South Portland extends tax break for Fairchild

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Move comes as National Semiconductor agrees to buyout by Texas Instruments

SOUTH PORTLAND — The City Council on Monday unanimously approved a more than 10-year extension to a tax break for Fairchild Semiconductor.

The move comes during a time of flux for the city’s semiconductor industry, which employees about 2,000 people.

Last week, Fairchild announced it changed the designation of its corporate headquarters from South Portland to Silicon Valley in California. Although the redesignation is not expected to affect local jobs, the company previously announced the layoff of 120 workers.

And just this week, National Semiconductor announced it is being purchased by Texas Instruments for $6.5 billion. The Santa Clara, Calif.-based company said the sale should have no impact on employment in South Portland.

Fairchild representatives first met with the City Council in February to ask for an extension for the tax break that is set to expire in July. The groups then went into an executive session to discuss proprietary information.

The city had previously renewed the Fairchild Tax Increment Financing District with the state. But instead of sharing with the company the tax revenue the district sheltered from the state, the city hoped to keep more of that money for projects eligible under state guidelines.

Fairchild, which has had the tax break since 1995, has received between $180,000 and $500,000 in recent years through the arrangement. 

City Manager Jim Gailey said the amendment would split TIF revenues evenly between the city and company through 2024. 

In a memo to the council, Gailey said the Fairchild TIF generated nearly $360,000.

He said the amendment also requires the company to invest an average of $12 million a year every three years in its South Portland factory. Previously, the company was required to invest $10 million a year.

Councilors applauded the changes on Monday night.

Councilor Tom Coward said the tax break will help keep the company competitive in the global market and a major taxpayer in the city.

Councilor Patti Smith said the new flexibility of the investment requirements would help the company.

Benny Chang, Fairchild’s vice president of analog technology development and managing director of Maine manufacturing, said in a statement Tuesday that the tax break will encourage the company to continue investing in South Portland.

“Fairchild is currently the third highest tax contributor to the city and we expect this to remain unchanged, even with the tax credit,” Chang said. “The positive outcome of this decision will help Fairchild be more competitive and position the site for long-term growth.”

The city’s TIF counsel, Shauna Cook Mueller, said the state still must sign off on the amended agreement.

Randy Billings can be reached at 781-3661 ext. 100 or Follow him on Twitter: @randybillings