Developer denies he got special treatment from LePage administration

AUGUSTA, Maine — Sparring over the effect of Gov. Paul LePage’s decision to delay selling bonds approved by past voter referendums continues at the State House.

LePage on Thursday criticized Democratic legislators who questioned how a downtown redevelopment project in Livermore Falls received funding after being stalled by LePage’s decision to delay selling bonds for 11 projects approved for Communities for Maine’s Future grants.

Democrats fired back Friday.

The grants, which total $3.5 million, derive from a bond package approved by voters in June 2010. In June of this year, LePage said he would not sell the bonds until January 2014 at the earliest.

That decision left officials and developers in the 11 municipalities wondering how they would fund the projects, some of which had already signed contracts or work started on the projects. The 11 communities are Bath, Belfast, Dover-Foxcroft, Eastport, Livermore Falls, Monmouth, Norway, Rockland, Skowhegan, Unity and Winthrop.

Three — Dover-Foxcroft, Eastport and Monmouth — received Community Development Block Grant funding because they fit CDBG guidelines and were completed or “well under way,” according the Maine Department of Economic and Community Development spokesman Doug Ray.

With a memo from LePage saying he would instruct State Treasurer Bruce Poliquin to sell $400,000 in bonds specifically for the Livermore Falls project before they expire on June 20, 2015, Portland-based developer Kevin Bunker, who is renovating the 11,000-square-foot Lamb Block building on Depot Street in Livermore Falls, on July 18 secured a $400,000 loan from the Maine Rural Development Authority, or MRDA. The $400,000 equals the Communities for Maine’s Future bond award.

That prompted Rep. Jeff McCabe, D-Skowhegan, to send a letter to LePage on Tuesday, asking how Skowhegan could receive similar treatment. It’s the third letter McCabe sent to LePage about what McCabe perceives to be the negative impacts on Skowhegan of the governor’s decision to delay authorizing the bonds.

“It just doesn’t make sense,” McCabe said in a release issued Tuesday by the Maine House Democratic Office. “The governor is willing to help Livermore Falls, but he’s leaving the rest of us in the dark. All I want to know is how Livermore Falls got help and what we need to do to get the same support.”

LePage responded Thursday.

“The town of Livermore Falls has not received any state monies at this time,” LePage said in a statement issued Thursday afternoon. “The developer of the Livermore Falls project applied for a loan through the Maine Rural Development Authority and it was approved by its independent board. It is clear that Representatives Cain and McCabe do not understand the situation and are twisting the truth for political gain. They are wrong to mislead Maine people.” Emily Cain, D-Orono, is the House Minority Leader.

“Furthermore, Democrats issued a statement recently indicating that I refuse to support projects in communities across the state including Skowhegan. This is inaccurate. What I have repeatedly said is that I will hold off on selling bonds until Maine is in a better fiscal position to absorb more debt.”

In a release issued Friday, Cain called the governor’s statement “a distraction.”

“At the end of the day we are simply asking him to keep the state’s promise to these communities to help create local jobs,” Cain said in the release. “All the communities should be given the same opportunity.”

The question of whether the loan to Bunker should be considered state money “depends on how you define ‘state money,’” according to John Cleveland, executive director of the MRDA.

On Friday, Cleveland said that the authority’s funding originates from past state bonds provided as capital to make loans. He described the loan to Bunker as “legitimate and eligible use of these funds, but it uses up resources at MRDA.”

Terms of the loan call for no interest payments during the first six months. After six months, interest rates of 1 percent on the balance due will be applied until the balance is paid in full, Cleveland said.

Cleveland said that no other developers who had expected to use Communities for Maine’s Future grants had approached MRDA.

George Gervais, Maine’s commissioner of economic and community development, confirmed Friday that the governor had written a memo to Poliquin to confirm that he would authorize the sale of state bonds before June 20, 2015, to support an opera house restoration project in Norway.

In a phone interview Thursday, Bunker rejected the notion that he received preferential treatment. He said he received a call informing him that bond money would not be available in July, “about two weeks before I was about to close.” Bunker called the Maine Department of Economic and Community Development and said he was told to “sit tight” and “hang in there.”

After legislators failed again in July to convince LePage to sign some bonds, “That’s when the project was really in trouble for the first time,” Bunker said. “This deal was going to die very soon.”

Bunker said that, at the suggestion of state officials, he approached the MRDA for bridge funding. With the July 16 letter from LePage to Poliquin that affirmed LePage’s intent to issue bonds by June 20, 2015, specifically for the Livermore Falls project, Bunker secured the $400,000 loan from the MRDA.

Other funding for the Lamb Block development derives from money Bunker has spent on the project, a bank loan, historic preservation tax credits and New Market tax credits from Coastal Enterprises Inc., according to Bunker.

“I don’t think that I got any special treatment,” Bunker said. “What I had was a timeline” that demanded immediate action.

“What gets lost in all this is that $2 million in private money is being invested” in a downtown that was very hard-hit by the recession, Bunker said. “People don’t want to talk about that. It does a disservice to people who are trying to do something about the economy. We’re all in this together.”