AUBURN — The City Council next week will take up a proposal for a “credit enhancement agreement” that would return 50% of new tax revenue generated from the Stable Ridge housing development to the project’s developer.
While the council narrowly approved a tax-increment financing district for the development in March, officials opted to take up the credit enhancement details separately in order to conduct a more thorough process and address concerns from some councilors and the public.
The development at 555 Court St. has been opposed by several neighbors since its inception, but the new apartments have filled up quickly due to the demand for housing. The second phase of the project was approved this spring after it was initially rejected by the Planning Board in February. The second phase will add another 60 units for a total of 120.
The proposed credit enhancement agreement would return 50% of the tax revenues generated on the increased value to American Development Group over 10 years or up to $500,000, whichever comes first.
With the first phase of Stable Ridge Apartments nearly complete, foreground, workers burn debris, background, where the second phase is planned to begin, background, as seen on March 29, above Court Street in Auburn. Russ Dillingham/Sun Journal
A previous city memo estimated the property’s valuation would increase from the original assessed value of $235,500 to more than $14 million over the next 20 years. With a credit enhancement agreement of 50% of TIF revenues over 10 years or up to $500,000, the city would see about $4.4 million total or an average of $220,000 per year.
During the initial hearing in March, several residents said they supported the creation of a TIF district but expressed concern over the credit enhancement agreement.
“At this point, the developer has financed the project, the developer has built the project and the developer has rented the project. I’ve heard no reason whatsoever why the developer needs $500,000 of taxpayer money for a project that is completed,” said resident John Cleveland.
“At no time during this project has the developer come forward and said they needed some type of incentive to go forward with their development,” resident Jeffrey Harmon said.
Both Cleveland and Harmon have been involved in previous efforts to overturn the new zoning that allowed Stable Ridge to be developed, arguing the city needs a better public process that can ensure “sustainable growth.”
During the same meeting, councilors agreed the credit enhancement agreement should be voted on separately, with Councilor Joe Morin saying that it would allow the council to vote on the TIF application and “then having a longer discussion about, if any, credit enhancement, what’s an appropriate amount and not conflating the two issues at the same time.”
Several members of the council said they didn’t support returning tax revenue to the developer, including Rick Whiting, who said it sets a “bad precedent” to make credit enhancement deals with private housing developments that don’t “provide a direct benefit back to the city.”
A motion from Councilor Dana Staples to strike all references to a credit enhancement agreement from the application failed 3-4.
Asked about the council’s upcoming hearing on the proposal, Mayor Jason Levesque said, “I always encourage open dialogue between developers, staff and municipal officials. Open and frank dialogue will help solve challenges that developers might face on projects with a significant public good.”
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