Aviation Business May Get Tax Incentive to Build Hangar at Augusta Airport
May 20, 2015
  • Share
  • AUGUSTA — City councilors on Thursday will consider giving a tax increment financing tax break to help Maine Instrument Flight build a new hangar at Augusta State Airport.

    The proposal, unanimously recommended by the city’s TIF Committee, would return 50 percent of the taxes, projected to be about $4,800 a year, on the new development to Maine Instrument Flight for the next 14 years and about $2,411 a year for the four additional years of the proposed 18-year agreement.

    Bill Perry, owner of Maine Instrument Flight, said the business has needed more storage space for planes for years, but it hasn’t been able to add a new hangar until now. The need is driven by private and commercial flights, flying lessons and, in a relatively new partnership with the University of Maine at Augusta, a degree program in aviation.

    “We’ve been losing corporate airplanes to other airports, primarily Brunswick, because we just don’t have the space” to park more planes in a hangar, Perry told city councilors last week when the proposal was first presented to them. “Right now we have no space for anybody. We’re at a logjam now for space. This eliminates that logjam.”

    The proposed 95-by-95-foot hangar would be built alongside Winthrop Street on the grounds of the city-run, state-owned airport, where Maine Instrument Flight holds a lease for the next 18 years. An old, smaller storage building there now would be demolished to make way for the new hangar, which would be in addition to an existing hangar attached to Maine Instrument Flight’s offices and other existing hangars.

    Perry said they initially planned a larger, 120-by-100-foot hangar but scaled back their plans because of space constraints and the cost of the larger building.

    He said the smaller hangar will cost about $650,000 to build, rather than the nearly $900,000 cost for the original larger building.

    Maine Instrument Flight’s recent expansion included the addition of a partnership to train pilots with UMA. Perry said the hangar isn’t being built specifically for that program, as the business primarily needs more space for its general operations.

    The new hangar would be built by Augusta-based Peachey Builders. City officials estimate it would be worth about $516,000 for tax purposes.
    Councilors expressed support for the proposal.

    “It’s a good project,” at-large Councilor Jeffrey Bilodeau said last week, “and someplace we want to try to support. I think it’s a good overall concept.”

    TIFs allow municipalities to shelter property taxes generated by new development within designated districts. Sheltering funds through a TIF means they would not be added to the city’s total property valuation for state tax calculation purposes. Without that, as a municipality’s total property valuation increases, its state-provided revenue – such as aid for education and revenue sharing – decreases, and its county tax liability increases. New value sheltered in a TIF doesn’t count toward a municipality’s property tax value.

    Mayor David Rollins said the TIF proposal for Maine Instrument Flight is roughly revenue-neutral for the city, because it would avoid the tax shift that would occur if the same development proceeded without being sheltered in a TIF and the city’s property valuation increased.

    A municipality can return the tax payments to the business or use the money itself for projects allowed to be funded under state TIF rules.

    In this proposal, Maine Instrument Flight would retain half the taxes it otherwise would owe on the building, about $4,800 a year. The city would get the other half, which would be put into the city’s already established Downtown TIF fund to be used for allowed projects in the Downtown TIF District.

    Keith Luke, the city’s deputy development director, said the TIF is proposed for 18 years to match the remaining time on the aviation business’s lease at the airport.

    “If you’re a business interested in making an investment in our community, we want to talk to you about how we can help make that happen,” Luke said.
    Councilors are scheduled to meet to consider the proposal at 7 p.m. Thursday in council chambers at Augusta City Center.