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BRUNSWICK — A proposed 10-year agreement with the town will rebate an average of 85 percent of property taxes to the developer of an inn planned at Maine Street Station and not tax the project at all during its first five years.
An outline of the credit enhancement financing was presented to the Town Council Feb. 11 after negotiations between JHR Development and town officials.
If approved by the council, the rebate program will become part of a new Tax Increment Financing District designed to help repay the town for the $5.2 million it’s putting into the $14 million project, including $2.25 million in bonds and more than $668,000 in land conveyances.
The town’s investment also includes $2.3 million in grants, some of which contain job-creation requirements.
The credit enhancement agreement would add more than an estimated $907,000 to the tally, giving JHR a 100 percent rebate on the inn’s property taxes for the first five years. The agreement would begin in fiscal year 2011-2012, after construction of the inn, and after the town begins collecting property taxes.
The property taxes would be based on the inn’s valuation.
The agreement does not include a performance provision for JHR, despite previous indications that it might.
The proposal appears to have the support of town officials and a council majority because it would help JHR build the 54-room inn at the corner of Noble and Maine streets.
Town Finance Director John Eldridge told the council that the inn is an important piece of the development, one that could help ensure that the six-building project is completed.
“Building the inn keeps the momentum going,” Eldridge said. “In the long run it’s in the town’s interest to keep the project going.”
Eldridge’s comments suggest the town is at the point of no return with Maine Street Station. Although some councilors have recently expressed frustration with the town’s concessions and its financial commitment in the 2007 Joint Development Agreement, several fear the town won’t break even if JHR abandons the project.
So far, just two of the six buildings have been completed.
But hope that the project is turning the corner appears to be overriding councilors’ concerns. Recently, a $35 million federal grant drastically improved the chances that Maine Street Station will become a destination for the Amtrak Downeaster.
Last week, Councilor Margo Knight said she supported the credit enhancement program, but wanted to make sure the proposal’s details were made available before the March 1 public hearing. The council will likely vote on the proposal that evening.
In endorsing the proposal, Eldridge and Economic Development Director Dave Markovchick said they reviewed a feasibility study for the inn and met with JHR’s lenders. Eldridge said the study showed the inn to be financially viable, and that the credit enhancement program is needed to ensure JHR can obtain financing.
Steve Mistler can be reached at 373-9060 ext. 123 or [email protected]