Lawmakers seek scrutiny of tax rebate for Brunswick inn

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BRUNSWICK — A tax rebate program for the developer of Maine Street Station is coming under increased scrutiny by the state agency reviewing the proposal.

The rebate, which over 10 years would award JHR Development an average of 85 percent of property taxes collected on a proposed 54-room inn, is part of a larger development program included in a new Tax Increment Financing district.

On March 30, the state Department of Economic and Community Development notified the town that the TIF district had been approved. However, DECD said further discussions will be held about the proposed development program.

The March 30 letter does not specifically mention the tax rebate, which is the target of a lawsuit initiated by a local hotel owner. Town Manager Gary Brown on Monday described the DECD examination as “fairly routine.”

“(DECD) has given me no indication that this is specific to the the (tax rebate program),” Brown said.

However, a DECD memo distributed last week to at least three legislators suggests the agency is under pressure to review the tax rebate. The memo, according to Sen. Stan Gerzofsky, was from George Gervais, an assistant to DECD Commissioner Thaxter Trafton. It was given to Gerzofsky, who is a Brunswick Democrat, and two Republican lawmakers challenging the rebate’s impact on other hotels. 

The memo acknowledges the “controversy” surrounding the rebate program and questions whether “the proper process was followed” prior to its adoption by the Town Council after a public hearing in March.

During that hearing, several hotel owners challenged the rebate and whether or not the town had considered how it would affect their businesses.

“Given the adverse impact disclosed during the public hearing, it is now required that (Brunswick) arrived at the ‘greater good’ after consideration of adverse impact,” the memo states. “The municipality must determine if the ‘greater good’ outweighs ‘adverse impact’ if the development program is to move forward.”

Gervais did not return a call seeking comment.

Jeanne St. Pierre, the DECD director of tax incentive programs, who is reviewing the Brunswick TIF, on Monday declined to specify which part of the town’s development program the agency is examining.

“We haven’t notified the town of that information, so it would be unfair to discuss that at this point,” St. Pierre said, adding that DECD planned to meet with town officials in a couple of weeks.

DECD’s oversight is restricted to reviewing the process municipalities must follow in adopting TIFs and development programs.

The process is one of many issues raised in a lawsuit initiated by Peter Anastos, the owner of the Fairfield Inn & Suites on Old Portland Road and the principal owner of the Maine Course Hospitality Group in Freeport.

Anastos believes the town never properly considered the impact on other Brunswick hotels. He said Brunswick doesn’t have the occupancy rates to support another inn.

Anastos’ argument appears to have won the support of two Republican lawmakers, Sen. Chris Rector of Thomaston and Rep. Brian Langley of Ellsworth. According to e-mails between Anastos and the lawmakers, Rector and Langley expressed concerns to DECD about the rebate program.

Anastos, who has helped develop nine hotels in the state, initially contacted Langley in a March 29 e-mail. Anastos developed and sold the Hampton Inn in Ellsworth, and owns the Hampton Inn in Thomaston.

This week, Rector, the ranking Republican on the Legislature’s Business Research and Economic Development Committee, said he questioned Brunswick’s rebate program because “it’s important new business development doesn’t damage existing businesses in the area.”

“Clearly the occupancy rates provided by (Anastos) raise questions about the fairness of this,” Rector said.

“This is not happenstance interest on my part,” he added. “The tentacles of economic development extend from Brunswick to my district, the other Mid-Coast. … I’m concerned about the impacts and whether or not the proper procedure was followed.”

Gerzofsky, meanwhile, acknowledged that he’d been in contact with DECD, but he said was doing so at the request of constituents who expressed concern about the fairness of the rebate.

“I was asked to look into the propriety of it by a private citizen,” he said. “I’m not accusing anybody or anything like that. … I haven’t initiated this, (Anastos) initiated it with (Rector and Langley). This is about (Rector), not me.”

Gerzofsky, who in the past has called Maine Street Station a “boondoggle,” denied he is trying to run interference on the inn rebate.

“I actually like Maine Street Station,” he said. “I just don’t like the way (the town) did it, overselling it and pushing it through with no transparency.”

Steve Mistler can be reached at 373-9060 ext. 123 or [email protected]