SCARBOROUGH — The town of Scarborough may enter a credit enhancement agreement with Avesta Housing for a 31-unit affordable senior living complex at the former public safety building location.

Councilors spoke in favor of the agreement during the June 9 Town Council meeting. Councilor Ken Johnson said the agreement would only include Avesta and not any other commercial development happening at the site, which is located at 246 US Route 1.

The 20-year CEA would see a 75 percent reimbursement of the tax increment, said Town Manager Tom Hall. According to information in the Town Council agenda, the estimated total reimbursement of the CEA is $555,440 to the developer, $162,929 in property taxes to the town’s general fund and $22,218 to Scarborough’s tax increment financing account.

A CEA, is one way to use Tax Increment Finance, or TIF, funds. TIF funds are tax money created from new property value that instead of going to a community’s general fund, can be set aside for infrastructure improvements within a specified TIF district, can go to a developer within the district in the form of a CEA, and more.

The town has included specific provisions in the proposed credit enhancement agreement, said Hall. One of which is that the project remain consistent with the town’s definition of affordable housing.

“And secondarily, that there be implemented a local preference for individuals living or working in Scarborough,” he said. “That language has been negotiated with Avesta and is included and proposed for (council) consideration as well.”

Besides the CEA, the Town Council will need to approve an amendment of the downtown TIF district to include the land, which is .44 acres, said Hall. The entirety of the district is about 1,000 acres.

“This is property, and I still haven’t figured out how we missed this boundary change, if you will,” he said. “This was town-owned property and by all rights, I think what we did is follow the zone boundary that was since changed as opposed to a property boundary, but nonetheless, this is a detail that is important.”

Councilor John Cloutier said he supported the addition of the parcel rather than creating a new affordable housing TIF district.

“Through some discussion with the town manager, I advocated for expanding the downtown district,” he said. “A big part of it is we’re on the verge of being a minimum receiver … We probably will be no longer a minimum receiver in the coming months, and there’s a big financial benefit that comes from being able to pool the growth in the overall downtown district to capture that value to offset costs associated with CEAs like this or other projects that we might want to take on. So pooling those allows you to really leverage or take advantage of the incentives that are given to us by the state to offset overall costs to the town. So that’s part of the reason why it’s coming forward as a downtown amendment as opposed to a separate TIF district.”

Expanding the downtown TIF district will allow a larger amount of money to go into one account, said Cloutier.

“If you create an affordable housing TIF district for this one parcel, the only dollars going into that fund are going to be the taxes that are paid on this one parcel,” he said. “When you’re giving 75 percent of those taxes back to the developer, there’s not much money that’s going to be left there. I like that you can use that for a greater range of project costs, but if there’s only a couple thousand dollars in the account, it’s not worth the administration to go through to try to find places where you can spend the small dollars. Whereas if you combine it with the downtown TIF, then you can have larger projects that can help capture more of the value.”

The Town Council held a public hearing on the amendment and CEA agreement at the June 16 meeting but there were no comments made.

Developers have discussed intentions for the former public safety building with the Town Council in previous meetings this year, saying that the intention is a village-like community, with a grocer, gym, bank and other types of businesses that are in a walkable distance from the housing complex.