Starboard Leadership Consulting and Rudman Winchell Assist on Multi-Million Dollar TIF Project in Brunswick
When a proposed area-wide tax increment financing (“TIF”) deal between the Town of Brunswick and the Midcoast Regional Redevelopment Agency (“MRRA”) for property at the former Brunswick Naval Air Station fell through in September 2012, one of the intended beneficiaries of that proposal turned to Starboard Leadership Consulting and Rudman Winchell to help pick up the pieces.
Molnlycke Health Care US, LLC is building a new manufacturing facility in Brunswick to produce its single-use wound care products for the company’s rapidly expanding U.S. market. The new facility will be located at the former Brunswick Naval Air Station, currently under redevelopment by MRRA. As part of the project’s financing, Molnlycke was to have received a portion of annual property tax reimbursements to be paid to MRRA under a proposed area-wide TIF district deal between MRRA and the Town of Brunswick, covering much of the former naval base property.
However, the TIF deal between the town and MRRA fell through in early September, for reasons unrelated to Molnlycke’s project. Shortly after, Molnlycke contacted Starboard Leadership and Rudman Winchell’s economic development team of Noreen Norton and Erik Stumpfel to negotiate a stand-alone TIF deal for the new facility.
From a standing start in early October, Noreen and Erik were able to assist Molnlycke in negotiating its own TIF deal with the Town, while completing all document work necessary to allow a final Town Council vote on the project on December 3rd. The Molnlycke TIF was approved by the Brunswick Town Council on that date, meeting Molnlycke’s objective of having an approved TIF deal in place by the end of 2012. The TIF received final State approval by Maine’s Department of Economic and Community Development on January 18, 2013.
As an added bonus, total tax reimbursements to Molnlycke over a 20 year period increased from a projected $1.4 million as Molnlycke’s share of the proposed MRRA TIF, to a projected $2.9 million under the new stand-alone TIF. The additional reimbursement amount will help position the new Brunswick facility to capture a larger share of the international company’s future production work, thereby increasing total employment at the Brunswick facility.
This project provides a good example of what Maine’s TIF statute is all about. The project will bring $51 million of new investment to Brunswick and will serve as an anchor for future redevelopment of the former naval base. The new facility will use $34 million of high-tech manufacturing equipment to create a product that does not compete with any other existing
business in Brunswick or the State of Maine. Production of the finished product in Brunswick will support jobs at Molnlycke’s existing facility in Wiscasset, which produces the raw material for Molnlycke’s wound-care products. In addition, the new facility will initially create approximately 45 new jobs, a number that should rapidly expand to approximately 85 as the facility reaches full production. Finally, a U.S. location for production of its finished product will cut Molnlycke’s shipping costs and reduce the amount of packaging required during the production process, substantially reducing the company’s waste stream.
On the Town’s side, the TIF deal will provide the Town with more than $5.3 million (projected) of new property tax revenues over 30 years to help fund the Town’s own economic development efforts and will protect the Town from about $4 million of adverse State funding formula impacts that would occur if the new facility’s taxable value were not “sheltered” within a TIF district. In addition, the Town’s general fund will benefit from approximately $8 million in new State reimbursements on account of the project’s $34 million of new manufacturing equipment, which is exempt from property taxation under Maine’s Business Equipment Tax Exemption (“BETE”) law.
For more information please contact:
Jeff Solari-Manager of Business Development