Wednesday, April 9, 2003

PWD not interested in lease plan

Published in the Current and the American Journal

A legislative bill that caused a big stir in Standish now appears unlikely to have any real impact on the town’s tax rolls.

Rep. Janet McLaughlin, D-Cape Elizabeth, proposed a bill that would allow water and sewer districts, including the Portland Water District, to raise ready cash under a lease-and-lease-back arrangement. Under the proposal,
district-owned buildings and equipment would be leased to a private entity, which could then take depreciation of the assets off their taxes.

Standish residents and officials were excited that the town might be a beneficiary of private control of the district’s assets, worth as much as $50 million, because they would no longer be tax exempt as they are now under PWD ownership.

Not only is the bill now tabled pending the input of the Legislature’s finance committee, but it could be revamped to excise any portions that would result in the transfer of ownership of any PWD equipment or buildings, leaving Standish’s hands empty of any new taxes.

Rep. Larry Bliss, D-South Portland, who heads the Legislature’s utilities committee, said last week that state law would require the state to pay half of the tax liability for any private property it exempts from tax. Under the proposal, the state would have granted that exemption.

A letter circulated to Standish town councilors suggested that PWD property is now worth $50 million. At Standish’s $20.48 per thousand tax rate, half of its potential property tax is $512,000, which the state would have to reimburse under the proposal.

That would be unlikely to pass in this tight budget season, Bliss said.

And the district is not interested anyway. PWD trustee chairman Howard Littlefield of Cape Elizabeth said there was nothing in the proposal the district would be likely to use.

The lease-and-lease-back arrangement was designed to provide ready cash to districts, paid by investors, who would take depreciation tax deductions on the district’s assets over time.

The tax-exempt district does not now receive any credit for depreciation. The bill would not allow the lease or sale of water rights, and transactions would be unlikely to include much real estate, because land does not depreciate.

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