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City Council OKs reduced tax break for Bath Iron Works

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City Council OKs reduced tax break for Bath Iron Works

BATH — After more than 2 1/2 hours of discussion, the City Council voted 7-1 Wednesday for a new tax increment financing agreement with Bath Iron Works.

But the 25-year agreement, revised in the wake of community opposition, reduces the benefit to BIW and increases the tax revenue to be retained by the city. 

The city is projected to receive $9 million, or 71 percent of the TIF revenue, while BIW will get $3.7 million, or 29 percent. The General Dynamics subsidiary had originally proposed the shipyard and city equally share tax revenues generated by the project and receive $6.36 million.

The Washington Street shipyard, which has site plan and contract rezoning approvals from the city, plans to build a more than 51,000-square-foot addition to the south end of its existing Ultra Hall, and to construct a two-bay blast/paint building and a combined boiler/compressor building.

The shipbuilder plans to invest $32 million into the Ultra Hall, which the company has projected could generate about $500,000 in new taxes each year. Through what BIW called a "credit enhancement agreement," its tax obligation on the facility would have been reduced by $250,000 each year for the life of the TIF, while the city would have kept the remainder.

But city staff presented the council with a different proposal, which the panel approved, and which rebates less money to the shipyard.

Under the reduced terms, the city and BIW will split TIF revenue for the first 10 years. The city will receive 60 percent for the next five years, and will get all the revenue for the remaining 10 years of the TIF.

Councilor David Sinclair, who opposed the revised agreement, called for the five-year, 60/40 period to be eliminated, so that the city would get the all the revenue for the last 15 years of the TIF. The City Council rejected that amendment.

"I love the yard," Sinclair said. He also agreed with Councilor Steve Brackett that the city's revised TIF proposal was a step in the right direction, but said "it doesn't quite get us there."

"I fundamentally don't buy the central premise that somehow, this (agreement), in whatever form, if it's passed, will make the yard more competitive," he said. "Because I don't think you make a business more competitive by giving (it) a leg up ... you make it more dependent."

BIW and the city previously created two TIF districts in 1997 that include the shipyard.

"We appreciate the support of the council," Jon Fitzgerald, vice president and general counsel at BIW, said after the panel's vote. "Obviously we had a different proposal in front of the council, but we also understand this is a public process, and (we've had) no fewer than five appearances before the council, and a lot of input from the public. This is the end result."

Bruce Gagnon of Bath, coordinator of the Global Network Against Weapons & Nuclear Power in Space and a member of TIF opponents Bath Citizens for Responsible TIF Action, had mixed feelings after the council vote.

"I think it was good they came a little bit our way," he said. "... The only reason why they did that was because they heard overwhelmingly from the public."

He commended Sinclair's proposal to have the city get the full TIF revenue sooner, calling the councilor "extremely courageous" and saying Sinclair tried "to really represent the people that are hurting in the city."

Alex Lear can be reached at 781-3661 ext. 113 or alear@theforecaster.net. Follow him on Twitter: @learics.