BELFAST, Maine — A $4 million midcoast shipyard expansion cleared one of its final hurdles last week, as city officials put the rubber stamp on a credit enhancement agreement that could allow the business to service superyachts and build ferries.
For the past two years, Front Street Shipyard has been pushing to build Building 6, a 21,700-square-foot hangar-like structure that would allow the company to service and possibly build larger ships.
The shipyard has a 485-ton remote-controlled lift capable of hauling huge vessels out of the water and moving them with ease around the yard, but the lift is too big to fit inside the shipyard’s largest existing maintenance building.
But finding financing for the project has been a slow process. The expansion initially was expected to start last spring, but was delayed as shipyard officials worked to find grants or banks to underwrite the project.
Androscoggin Bank agreed to finance the work, but wanted more security in the event that the 7-year-old shipyard unexpectedly folds or fails to keep up with payments.
J.B. Turner, president and general manager of the shipyard, said that’s extremely unlikely.
“Business has been crazy, we can’t get enough people to get all the work done,” Turner said Tuesday on his way to catch a plane to San Francisco, where he was trying to line up more work on a 130-foot motor yacht. “It’s as busy as we’ve ever been.”
“We’re already lining up jobs for Building 6,” Turner added. The shipyard expects the Building 6 expansion to add 40 jobs.
Last week, the Belfast City Council approved a credit enhancement agreement between the city and the LLC formed by the shipyard. Under the agreement, if the shipyard defaults, the city will owe a “penalty” to the bank, according to Thomas Kittredge, Belfast’s economic development director.
That penalty starts at $400,000, but decreases each year as Front Street makes its payments and the bank’s risk shrinks. After five years, the penalty reaches zero and the money officially stays in the city’s Downtown Waterfront Tax Increment Financing District for use on economic development and municipal projects.
Androscoggin Bank submitted a letter committing to financing the project, as long as the city agreed to the credit enhancement agreement.
The bank still has to go through its internal approval process, as well as the Finance Authority of Maine, before the financing is released and the shipyard can break ground, according to Turner. That process could be wrapped up sometime in March.
Turner said he hopes to start construction in April and move workers into the building by early September so he can bring in some fall business. The new space will allow the shipyard to court customers with larger superyachts in need of repairs, restoration or refitting, and possibly open up other new business.
Front Street has been trying to break into the carbon-fiber ferry construction, building vessels for cities from New York to Seattle, and the new facility would give the yard more leverage when vying for those contracts. Still, construction of Building 6 won’t depend on ferry deals, and the ferry deals won’t necessarily depend on the construction of Building 6, Turner said.
In addition to preparing for construction, the shipyard is in the process of purchasing the land the building will stand on, which is currently home to a city-owned parking lot, for $600,000.
“I just think it’s another great example of how a city and a private business can make things happen,” Turner said. “They stood behind us from the very beginning.”
Follow Nick McCrea on Twitter at @nmccrea213.
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