Officials explore tapping Saddleback program for Kestrel funding

Posted Oct. 27, 2011, at 2:19 p.m.
Last modified Oct. 27, 2011, at 3:13 p.m.
Kestrel Aircraft Co., whose planes can be seen in the foreground, has long been promoted as one of the centerpieces of the Brunswick Naval Air Station revitalization.
Pat Wellenbach | AP
Kestrel Aircraft Co., whose planes can be seen in the foreground, has long been promoted as one of the centerpieces of the Brunswick Naval Air Station revitalization.

BRUNSWICK, Maine — Since Kestrel Aircraft Co. founder Alan Klapmeier told The Times

Record last week that some of the 300 to 600 jobs he initially expected to create in Maine might instead be located elsewhere, Maine lawmakers and redevelopment officials have scrambled to address Klapmeier’s concerns.

On Wednesday, Sen. Stan Gerzofsky, D-Brunswick, said a newly created federal Immigrant Investor Program center at Saddleback Mountain ski resort in Franklin County could be one option, among several, to provide Kestrel the additional capital Klapmeier said he needs to keep those jobs in the state.

On Tuesday, Maine Economic Development Commissioner George Gervais announced the creation of USA Lifestyles, Inc., a pilot center of the federal Immigrant Investor, or EB-5, Program, based at Saddleback.

The regional center will allow foreign investors to obtain green cards and permanent residency in exchange for investing up to $500,000 in a Maine business.

Gerzofsky said late Wednesday afternoon that officials from Kestrel and Saddleback are “very interested” in pursuing an amendment to the program at Saddleback that would fund Kestrel jobs in Maine — some at Brunswick Landing and some at a “satellite” facility in Franklin County.

“In my conversations with Kestrel, they are very interested,” Gerzofsky said. “That’s not a commitment, but they’re very interested in pursuing it, and Saddleback, based on my discussions with [Gervais], seems to be very interested in working this out.”

“Saddleback Mountain was just approved as a regional center, and we may be able to piggyback on,” Steve Levesque, executive director of the Midcoast Regional Redevelopment Authority, said Wednesday. “It’s another opportunity to bring capital to support the company’s growth here in Maine.”

Levesque said he met Tuesday at Kestrel’s Brunswick headquarters with state economic development officials and a Kestrel representative to continue the discussion.

Neither Klapmeier nor Kestrel spokeswoman Kate Dougherty returned phone calls or emails seeking comment by press time.

Contacted Wednesday and today, Adrienne Bennett, spokeswoman for Gov. Paul LePage, said on behalf of LePage and Gervais, that the administration would not disclose details of discussions with Kestrel at this time.

According to Gerzofsky and Levesque, an amendment to the Immigrant Investor Center at Saddleback is only one of several options that state, federal and local officials continue to pursue to fill a funding gap for Kestrel.

In July 2010, Klapmeier announced a $100 million project to design and build new Turboprop single engine planes at Brunswick Landing.

Levesque said Wednesday that Klapmeier’s decision to locate the new facility in Brunswick was based on a number of factors, including that Wiscasset-based CEI Capital Management, LLC, or CCML, agreed to assist Kestrel with its financing “in four $20 million” installments through the New Market Tax Credit allocation program.

In April 2011, Kestrel secured the first $20 million allocation, but Klapmeier said last week that the additional funding did not materialize, and as a result, Kestrel was forced to consider building another facility elsewhere — possibly in New Hampshire.

According to Levesque, CCML informed Kestrel in May “that they cannot allocate more than $20 million to the project, leaving a gap of approximately $60 million. “Since then, MRRA has been working with Kestrel, Commissioner Gervais, the governor’s office, Sen. Gerzofsky and others at the state and federal level to convince CCML to do an additional [installment],” locate additional funding or tax credits, and to approve an application by MRRA to become certified to allocate $70 million in New Market Tax Credits, Levesque wrote in an email to The Times Record.

Last week, Charles Spies, chief executive officer of CCML, told The Times Record, “We did tell [Kestrel] we would do our best to help facilitate [the overall funding] but we never committed to providing it through our own allocation. We got the first piece there, but there

are a lot of pieces that have to come together beyond where we are.”

