Tax-supported development can be a wonderful thing.
Funded partially by surrendered property tax collections, it allows developers to do projects that provide public benefits: redevelopment of decrepit sites, employment, the ability to boost targeted business sectors, a chance to carry out a vision of planning and design.
When it’s done right.
When it’s done wrong, monopoly interests with connections in high places get free cash, supply meager jobs at poor wages and put taxpayers on the hook for their own private gain should the investment go sour.
Bath Iron Works’ request for its fourth tax-increment financing deal from the city is just one example of the dangers we have addressed in this space of what some call “corporate welfare.”
In Topsham, economic development officials are touting as many as four plans to use money it would otherwise collect for public use to rebate to developers.
One, the River Landing senior housing project, is a huge departure in TIF development: We’re not talking about a developer obtaining capital for construction; we’re talking about taxpayers helping finance ongoing operating costs.
The developers say they need those funds to leverage other grant money. It’s an innocent but familiar refrain that always sounds a little like blackmail: No tax breaks, no project. Topsham voters would do well to question what the public benefits are if they surrender public money to a developer for a for-profit senior housing project, amid many other public needs.
Maybe it’s a lot of jobs; maybe it’s curing blight. Whatever it is, River Landing developers should have a ready cost-benefit analysis for Topsham residents tonight — and at the ballot box Sept. 25.
We were reminded of the dangers of publicly-financed development this week with the bizarre news that Brunswick’s only taxi company got a quarter million dollars in loan guarantees to buy equipment, upgrade facilities and expand operations.
The loan was made from the Brunswick Development Corp., a quasi-public entity whose former director, Joanne King — also a former Town Council chairwoman — is married to the company’s owner and materially benefits from its success.
Not illegal, but smelly.
Would just anyone be able to obtain $247,000 loan without collateral, with the chance to never repay it?
Why does a monopoly business need public money to survive? Maybe the market doesn’t support the business, in which case the $247,000 loan is nothing more than a gift from you, Brunswick taxpayer, to Dale King.
We’d wish him a lot of luck — but it appears, putting the best possible spin on it, he’s got plenty of that already.
In TIFs, quasi-development agencies like the BDC and federally sanctioned authorities like Midcoast Regional Redevelopment Authority, we have some of the most creative ideas and brightest minds working to create economic development in Maine.
Most of the time, it works.
Other times, you really have to scratch your head and wonder: What’s happened to the idea of entrepreneurial risk?
This piece was edited to reflect Joanne King is a former, not current, director of the Brunswick Development Corp.