Lawsuit concern delays Brunswick Landing improvement funds

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BRUNSWICK — A dispute with town government has delayed infrastructure improvements planned at Brunswick Landing by the Midcoast Regional Redevelopment Authority.

At issue is more than half a million dollars from Tax Increment Financing districts at Brunswick Landing and the Brunswick Executive Airport, held in a reserve account by the town. 

MRRA plans to use the money to help pay for work on the sewer and water systems, electrical grid, and roads at Brunswick Landing, and improvements to the airport.

But its two requests for TIF funds, from December 2013 and October 2014, have not been addressed by the Town Council, which has been waiting for resolution of a lawsuit over the tax status of Kestrel Aviation, a company leasing space from MRRA. 

“We’re basically putting some of these projects on hold until we can get the resources,” MRRA Executive Director Steve Levesque said this week. 

In the lawsuit filed last April, MRRA argues, and the town contests, that the space Kestrel leases is tax-exempt. At the heart of the matter is approximately $238,000 that MRRA has paid in property taxes on behalf of Kestrel.

“We haven’t addressed (the TIFs) until we have some resolution on the declaratory judgement,” in the Kestrel case, Town Manager John Eldridge said.

But this week, town officials signaled that they are prepared to take a look at MRRA’s applications and possibly release money that is unconnected to the Kestrel issue. 

Eldridge said MRRA officials have expressed their interest in moving forward with the improvements, and Town Council Chairwoman Sarah Brayman said she has contacted councilors tasked with reviewing the applications. 

The two TIF districts were adopted in July 2013, and a development program was approved by Maine’s Economic and Community Development commissioner that October. 

Under the terms of the agreement, new property value created in the districts is sheltered from county and state taxes. The sheltered revenue is split equally and routed into separate accounts for MRRA and the town. 

MRRA can apply for up to $12 million to help pay for infrastructure improvements, while the town can use its share for roads, emergency vehicles, school improvements and downtown development.

But while it has already spent its share of the TIF revenue from 2013 to pay down debt on the Station Avenue project, the town has yet to officially respond to MRRA’s requests, which total more than $501,000. 

In December 2013, MRRA applied for more than $122,000 from its Brunswick Landing account. It applied for more than another $271,500 in October 2014.

That money was expected to be used to pay down a $2 million bond package MRRA expected to float this year, Levesque said. With the delay, MRRA is considering waiting to issue the bond.

“When you do a bond, you have to demonstrate you have the ability to pay the bond back,” Levesque said. 

Prime among the infrastructure projects is a planned $1.5 million investment in 46,200 feet of sewer lines, plagued by infiltration and inflow from groundwater and storm runoff. 

Because of infiltration, Levesque estimates that MRRA pays about $20,000 more than it should each month to treat excess water.

“Getting the sewer lines fixed is one of our critical priorities, because we’re spending an awful lot of money paying for water we’re not using,” he said. 

MRRA also plans to annually spend $187,500 to repave roads, $22,500 to fix water lines, and $100,000 to improve electrical transmission and distribution systems, according to its recent TIF application. Levesque said the repairs would happen over the next five years.

But without access to TIF funding, little headway has been made on the projects, he said. 

The airport TIF is intended to cover a 5 percent match MRRA needs in exchange for about $8 million from the Federal Aviation Administration and the Maine Department of Transportation to transition the airport from military to civilian use. MRRA’s share of the project is almost $470,000.

While it asked for about $86,000 from the TIF in 2013, MRRA subtracted the Kestrel revenue from its 2014 request, asking Brunswick for only about $21,800. Reducing its request was a recognition that the Kestrel funds might not be available depending on the court ruling, Levesque said.

Although MRRA and the town have had a tumultuous relationship in the past, Levesque expected the requests would ultimately be addressed by the town. The applications were filed during a time of transition for Brunswick, as the town brought on a new town manager and experienced turnover on the Town Council.

“We have good ongoing dialogue with the town,” Levesque said. “We don’t sense there’s any sort of adversarial situation going on.” 

Councilors on the TIF application committee said they expected to begin reviewing MRRA’s request in the near future, even without a ruling in the Kestrel case.

“I would think that we would be able to, at some point, disburse part of the money that’s not up in question, and get some projects done,” Councilor John Perreault said, adding that he was unaware MRRA had made a request in 2013. 

Councilor David Watson, who is also on the committee, also said he was unfamiliar with MRRA’s TIF applications, but thought the council should begin reviewing them. 

Waiting for the Kestrel ruling makes sense “from a legal standpoint,” Watson said, “but from a moving forward standpoint, it doesn’t.”

Peter L. McGuire can be reached at 781-3661 ext. 100 or Follow him on Twitter @PeteL_McGuire.