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Federal grant could be in jeopardy
BRUNSWICK — Too big to fail.
That was the subtext of Monday’s 7-2 decision by the Town Council to continue infrastructure work at the $23.5 million Maine Street Station project with or without an $850,000 federal grant long promised to offset the development’s cost to taxpayers.
While the council’s vote has no true parallel to the federal bailouts that have brought “too big to fail” into popular lexicon, the message was essentially the same: Too much is riding on the success of the town’s lone economic development project, including Brunswick’s reputation as a development partner.
The decision was opposed by Chairwoman Hallie Daughtry and Councilor Karen Klatt. On Tuesday, Daughtry said her opposition is to the deadline, not the project.
But even the majority expressed ambivalence about taking action that could jeopardize the entire $850,000 sought from the federal Economic Development Administration.
Contractually speaking, the council had no choice.
The town is a partner in the development and has already committed $2 million for infrastructure and coal-ash cleanup. In addition, the town’s inability to secure the EDA grant that was promised last summer has forced construction delays that the developer says are threatening its financing.
Interim Town Manager Gary Brown said Monday that JHR Development needed the first phase of the project built and operational by July 1 to satisfy its financing agreements. Brown added that JHR has grown wary of repeated assurances from the town that the grant is forthcoming, and therefore, was unwilling to wait beyond March 17.
“They’re basically saying that they hear something different from us every time we talk to them,” said Brown, responding to council questions about the March 17 deadline. “First we told them it was October, then it was November … now it’s March 17.”
While the EDA has twice told the town its application has been approved, the funds haven’t been released. Brown said that’s because the agency has experienced leadership changes and reorganization following the November election.
The agency is funded by Congress, which has yet to adopt a budget. In October, Congress passed a six-month continuing resolution to fund EDA through March 6. Another resolution is dependent upon passage of President Barack Obama’s proposed spending plan.
Meanwhile, Brunswick anxiously awaits news on the EDA grant. Brown said that he has been in constant contact with EDA representatives, but hasn’t received confirmation that the funds are on the way.
In addition, Brown told councilors that an EDA representative wanted to meet with them about the project. That meeting was still not scheduled as of Wednesday.
Brown said Tuesday that he was unsure if EDA’s meeting request is good or bad news. He said that the official was vague about his reasons for coming.
“Hopefully, he’s coming to bring us a check,” Brown said.
Brown’s comment was in jest, but in sharp contrast to the council’s reaction to Monday’s decision. Several councilors acknowledged that they struggled with a decision that may ultimately leave taxpayers on the hook for $850,000.
“It’s not just that this project is worth doing,” said Councilor Ben Tucker on Tuesday. “It’s the town fulfilling its commitment. Not doing so will cost the town millions in lost credibility. We’ve got to do it. There’s going to be future projects where a developer is going to need to trust the town.”
Councilor Gerald Favreau agreed. He said the town should pour all its effort into the success of Maine Street Station.
“We’re on the hook contractually,” Favreau said. “When you look at the economy, it’s pretty surprising the project is moving forward.”
JHR has said Maine Street Station’s slog through the economic crisis shows the project’s strength.
But so far, it’s unclear how if those attributes are winning potential tenants.
Earlier this year JHR revealed that several tenants had shown interest, including a local restaurant and a sporting goods store and a bakery from Portland.
The largest confirmed tenant is Bowdoin College, which is leasing one building on Maine Street, as well as the second floor of another near the train station.
The town may also become a chief tenant. It has already agreed to sublet meeting space from Bowdoin. In addition, there’s another proposal for the town to become the master lessor of the train station.
Town officials have proposed using funds from the Brunswick Development Corp. for the station. However, at least one citizen representative on the BDC board of directors has questioned using some of the BDC’s $3.6 million for operating costs.
In recent correspondence to BDC members, Steve Weems, the board’s citizen representative and vice president of the Brunswick Economic Development Corp., questioned if using BDC funds for operational costs was consistent with the corporation’s mission.
BDC’s cash reserves have come from the proceeds from previous town dealings, specifically the sale of Brunswick Technologies at the industrial park. Weems argued those funds should be used for economic development projects that will provide “return on investment.”
BDC funds had previously been considered for a proposed business park, a project the council killed last September.
Now, however, a new joint business park with Topsham is being discussed by the BEDC and Topsham Development. Should the two communities reach an agreement, using BDC funds to operate the train station may be at odds with business park development, a project the BEDC strongly endorses.
Additionally, two citizen representatives on the BDC – Weems and John Gerard – are BEDC members.
But that scenario is a distant consideration for the council. Right now, it and the town are focused solely on the EDA grant.
“I’m still real confident we’re going to see the money,” said Councilor Margo Knight, who also chairs the Maine Street Station Oversight Committee. “We needed to do this to show the business community that we’re really serious about economic development.”