PORTLAND – More fees, greater accountability and a requirement that developers use local contractors to build projects. Members of a City Council committee would like to see those elements in a new policy regulating tax breaks known as tax increment financing.

The council’s Housing and Community Development Committee met Wednesday night to start reviewing proposed revisions to the city’s policy governing the property tax breaks.

Officials said two to three more workshops could be needed before a final proposal is ready to be presented to the full City Council.

Critics say many of the city’s existing TIF agreements are nothing more than giveaways to corporations that don’t face financial hardships. Recent TIFs have helped developers pay for public improvements that were required by city ordinances.

Councilor Cheryl Leeman, a member of the Housing and Community Development Committee, said she would like to see job creation tied to TIF agreements.

She also said that developers who negotiate deals with the city, such as contract zones, should not be allowed to ask for tax breaks to pay for required public improvements.

“Many of the developers that come in here don’t have enough money to finance their projects,” Leeman said.

Greg Mitchell, the city’s director of economic development, presented councilors with a draft proposal that includes several revisions to the existing policy. The changes would establish standards for tax increment financing, including:

• Setting a cap of 50 percent on the amount of tax revenue that could be returned to a developer, down from the current 75 percent.

• Shortening the terms of TIF agreements to 10 to 15 years. Under state law, a TIF agreement can remain in effect for as long as 30 years.

• Making four neighborhoods priority areas for tax increment financing: Bayside, the waterfront, India Street and the downtown arts district.

• Requiring the Economic Development Department to report on TIF district activity annually to the City Council.

• Requiring developers who receive the tax breaks to use local contractors whenever possible.

Several councilors said there must be more accountability in the city’s TIF program.

Councilor Edward Suslovic, a member of the Housing and Community Development Committee, said he would support charging fees to developers who apply for TIF agreements. The city would use the money to pay for an outside analysis of each project, to ensure that what the developer proposes is realistic.

“If someone is seeking a million-dollar (tax) benefit from the city, we should be able to spend $10,000 to have someone go over their books,” said Suslovic.

Under state law, Mitchell said, as much as 5 percent of a municipality’s area can be in TIF districts. In Portland, where 142 acres are covered by TIF agreements, 477 acres remain available.

Since the city’s first TIF was approved in 1994, the city has returned more than $18 million in tax revenue to developers.

Under its existing agreements, the city will return an estimated $65 million to developers over the next 30 years.

 

Staff Writer Dennis Hoey can be contacted at 791-6365 or at:

dhoey@pressherald.com