How Do We Keep Scarborough Affordable? Part 2

How Do We Keep Scarborough Affordable? Part 2

By Jon Anderson, Scarborough Town Council 

In November, I wrote a Councilor Corner on how residential and commercial growth is one strategy that helps to keep Scarborough affordable. Town staff will be working with the Council Communications Committee on a more in-depth communications and engagement plan to share more financial details on growth as a lever to help keep taxes lower in the near future.  

Unfortunately, today the major source of revenue for municipalities is property taxes. So in order to have predictable and stable tax increases around 3%, through our Comprehensive Plan we moved away from suburban sprawl to focus on higher density in our designated growth areas around Route 1.

This means more visible growth in Oak Hill, the Downs, Dunstan, Haigis Parkway and a few other areas in Town where we are targeting development, and less in our more rural areas. Higher density lowers the cost to serve and as I shared in Part 1, may even enable the Town to operate at a profit to offset tax impacts. The new taxable value created in these growth areas generally has a positive impact on the Town’s bottom line, which helps offset increased costs to deliver level services or new investments.  

Increased value and diversity in our tax base is also viewed favorably by credit rating agencies. As we grow, we will need to borrow more money to invest in infrastructure and facilities at the best interest rate possible, which will save taxpayers’ dollars. I’m proud to say at this point, we are well positioned for an upgrade in our rating in part due to our growth strategy. With a school solution being vetted as you read this, it is super important to ensure our financial house is in order before we go to bond to minimize the tax impacts of borrowing. 

Currently, we are in a housing crisis in the state - particularly as it relates to affordable and workforce housing options. I recently saw in Scarborough Living Magazine that the average sale price in Scarborough this fall was over $700,000. That’s just crazy! I hope that as we continue to grow, the Town focuses more on strategies that will help create more homes that are diverse and affordable - $700,000 is a lot of money. However, affordable housing options may also come with a cost to taxpayers. In order for affordable options to come to Scarborough, particularly deed restricted housing, it can be a challenge for affordable housing developers to secure financing without support from the municipality. A municipality’s support can make or break a project from getting the state and federal funding needed to make the project a reality. This typically comes with a request to the Town for a Credit Enhancement Agreement, where the Council negotiates a percentage of the property’s taxes to be refunded to the project to help finance its existence. Allowing this in some cases may mean less money to offset property taxes from the new value generated, which needs to be weighed against the importance of housing diversity and affordability for different individuals (e..g a new college graduates working as a teacher, a young family looking to establish roots, seniors on fixed income looking to downsize, and other situations where affordable and workforce housing options may be helpful.)

Jocelyn Place, which recently opened in Oak Hill, is a great example of a senior affordable project where past Councils approved a CEA to support the project. 3iHomes, a first of its kind affordable project that is supportive to adults with disabilities in the Downs, has an approved CEA that will be coming in the near future. The Council recently reviewed a request for a new project in the Dunstan area that will also create senior affordable and workforce housing units that may also require a CEA to finance the project. Each of these projects will go through a rigorous public process. The Council will be holding a workshop on January 22nd to review a refinement to our existing CEA policy, outlining detailed parameters for an affordable housing CEA that will establish more rigor for how we evaluate affordable housing projects. This new policy will likely have action at our February meetings to implement the policy, and the Dunstan project will likely be the first to go through this process.  

While property taxes are the primary source of revenue for municipalities, and growth is a key component to help with tax stabilization, I encourage everyone to pay attention to what is happening in Augusta. Legislation is being proposed that may offer new ways for municipalities to generate revenue or reduce costs that may help to reduce reliance on property taxes. I hope to see a workshop with our state delegation in 2025 to talk about this legislation and advocate for more options for the Town to generate revenue that limits the impact to your personal property taxes. I encourage you to pay attention, get involved and advocate for legislation you would support that reduces reliance on property tax. 

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Scarborough Town Council.