Zoning variance: Greater Portland seeks PTZ status | The state's Pine Tree Zone incentives were intended for Maine's poorest communities. So why is Portland making a pitch?
Photo/David A. Rodgers
Keith Luke, director of economic development in Westbrook, says establishing a Pine Tree Development Zone in Greater Portland would boost the state's competitiveness in attracting new high-tech businesses
A bill will be introduced this legislative session to expand the state’s Pine Tree Development Zones to the Greater Portland area. Given the program’s original intent to help economically distressed areas of the state attract and retain businesses, the bill could face tough opposition.
Proponents of the bill are ready to nip in the bud any argument that making Greater Portland eligible for PTZ status defeats the intent of the program.
Developed in 2003 through tax credits and other incentives and enacted in the fall of 2004, the program was designed to help areas with low wages and high unemployment. At the time, the economy was doing fine and the Greater Portland area was seen as a bastion of economic development, so it made sense to deploy those powerful economic development tools in the places that needed them most, says Chris Hall, executive vice president of the Portland Regional Chamber. But he says those times have changed.
“There may have been a time when Portland didn’t need this because Portland was doing fine. But, that’s not the case any longer. Portland is suffering from this recession,” Hall says. “It’s a good program, something that can make a difference given the economic times. It’s foolish not to deploy these tools for the entire state.”
The push to expand the PTZ program to Greater Portland started when representatives from Portland, South Portland, Scarborough and Westbrook began meeting to consider jointly marketing the area as a biotechnology hub. Last year, they came to the conclusion that to compete against northern Massachusetts and southern New Hampshire to attract high-tech companies, they need every economic development tool they can muster.
“Given our proximity to the Boston area — 1.5 hours — we are really well positioned to attract companies from out of state,” says Erik Carson, assistant city manager and economic development director of South Portland. “The challenge is what else can we do? We use TIFs [tax increment financing districts] when we can, we use municipal loan programs. But, at the end of the day, something as substantial as Pine Tree Zones we don’t have.”
Rep. Anne Haskell (D-Portland), the bill’s House sponsor, echoes Carson’s sentiments. “Maine is to the U.S. what Washington County is to Maine,” Haskell says. “We’re rural, we’re isolated, we’re the end of the line. And so in order to be able to be competitive, I’m hoping we’d have all the tools we can.”
Pat Finnegan, assistant city manager of Portland, says the group is trying to be as strategic in its approach as possible because it doesn’t want this effort to be viewed as making the PTZ program meaningless. “We don’t want to dilute the purpose of Pine Tree Zones, but we do want to be able to concentrate on attracting those businesses that are more appropriately located here as opposed to other regions in the state.”
As it stands now, the Pine Tree Development Zone program covers 30,000 acres in more than 100 communities. There are 214 companies certified to benefit from the zones, says Brian Hodges, director of tax incentive programs at the Maine Department of Economic and Community Development. Incentives include 100% corporate income tax credit and 100% insurance premium tax credit for the first five years, among other things. Industries that qualify for PTZ benefits are: Manufacturing, including precision manufacturing technology; financial services; biotechnology; aquaculture and marine technology; composite materials technology; environmental technology; advanced technologies for forestry and agriculture; and information technology. Currently, Cumberland County only has a few eligible locations including Bridgton, Naples and the Sappi paper mill in Westbrook. York County’s coast, though not so far behind Cumberland County in terms of economic development, has several Pine Tree Zones, including in Kennebunk, Wells and Saco.
Expanding the program to cover more areas is not new, says Sen. Phil Bartlett (D-Gorham), the lead sponsor of the bill. In nearly every legislative session, a bill is proposed to expand the program beyond its original design. Last year, the program was changed so that any manufacturing company that has been at its current location for at least three years can qualify for PTZ incentives if it expands. In 2006, special legislation expanded the designation to cover the Sappi paper mill in Westbrook. “We’ve seen [the program] creep down into other areas like York County that typically has been successful,” Bartlett says. “So that argument is really gone. Now Cumberland County is being penalized for past successes with economic development and the reality is it’s tough to get companies to come to Maine. We ought to be working together to make sure we as a state are providing benefits to these companies.”
Peter Fisher, a University of Iowa economics professor and co-author of the book, “State Enterprise Zone Programs: Have They Worked?” told the Portland Press Herald in 2006 that nationally, state-sponsored programs like the Pine Tree Development Zones follow similar paths. They are typically created to help economically distressed areas, but slowly spread to cover more and more of the state as political pressure mounts. “Everyone wants a piece of the pie,” he told the Press Herald.
That creep puts the whole program into question, says Hodges at the DECD. “The danger with [this proposal] is you open up a door — and I’m not saying it’s good or bad — but by doing that, it becomes a slippery slope. Should we just make the whole state eligible and remove the concept of acreage?” Hodges asks.
Keith Luke, economic development director for Westbrook, says it’s high time the tired arguments over the Two Maines are dropped in favor of a discussion on how to make Maine as a whole more competitive with its neighbors. “We’ve over-invested ourselves looking at this inner Maine dynamic when there isn’t enough wealth spread around that we should be debating it for years on end,” Luke said.
In the end, what helps particular industries like biotech in southern Maine helps the state as a whole, says Hall. “The largest part of the economy is concentrated in southern Maine, so it only makes sense to do all we can to support it. Even if you live in the farthest part of state, you still derive great value in revenue generated in southern Maine,” he says.
Whether the program even works the way it was intended is up for debate. If a business is considering a move to Maine, Luke says, it already knows where it wants to be based on its needs — such as proximity to Boston, the highway or a particular workforce. A business wouldn’t choose Maine and then decide between a location in the Greater Portland area or a spot in a PTZ in Medway, Penobscot County. He argues against giving tax breaks to only one area and not the more developed areas. “We can spend a lot of money chasing down very few success stories or perhaps we can spend a similar amount of money, effort and investment to promote areas where conditions for success are ripe,” says Luke.
Whit Richardson, Mainebiz new media editor, can be reached at wrichardson@mainebiz.biz.
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