Town Council weighs tax deal for Brunswick Landing business
BRUNSWICK — Although the Town Council severed negotiations for a tax-sheltering agreement with Brunswick Landing's redevelopment authority earlier this year, the council will revisit a similar agreement at its Dec. 3 meeting for a Swedish health-care company coming to the property.
Molnlycke Health Care wants to designate its new $14.5 million facility at Brunswick Landing, which will be called Molnlycke Manufacturing US, as a tax increment financing district and enter a credit enhancement agreement with the town.
Local project manager James Detert said the TIF agreement will provide the company with an extra revenue source and help the facility compete on the global market.
"I think it's important for everybody to know that Brunswick, Maine, will have the most advanced wound-care product factory in the world," Detert said at the council's Nov. 19 meeting.
Besides serving as the new facility's project manager, Detert is also the site director for Rynel, a Wiscasset-based foam manufacturer that Molnlycke purchased in 2010.
Detert said Rynel has been shipping its specialty foam to Molnlycke's Finland processing plant to make wound-care products.
But since the U.S. was becoming the company's largest and fastest growing market, he said, it made more sense to keep manufacturing and processing for the country within its borders.
"It made sense to have a converting factory closer to Wiscasset, Maine," Detert said. "We lobbied very hard to have it in Brunswick, and I want to thank the town, Town Council and town manager for showing a lot of interest over the last couple of years."
If the council approves the TIF agreement, it will direct property tax revenues from Molnlycke's new facility to a town fund for a 30-year period, according to the company's TIF application. Then, as part of a 20-year credit enhancement agreement, a minimum 35 percent of that annual revenue will go back to Molnlycke.
Brunswick will capture nearly $13.7 million of the more than $16.6 million in TIF revenues over the agreement's 30-year period, according to projected funding models used in the TIF application. Molnlycke would end up with more than $2.97 million over the same time period.
The town will use its share of TIF revenue to improve local infrastructure, purchase public safety equipment and fund Brunswick's downtown TIF district, according to the TIF application.
Town Manager Gary Brown said anything funded by TIF revenue from Brunswick Landing would be used for projects that would have been funded by the town's general funds.
"The basis for this position is that we simply don't want to take new tax dollars and spend them on new programs," Brown said at the council's Nov. 19 meeting, "because that doesn't provide the Brunswick citizens with any tax relief."
The other benefit of the TIF agreement, Brown said, is that any new assessed value at Molnlycke will be sheltered by the town. He said this will prevent Brunswick from having to pay more in county taxes and receive less money from state education funding and revenue sharing.
Molnlycke will use its end of TIF revenue for "site improvements, building construction, machinery, and equipment purchases, project financing and employee training," according to the TIF application.
Detert said the company's share of TIF revenues could increase over time if Molnlycke hires more full-time employees with benefits, but it wouldn't exceed 55 percent.
According to the TIF application, the company's share of revenue will increase 0.5 percent for every additional full-time employee hired in excess of the 45 employees who will start work in February when the facility opens.
When Molnlycke originally announced its plans in 2010 to land in Brunswick, Detert had estimated the facility would start with 100 employees.
Looking back at his estimate, Detert said Tuesday the reduced forecast for jobs is a result of the company's increased investment in automation.
He said that might sound negative, because the new equipment replaced around 50 lower skilled jobs, but the investment will "create more growth with more higher-skilled jobs in the future."
Detert told the council that investment in Molnlycke's new facility has grown from $30 million to $50 million since earlier this year, and Brown said that is good news for Brunswick.
"We're certainly encouraging the increase in investments Molnlycke has presented to us: the increase in investments will do a couple of things," Brown said. "One, it will increase the tax payments that they're going to have to pay us, which we will then share with them. But it will also result in an increase in employment levels."
Councilor Benet Pols said Tuesday that it's unusual for a company like Molnlycke to ask for a TIF agreement this late into development.
Detert said the council's termination of TIF negotiations for Brunswick Landing with the Midcoast Regional Redevelopment Authority was a reason for this timing.
MRRA Executive Director Steve Levesque said as part of Molnlycke's lease negotiations with MRRA, the company was promised a portion of TIF revenues from the authority's TIF districts if they were approved by the Town Council.
But since TIF negotiations between the council and MRRA fell through, Detert said Molnlycke chose to go ahead and make its own proposal for a TIF, which the company had been expecting to get when they first started developing at Brunswick Landing.
Detert said Molnlycke couldn't have waited for approval of a TIF district before beginning development because the company had to make an early commitment to MRRA.
"We had to commit early on to make our time frame," Detert said.
Pols said the council is going forward with TIF negotiations for Molnlycke because there is no current state legislation threatening to change the terms for this kind of TIF agreement – unlike the kind MRRA was seeking.
He said even if there was any proposed legislation, its impact would be much smaller than it would for a TIF district covering all of Brunswick Landing.
Detert said he is less concerned about gaining public support for Molnlycke's TIF agreement and more concerned about properly educating everyone about its benefits to the town, company and Brunswick Landing's redevelopment.
"We need the TIF benefit to help the economics going forward so that we can continue to compete with other Molnlycke factories in the future and hopefully expand in Brunswick versus other geographic locations," Detert said. "Anything that helps improve the economics of the Brunswick factory makes it more competitive and more secure going forward as we face global competition from Molnlycke competitors, as well as other Molnlycke factories."