in Wiscasset, there is ample capacity.

Q. Isn’t the Town subsidizing the sewer and water?
A. The developer will be reimbursed for the cost of the water and sewer from the new taxes. Theoretically, it is a subsidy assuming that the project is developed as planned, and that the value increases providing greater tax revenues; however, without the TIF, there would be no money for the project and no ability to develop the land. The Town would then be receiving 100% of no new taxes rather than 45% of whatever new tax revenues come in.
     The Town has two alternatives. Sheepscot can bring in the water and sewer lines and give them to the town in exchange for the TIF district which will reimburse Sheepscot and provide 45% of the new taxes for town use. The Town will benefit by being able to expand the water and sewer lines and also by the substantial increase in taxes generated by the proposed development. Or, Sheepscot can bring in the water and sewer to its property with no incentive to give it to the town if there is no reimbursement, and Edgecomb if it is looking for development in that area will lose an opportunity to have these services with no financial risk at all. By contrast, other towns will borrow to acquire property and then offer TIFs for the development of that land. In that scenario, the town is taking a financial risk, but if a town wants development, TIFs are a good way to accomplish that.

The public hearing adjourned at 8:30 p.m.