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MADAWASKA – The Madawaska Board of Selectmen agreed Wednesday night to support the creation of a Tax Increment Financing [TIF] District in the future for a major investment at the Fraser Papers Inc. paper mill.
Details on the project were minimal because a reporter raised concerns about an executive session that would have allowed company officials to disclose the proposed project to selectmen in privacy.
“Details of such a project must be kept confidential because of the nature of the industry,” James Good, a Portland lawyer representing Fraser, said. “We cannot make plans public at this time.”
Without the executive session, only the creation of a TIF district was explained by Good.
“We are talking about a major project, but it must be kept secret for the time being,” Rosaire Pelletier, a comptroller for Fraser at Madawaska, said Thursday afternoon. “We cannot let our competitors in on what we have in mind at this time.
“This could happen in two years,” he continued. “If approved by the company, it will be a major capital project.
“It would be a win, win proposition for everyone involved,” he said. “The company, the employees and the community.”
A TIF District, according to Good, allows new tax revenues to be invested back into public facilities projects needed to support the development, and revenues may also be used to provide an income to strengthen the project economically.
A TIF District, according to Good, supports local development by investing new tax revenues in job creation or retention, enticing new long-term investment or rehabilitation.
TIF captures a portion of new property taxes generated by the new development for specific commercial growth and development projects. Funds for the TIF District must be maintained in a development program fund used to support the cost of the project and other activities that support or promote economic growth.
According to the lawyer, 60 communities in Maine are using the program to enerate investments and jobs.
“Most papermaking towns in the state have used them to help finance projects at mill sites,” Good said. “Major investment brought in with the program increases the local tax base, protects and enhances jobs and protects the communities state valuation.”
The protection of the town’s state valuation protects the money towns receive from the state for education, and also protects the status quo of towns for expenditures such as county tax.
Pelletier said a TIF district could result in more investment in the paper mill at Madawaska, because the program is a carrot for investors.
Before4 the approval of a local TIF District, a public hearing would have to be held for the company to declare its use and make its plans public. After a public hearing, residents need to vote on the proposal. The plan must also be approved by the commissioner of the Department of Economic and Community Development.
Bonds issued for projects in a TIF District must be repaid in fewer than 20 years.
“It’s an inducement to business and industry,” Pelletier said. “It makes projects look better to investors, because of tax breaks and community projects involved.
“We have not decided on the size of this project, but it would be one involving megabucks,” he continued.
Over the last five years Fraser has invested $70 million into the paper mill at Madawaska. The company pays 66 percent of the town’s property tax commitment, over $4.6 million this year.
In the size of its portion of local property taxes paid to a town, Fraser is the sixth-largest in Maine. Others include Great Northern Paper Co. at East Millinocket, which pays 96 percent of the local tax bill, Georgia Pacific at Baileyville at 86 percent, International Paper at Jay at 73 percent, and Champion at Bucksport at 66 percent, according to Pelletier.