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BUCKSPORT, Maine — The Town Council voted 7-0 on Thursday night to approve a tax break for a company that proposes to bring one of the state’s first land-based Atlantic salmon farms to the site of the former Verso Paper mill.
Whole Oceans CEO Jason Mitchell told the council during its meeting that with the tax-increment financing deal approved, the company will apply to the town next month for a permit to build the aquafarm, with construction slated to begin in the fourth quarter of this year.
With the vote, the council allows Whole Oceans to avoid paying 70 percent of the new property taxes it expects to owe Bucksport over the first 20 years of the salmon farm’s operation. For the town, the tax-increment financing arrangement comes with a number of direct financial benefits to make up for lost property tax revenue.
“It is showing that Bucksport is business-friendly,” said Richard Rotella, Bucksport’s community and economic development director. “The town is used to having TIFs, especially at the former mill site. When they first became available, we had one on site.”
Under the TIF agreement, Whole Oceans will not have to pay property taxes for the first five years of the 20-year agreement on any new property value it creates from developing the salmon farm. It will pay 25 percent of its new property tax obligations over the subsequent five years and 50 percent for the remaining 10 years.
Whole Oceans’ development on a 90-acre portion of the site is expected to increase the site’s property value by $42.2 million, according to the TIF agreement between Bucksport and Whole Oceans, which the parties expect to submit to the state Department of Economic and Community Development for approval within the next month. The site’s value as of March 31 was $1.4 million.
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If taxed at the town’s current tax rate of $16.30 for every $1,000 in property value, that increased value would translate into $13.7 million in new taxes for Whole Oceans in the salmon farm’s first 20 years, or $687,000 annually.
But under the TIF program, the town will reimburse approximately 70 percent of the new taxes — $473,000 a year on average — to Whole Oceans, said attorney Jim Saffian, who represents the salmon farm developer. That reimbursement would work out to $9.45 million over 20 years.
While the town would forgo new property tax revenue, a TIF allows a town to “shelter” the new property value a business development generates. As a result, the state disregards the new value in calculating the town’s share of school aid and revenue sharing.
Because those amounts generally decline with increased property values, the sheltering of the new property value allows larger amounts of state aid to continue flowing.
The sheltering also allows the town to pay a lower amount in taxes to Hancock County.
In the case of Whole Oceans and Bucksport, an average of more than $400,000 would be preserved annually in state revenue sharing and school aid, and the town would save about $18,600 in county taxes each year of the 20-year arrangement, according to the TIF agreement.
Another financial benefit to the town would come through another state-sponsored tax break program, the Business Equipment Tax Exemption, which exempts new equipment businesses install from property taxes and reimburses towns for the corresponding loss in tax revenue. The town can expect about $10.5 million under that arrangement over the course of the 20-year tax increment financing agreement, Saffian said.
The BETE funding will start April 2021 or April 2022, depending on when Whole Oceans installs its equipment on site, Mitchell said.
The first phase of the salmon farm’s development, estimated at $180.6 million, could create as many as 75 jobs. If all goes as planned, a second phase of development at the salmon farm will come in four to eight years, company officials have said, with more jobs and more investment.
Mitchell said that Whole Oceans plans to hire as many local contractors as possible to build the aquafarm.
Whole Oceans does not expect to start seeing revenue from its $180.6 million investment until 2023 or 2024. The first phase of construction is expected to take two years, with another two years spent growing fish.
Saffian said the TIF will be an important part of Whole Oceans’ success.
“Any startup business is most vulnerable in the first five years. You are looking to make a budget work every year,” Saffian said. “Every bit helps.”