BUCKSPORT — The Bucksport Town Council July 11 unanimously approved a tax deal for Whole Oceans, the company that intends to develop a land-based salmon farm on 105 acres of the former paper mill site.
Under the arrangement, called tax increment financing, Whole Oceans will pay taxes on the value of its land at the time of the purchase — $1.4 million. The company will not pay taxes on any new value added by improvements to the property for the first five years, Bucksport Economic Development Director Rich Rotella said.
Bucksport Town Manager Susan Lessard explained how Whole Oceans and the town of Bucksport would each benefit from the TIF agreement.
“For the first five years, 100 percent of the taxes they pay on development of the land would be returned to them,” Lessard said.
“During that time, however, the town would receive 100 percent of the business equipment tax proceeds, which during that five-year period is about $6 million,” Lessard said. “The town would also be realizing an additional $6 million in revenue coming to it from that development.”
After the first five years, 75 percent of the new value added to the Whole Oceans property will be sheltered from taxes for the ensuing five years. Finally, 50 percent of the value will be sheltered for the last ten years of the 20-year agreement.
Rotella explained that the TIF agreement allows Bucksport to “shelter” the new value Whole Oceans is adding to the former mill site. The added value of improvements to the property will not be included in Bucksport’s property valuation.
“Sheltering the value will mean that our county taxes will not increase based on this project, our share of revenue sharing will not decrease, and the EPS formula for purposes of school funding from the state will not decrease,” Rotella said.
Pierce Atwood attorney Jim Saffian, who represents Whole Oceans, explained that the start-up will be able to “reduce their tax liability” with the arrangement.
The Whole Oceans project is anticipated to be a $190-million development, Saffian said.
“Like any start-up business, the beginning is the most difficult time,” Saffian said. “You have no revenue coming in yet. Yet you’re spending money to make the project work.”
Jason Mitchell, Whole Oceans’ president, and Kevin Tait, the company’s finance manager, also attended the council meeting with Saffian.
Mitchell said it would be four years before Whole Oceans is operational. Once the project has received all the necessary permits, construction will take two years. Then growing fish will take another two years, Mitchell said.
“There’s a pretty big scope in front of us, a pretty big challenge before the business is up and running,” Mitchell said.
“I very much appreciate the consideration on the TIF, especially in the early days of the project,” said Mitchell. “It’s a capital-intensive project. We’ve structured the TIF to marry that challenge.”
“This site just checked all the boxes,” said Mitchell, citing the availability of industrial power and the water supply as well as the people of Bucksport. “The people here are incredible.”
Mitchell said with Bucksport’s approval of the TIF, he would seek state approval of the tax arrangement.
The Maine Department of Economic and Community Development reviews and either approves or rejects proposed TIF arrangements.
The Town Council did not engage in much discussion before voting to approve the arrangement.
However, Councilor David Kee asked Mitchell about his thinking on being “a good corporate neighbor.”
“I appreciate that question,” Mitchell said. “We want to be part of the community.”
Kee replied, “Little things like buying uniforms for the baseball team when St. Regis [Paper Co.] was here went a long way.”
Council Chairman Peter Stewart interjected, “I think he’s looking for an indoor pool.”
Everyone in the audience and on the board laughed at Stewart’s quip.
Bucksport’s municipal pool has closed due to serious safety problems and needs to be replaced. The council discussed in June the costs of its replacement and whether building an indoor pool was feasible.
“You could even name it after your corporation,” Kee said.
Stewart asked Rotella how this TIF compares with others the town has had. There were two previous TIF arrangements when the former mill site was still active as a paper mill.
“This isn’t new,” Rotella said. “We’ll be sheltering this value at their purchase price. It’s going to make this a nice, smooth transition for everybody.”