Brunswick terminates tax agreement with Navy base redevelopment organization

Brunswick Naval Air Station
AP file photo
Brunswick Naval Air Station
By Christopher Cousins, BDN Staff
Posted Sept. 05, 2012, at 9:49 a.m.

BRUNSWICK, Maine — A tax-sheltering agreement being negotiated between the town and the body overseeing the redevelopment of the former Brunswick Naval Air Station was rescinded by the Town Council on Tuesday in a move that surprised state and local officials who thought the deal was on track to fruition.

Midcoast Regional Redevelopment Authority executive director Steve Levesque and Maine Department of Economic and Community Development Commissioner George Gervais, as well as Sen. Stan Gerzofsky, D-Brunswick, all said they were surprised by the Town Council’s 8-1 vote. The vote took place after a closed-door discussion and after an item was added to Tuesday’s agenda during regular session, according to Town Manager Gary Brown.

Though the exact terms had not been ironed out yet, Brown said early negotiations indicated that the TIFs could have involved about $12 million in tax payments over the next 30 years that would have gone back to the MRRA as opposed to supporting the municipal budget.

Brown said the town’s dire financial situation and uncertainty about changes to tax increment financing laws being considered in Augusta led to Tuesday night’s council vote, though Gervais and a spokeswoman for Gov. Paul LePage said there are no such changes in the works.

“There were several reasons,” said Brown. “Because of a reduction in our revenues, particularly on the school side, the council felt they needed to do everything they could to take care of Brunswick’s situation. There’s also a degree of uncertainty of what the state will let us do. The council is going to take a wait-and-see attitude.”

Levesque said Wednesday morning that his organization had just heard of the vote and was exploring what it means for the redevelopment effort.

“We’re in the process of fact-finding,” said Levesque. “We hadn’t finished with negotiations yet … I thought we had reached an accord. If there’s not a TIF program with the town of Brunswick, we’ll have to find other sources of money.”

Levesque said the TIF dollars, which would have been disbursed to the MRRA on a yearly basis at a rate that had not yet been determined, would have been used for infrastructure improvements and maintenance. Levesque declined to discuss the terms of the agreement that was under negotiation.

Brunswick and the redevelopment group were in the midst of negotiations to create two tax increment financing districts on the former Brunswick Naval Air Station property which would have allowed the MRRA to keep a portion of its property tax payments to the town for infrastructure improvements on the former base, according to Brown. The state approved creation of two TIF districts at the former base, which is now called Brunswick Landing, in March, and Brown said the next step was for the town to submit a development plan that would have included geographic boundaries of the districts and details about the amount of money to be sheltered. As of Tuesday night’s vote, that process ended.

Gervais, who as Department of Economic and Community Development commissioner holds a seat on the MRRA board of directors, said Wednesday there are no concrete proposals for any changes to the state’s laws regarding TIF districts, which have been used across the state as a means to help businesses and communities accomplish economic development goals by earmarking tax dollars for specific purposes related to the developments.

“We have not started any formal discussions on TIF changes,” said Gervais, refuting statements made by Brown. “I was very surprised by the Town Council’s decision. We had no idea it was coming. Whether any town chooses to move forward with a TIF application is totally up to that town, but in this case it’s unfortunate that it has a negative impact on the redevelopment of the base. There’s nothing I can do about their decision not to do that.”

Adrienne Bennett, a spokeswoman for LePage, corroborated Gervais’ statement that there is nothing proposed that would alter TIF laws.

“We don’t have anything in the works right now,” she said. “We certainly wouldn’t advise any town official to vote on the premise of what we may or may not introduce in a future legislative session.”

Brown said there were two TIFs proposed because of limits the state has on how large a TIF district can be. In general terms, he said, one of the TIFs involved hangars and other buildings associated with the airfield’s twin runways and the other would have encompassed most of the other buildings on the former base.

Brown said he was unsure of what changes to TIF regulations might be in the works at the state level, but that “people close to the administration” have told the town that changes may be proposed in the next legislative session.

On the budget front, according to Brown, the council faced a $2.2 million deficit in the School Department alone for this fiscal year, which began July 1.

“This is not a one-year phenomenon,” said Brown. “This is a huge deal for the town of Brunswick to enter into an agreement like this with any organization.”

Gerzofsky, who served on the Brunswick Local Redevelopment Authority before that board was replaced by the MRRA, has been an outspoken advocate of the former base’s redevelopment, though as an elected official he is not allowed to sit on the board of directors. During a telephone interview Wednesday from the Democratic National Convention in North Carolina, Gerzofsky reacted angrily when told of the council’s vote.

“I’m just absolutely shocked that it’s fallen apart at this late stage,” he said. “I’ve been led to believe as recently as last week by councilors that they had negotiated a TIF between the town and the MRRA. I know there have been some issues a few months ago and I thought those were resolved. I thought it was a done deal.”

In March, Brunswick officials said they were surprised when a debate began in the Legislature’s Appropriations and Financial Affairs Committee concerning TIF negotiations involving former military facilities. According to an article in The Forecaster newspaper, a provision that would have routed 80 percent of property tax revenue from the former base to MRRA was included in a budget change package submitted by LePage.

“They’re way out of line,” Brunswick Council Chairwoman Joanne King told The Forecaster at the time. “Everyone is horrified that this is happening.”

King could not be reached for comment on Wednesday.

Gervais said Wednesday that the TIF language was pulled from the change package without much discussion so negotiations could continue at the local level.

“I had no idea that language was being put into the change package,” said Gervais. “For several weeks prior to that I had been attempting to include that language in another bill. I had every intention of it going through the full public hearing process. I had the best of intentions for Brunswick.”

The lone vote against terminating the TIF agreements Tuesday night was cast by Councilor Benet Pols, who said Wednesday afternoon that he was not comfortable supporting the move to rescind the deal because he had been unable to attend an executive session on the issue, which was held before Tuesday’s regular council meeting.

Brown said no one from the MRRA was at Tuesday night’s meeting.

The Department of Defense turned most of the base over to MRRA late last year, which means fiscal year 2013, which began July 1, is the first year the town can expect tax revenues from the formerly tax-exempt military property. He said the amount of taxes the town can expect from Brunswick Landing is unknown because the property value has not yet been assessed. The first tax payment is due in October.

Brown stressed that Tuesday’s vote should not be interpreted as evidence of discord between the town and the MRRA.

“The position of the council is that there’s certainly a willingness to re-examine this issue in the future,” he said.

http://bangordailynews.com/2012/09/05/news/midcoast/brunswick-terminates-tax-agreement-with-navy-base-redevelopment-organization/ printed on September 20, 2014