Gouldsboro board again endorses lobster processing grant, with conditions

Posted March 28, 2011, at 8:07 p.m.

GOULDSBORO, Maine — The Board of Selectmen took another halting step last week in providing support to a Massachusetts firm that wants to start a lobster processing operation in a former sardine cannery.

By a 4-0 vote, the board agreed on March 24 to sign an application for a $200,000 grant and a $200,000 loan through the federal Community Development Block Grant program. The money, $400,000 in total, would go to Chelsea, Mass.-based Live Lobster, which earlier this month acquired the former Stinson Seafood sardine cannery from Bumble Bee Foods. Live Lobster officials have said they will use the money for equipment the company needs to get its local lobster processing operation off the ground.

But again the board had conditions for how much support it was willing to offer. Members of the board said last week they want guarantees that, should something happen with Live Lobster’s plans, the town will not be liable for repaying the grant or loan to the federal government.

“We’re not on the hook if we sign this application,” Bill Thayer, vice chairman of the board, told about a dozen people who had gathered at the town office for the selectmen’s regular meeting.

The town would be held responsible for the funds, however, if the application is approved and the town then signs the mandatory contract to receive it, Thayer added.

Frank Chiaravalloti, a Newbury, Mass.-based consultant representing Live Lobster, assured selectmen that the company will guarantee in writing its responsibility for the money. He said the company will receive an irrevocable letter of credit from an accredited lending institution that will make sure Live Lobster has the money needed to repay all the federal money.

“Before we sign the contract with you, we will give you the irrevocable letter of credit,” Chiaravalloti told the board.

The issue of whether the town should support Live Lobster’s application, which is a requirement of the federal program, has been a contentious one in Gouldsboro for months. Selectmen have balked at earlier requests from the company for the board’s support, saying they did not want government to intervene in a competitive local lobster dealer market.

Live Lobster functions only as a lobster buyer and distributor, and those functions of its local operations would compete against other lobster dealers in the Schoodic Peninsula area. Its lobster processing operation in the village of Prospect Harbor would be its first such operation anywhere.

But many people have been critical of the board’s reluctance, saying that the area needs the jobs that Live Lobster’s processing operation would create. Bumble Bee Foods laid off more than 120 people when it closed down the former Stinson Seafood sardine cannery for good last April. Live Lobster has said that, if it can successfully convert the defunct cannery into a lobster processing plant, it could employ approximately 100 people in Prospect Harbor within a few years.

Chiaravalloti told the board that Live Lobster employs approximately 100 people at its existing distribution facilities in Maine and Massachusetts. Firm officials have said they hope to hire approximately 40 people this spring in Prospect Harbor once it gets its local lobster-buying and bait-selling operations off the ground.

Selectman James Watson said last week that the decision of whether the town should co-sign Live Lobster’s CDBG application has not been easy. To ease the selectmen’s concerns, Live Lobster has allowed them to view the company’s financial records, but for competitive reasons has required them to sign nondisclosure agreements about the company’s finances, he said.

Watson said he wishes the public had access to the same information he has access to.

“I agree, [a local lobster processor] could be a great thing,” Watson told people at the meeting. “It may seem cut and dry to some of you, but it’s not that cut and dry.”

Eve Wilkinson, Gouldbsoro’s town manager, said Monday that on March 25, the town mailed the signed CDBG application to the state Department of Economic and Community Development, which administers the federal program in Maine.

Dana Rice, chairman of Gouldsboro’s selectmen, was not at last week’s meeting. Rice has abstained from earlier votes by the board on Live Lobster’s sponsorship request because, as a lobster dealer, he will be a local competitor with the company.

The Live Lobster project next will be aired publicly at 6 p.m. Tuesday, April 5, when the municipal planning board holds a public hearing on the company’s renovation plans for the defunct sardine cannery. Company officials have said the new deeded owner of the plant is Prospect Harbor Properties LLC, a subsidiary of Live Lobster, and that the company plans to operate in Gouldsboro as Lobster Web Co. LLC.

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