“Whether they would do some of their manufacturing in New Hampshire, it may just be a business decision for them,” Spies added.

Immigrant Investor Program

Administered by the U.S. Citizenship and Immigration Services, the EB-5, or Immigrant Investor Program, was created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors, according to the USCIS website.

Under terms of the program, foreign investors can commit a minimum of $500,000 in a “high-unemployment or rural area in the U.S.” in a new commercial enterprise, creating at least 10 jobs, directly or indirectly. In return they receive green cards.

According to Gerzofsky, officials from Kestrel and Saddleback agreed that a proposed amendment to the EB-5 center at Saddleback might benefit both Kestrel — with funding — and Franklin County — with jobs.

Gerzofsky said officials understood ever since Klapmeier announced that Kestrel would come to Maine that the proposed jobs would be at various sites throughout the state.

“We’ve always known that we were going to have satellite Kestrel plants in the state of Maine,” he said Wednesday. “That’s how I got a lot of support in the Legislature for the [MRRA] bonds. [Legislators] knew we would be training people from [elsewhere in the state] and sending them back to produce products for Kestrel that would come back

down here for assembly.”

That redevelopment of the former Brunswick Naval Air Station has always been seen as “a regional issue, a state issue,” Gerzofsky said, and keeping jobs in Maine is the priority.

Rep. Kerri Prescott, R-Topsham, who serves as House chairwoman of the Legislature’s Labor, Commerce, Research and Economic Development Committee, said Wednesday that the process to become certified as an EB-5 regional center is lengthy and difficult, but obtaining an amendment to an existing center is “a matter of paperwork” and could be accomplished within a few months because “the lion’s share has been done.”

The proposed amendment “certainly could be a solution to the gap that exists between what Kestrel needed and wanted financially,” Prescott said. “I know the timing is certainly right, considering the EB-5 center was just approved. The timing couldn’t have been better.”

Other options

Amending the Saddleback EB-5 program is not the only option, however.

Gerzofsky said a new state program, approved by the Legislature earlier this year and administered by the Finance Authority of Maine allows the state to allocate tax credits.

State administrators are currently developing rules for the implementation of the program, he said, but the program “has a lot of legitimacy” and is appropriate, particularly because it’s state-controlled.

Finally, Levesque reiterated that if MRRA is successful in its application to be certified to allocate $70 million in New Market Tax Credits, assisting Kestrel would be the authority’s first project.

While a short-term fix for Kestrel’s funding gap is critical, officials agree, Levesque said MRRA is also interested in becoming a regional EB-5 center itself.

“We’ve always had it in our long-range plan that Brunswick Landing and Topsham Commerce Park would become a regional center to help attract investment for the redevelopment effort,” he said.

Gerzofsky, Prescott and Levesque all said Wednesday that Maine’s Department of Economic and Community Development is certainly doing all they can to make sure Kestrel stays in Maine.

“The governor’s office has a laser on this,” Gerzofsky said. “It’s not Democrats or Republicans, it’s Democrats and Republicans, state government and federal government.”

Maine’s congressional delegation and local legislators are “very much aware of this particular issue, and also of our long-term funding needs,” Levesque said, adding that their support for the EB-5 program and MRRA’s application to become a New Market Tax Credit “allocatee” will be critical.

Willy Ritch, spokesman for U.S. Rep. Chellie Pingree, a Democrat who represents Maine’s 1st District, said Pingree’s staff spoke to members of the LePage administration and officials from MRRA on Wednesday, and Pingree plans to speak to Kestrel representatives in the near future.

“Her instructions to the staff were, ‘I don’t want to leave any stone unturned in looking for ways to keep Kestrel in Maine,’” Ritch said.

Gerzofsky said Kestrel will need a resolution within the next few weeks in order to make decisions and answer to investors.

But he added, “I believe that at the end of the day, government works best when it’s in a crisis, because it focuses so well.”

“We can and will work it out,” he said. “Brunswick’s not losing Kestrel. Kestrel made the commitment that they want to be in Maine. That’s their choice. We just have to make sure that no other location can offer them what we can.”

To see more from The Times Record, visit timesrecord.com.

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