Brunswick considers tax deal to ensure medical supply company follows through with former base site

Molnlycke Health Care's $14 million production plant at Brunswick Landing is expected to be completed early next year with production beginning in February.
The Times Record
Molnlycke Health Care's $14 million production plant at Brunswick Landing is expected to be completed early next year with production beginning in February.
Posted Nov. 26, 2012, at 2:49 p.m.
Last modified Nov. 29, 2012, at 8:24 p.m.

BRUNSWICK, Maine — With some local financial help, a Swedish medical supply giant hopes to maintain jobs at its plant in Wiscasset, increase employment at a new Brunswick Landing facility and prevent moving jobs to Finland.

Molnlycke Health Care’s $14 million plant at 192 Admiral Fitch Ave., on land formerly occupied by the Brunswick Naval Air Station, will be operational within a few months.

And while the timing for tax increment financing, or TIF, discussion is a bit strange for a project already more than three-quarters complete, town officials want to control the potential global economic ripple effect as much as possible.

A public hearing to explain and discuss the TIF proposal is scheduled during the Town Council’s regular Dec. 3 meeting, starting at 7 p.m. at Brunswick Station.

If the TIF is approved, it could mean an estimated $13.7 million in revenue for the town during the proposal’s 30-year term. Under the proposed agreement, the town would superimpose the TIF district atop 19 acres surrounding Molnlycke’s new 72,000-square-foot plant, allowing the town to shield its increased valuation and preserve current state educational funding levels.

The sheltered revenue would be poured back into Brunswick’s general fund to offset the cost of municipal improvements or mitigate property tax increases.

Additionally, a concurrent 20-year “credit enhancement agreement” would allow the town to return to Molnlycke, which is pronounced “mun-lick-a,” a percentage of money the company normally would pay in local taxes to be used for reinvestment, expansion or to hire new employees.

Town documents show that as much as $16.6 million could be generated during the life of the TIF, with the town’s share being 82 percent, or $13.7 million, and Molnlycke’s share being just shy of $3 million.

Numerous caveats and incentives are built into the agreement.

For example, the more employees Molnlycke hires, the more it receives as an annual reimbursement. However, there is a 55 percent annual cap on the 20-year enhancement payback.

Usually, a TIF agreement is used to lure a company to a municipality.

In this case, it’s a make-up call on the town’s behalf.

“Part of it is that Midcoast Regional Redevelopment Agency promised Molnlycke that (MRRA) would be getting a TIF from the town of Brunswick, and that it would split the TIF with Molnlycke,” at-large Councilor Benet Pols said.

MRRA is the quasi-municipal agency in charge of turning the former military base into a mixed-use residential and commercial borough now that most of its 3,200 acres have transferred from the Navy to MRRA control.

In February, councilors agreed to two separate TIF districts on the former base to preserve more than $1 million in state school money that would have been lost in 2014-15 because of the base being added to the town’s tax rolls.

But talks between the town and MRRA collapsed in September.

Town Manager Gary Brown attributed the breakdown to uncertainty on how Gov. Paul LePage’s administration would treat TIF legislation.

“Molnlycke believed in good faith that it would get something indirectly from Brunswick if they came here, and we want to make the situation right because we want Molnlycke to succeed,” Pols said.

The TIF district currently being proposed is less than 10 percent the size of the original two, which would have enveloped the entire former base.

“The much smaller geographic area leaves open the possibility that we can go back and renegotiate the original package with MRRA, but excising the Molnlycke piece,” Pols said.

Molnlycke’s new plant is scheduled to be operational by February 2013.

With more than $35 million worth of automation and equipment, it will process high-tech foam manufactured in the Twin Rivers Drive facility in Wiscasset, turning the foam into super-absorbent medical dressings to be marketed throughout the world.

“It’s a $50 million investment,” said Jim Detert, site director for Rynel Inc., a Molnlycke subsidiary that owns the Wiscasset plant. “We’re starting out with 45 good jobs with good benefits, approaching a couple million dollars of annual payroll.”

Detert told Brunswick officials the company hopes eventually to double the number of full-time employees at the Brunswick Landing plant.

“The next five years are critical,” Detert said. “We want the next investment that Molnlycke makes to be in Maine, not Finland and not Poland. The financial part of it is key.”

CORRECTION:

An earlier version of this story incorrectly stated that most of the property that made up the former Brunswick Naval Air Station has now been returned to the town by the Navy. Most of the 3,200-acre property has been turned over from the Navy to the Midcoast Regional Redevelopment Authority, not the town.

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