State budget gives big tax break to Millinocket torrefied wood plant

Posted May 18, 2012, at 7:30 p.m.

MILLINOCKET, Maine — New England’s first torrefied wood facility will qualify for an additional $30 million in tax credits thanks to an amendment passed within the state budget Gov. Paul LePage signed this week, officials said Friday.

As proposed by Senate President and 2nd Congressional District candidate Kevin Raye, the amendment increases the cap on business self-investment tax credits offered through the state’s New Market Tax Credit program from $10 million to $40 million.

Raye, R-Perry, and state Sen. Doug Thomas, R-Ripley, said Raye proposed the amendment to the program’s guidelines and LePage signed it into law earlier this week with Cate Street Capital’s plans for the Millinocket mill site in mind.

“They needed a larger package than $10 million,” Raye said Friday of Cate Street. “Ten million would not do it for them. We looked at that and said, ‘Let’s look at increasing the cap.’”

Modeled after the federal New Market Tax Credit program, Maine’s program effectively sets aside a total of $250 million in tax credits for Maine companies generating new products or using new technology to produce energy.

Torrefied wood, which Cate Street proposes to manufacture through its subsidiary Thermogen Industries LLC, is described as a replacement for coal created through microwave technology that creates far less pollutants than coal.

Thermogen will submit a formal application to the Maine Department of Environmental Protection to build its first of possibly five $35 million torrefaction facilities at the Katahdin Avenue paper mill site sometime next week, said Scott Tranchemontagne, a company spokesman.

“We do plan on taking advantage of it,” Tranchemontagne said of the increased cap. “At the end of the day, it allows us to put together a stronger financing package, so it is good for the project. It will give it an even stronger chance to be successful.”

The first machine will generate less than 50 decibels of noise audible off-site, operate round the clock, draw less than 0.5 percent of the water the paper mill drew, and send wastewater to the town’s water treatment plant representing less than 0.2 percent of the wastewater plant’s total capacity, company officials have said.

Thomas lamented the need for such tax-credit programs, as they draw income tax funds away from the state. In the New Markets case, businesses that qualify can get their income tax reduced by as much as 39 percent if they hire many new workers or benefit other business such as those that supply them raw materials.

Thomas said he believed the program is good for the rural, underserved and economically distressed areas it is designed to serve.

The tax break program “only goes for six years and if they are investing that kind of money [approximately $35 million per machine] you know they will be there for more than six years. That is a 30- to 40-year investment,” Thomas said.

“It is too bad we have to do this, but every other state in the union is doing this. In some states, they will build them [investing businesses] a building and lease it for free,” Thomas said. “What do you do?”

“It is a real incentive,” Raye said of the program.

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