600 jobs fly to Wisconsin

AUGUSTA — Wisconsin appears to have won the bidding war for most of the promised 600 new manufacturing jobs originally expected to come to Maine.

Forecaster file photo Kestrel Aircraft CEO Alan Klapmeier

The Forecaster file photo

A Kestrel airplane sits on display in Hangar 6 at Brunswick Naval Air Station last February during a ceremony to transfer the airport from the U.S. Navy to the Midcoast Regional Redevelopment Authority. Wisconsin Gov. Scott Walker announced Monday that his administration had lured Kestrel from Brunswick with a rich financing package.

Wisconsin Gov. Scott Walker announced Monday that Kestrel Aircraft Corp. will establish its manufacturing and business headquarters in Superior, Wis. The company had planned to locate its facility in Brunswick at the recently decommissioned Brunswick Naval Air Station. However, the startup had also been approached by other states after CEO Alan Klapmeier sought additional financing.

Klapmeier in December met with Gov. Paul LePage and members of his administration to discuss ways to keep the aircraft manufacturing company in Brunswick. However, there were signs last week that those efforts were running up against stiff competition.

On Monday, Walker announced that his administration had delivered a financing package that would bring Kestrel to Superior.

Klapmeier said his inability to obtain additional tax credits from Maine forced him to consider other locations. In November, The Forecaster reported that Kestrel was eyeing a manufacturing facility in Berlin, N.H., after Klapmeier appeared in a report by New Hampshire Public Radio.

Kestrel had hoped to fund a portion of its $100 million project through Coastal Enterprises, a Wiscasset-based private, nonprofit community development institution, and the federal New Market Tax Credit program. The program helps bring jobs and investments into low-income or distressed areas, as identified in the U.S. Census.

Kestrel hoped to receive $39 million in tax credits, but only received a fifth of the amount it was seeking. In April, the company was allocated $7.8 million in tax credits, enough to get Kestrel Aeroworks, the maintenance and repair operation, off the ground, but not enough to start manufacturing airplanes.

News of the financing struggles prompted renewed efforts by state officials to keep Kestrel in Brunswick.

Last week, LePage highlighted the state's effort to support Kestrel, including a  $300,000 Community Development Block Grant, a lease write-down rate that carries a value of $250,000 per year, a local property tax exemption carrying a value of $105,000 per year, $750,000 in direct building improvements and  commitment from the Midcoast Regional Redevelopment Authority to issue $10 million in tax revenue bonds.

With those commitments already made, the LePage administration sought additional information from Kestrel before sweetening the pot with gap financing. The latter would have allowed the startup to obtain additional tax credits during the new application cycle.

"All that is left is for our team to receive updated and thorough financial information from Kestrel," LePage said last week in a statement. "As governor, it is my responsibility to ensure prudent use of Maine’s business development programs."

The company had planned to lease one of the former U.S. Navy base's prime locations, the state-of-the-art Hangar 6. The company's plan to build a single-engine turboprop in Brunswick had excited state officials, who touted the company's promise of 600 jobs.

Peter Rogers, LePage's communications director, said the governor and his economic development staff were disappointed by the announcement.

Rogers said LePage had spoken with Klapmeier several times during the last few weeks. He said the governor wanted financial data from the Kestrel before green-lighting "a generous" funding package.

Rogers said Kestrel never provided that data.

"The governor takes his duty as the state's financial steward," Rogers said. "This package has been in place for a long, long time. It's disappointing because staff had worked hours and hours to negotiate the funding package."

"The governor is a businessman and he wanted to see (Kestrel's) financial information before moving forward," Rogers said.

George Gervais, commissioner of the state Department of Economic and Community Development, said the gap financing was made available to Kestrel weeks ago, but the company didn't supply the required financial data to complete the application.

"The gap financing was on the table for quite awhile," Gervais said. "When they didn't respond it became clear to me that they were looking elsewhere. They were just further down the road than I thought."

Gervais also refuted claims that the administration hadn't done its part to keep Kestrel in Maine. He said the state had fulfilled all of its promises to the company.

Gervais noted that unlike Wisconsin, which has a quasi-public agency to distribute the tax credits Kestrel sought, Maine had no say in how the federal credits were distributed. 

Kestrel's agreement with the redevelopment authority in Brunswick requires it to maintain a portion of its business here. Gervais said the company, which already employs 25 people in the town, could create up to 100 jobs there.

"Maine will still get a piece of the pie, but now we're splitting the pie with Wisconsin," Gervais said.

Maintaining a presence in Maine will also allow the company to keep some of the financing it's received, including the $300,000 CDBG funds that it was just awarded. CDBG funding contains job-creation mandates.

smistle@sunjournal.com

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Comments

Randall Pond's picture

600 jobs fly to Wisconsin

Way to Go Gov. LaPage! Screwing Maine out of 600 Jobs by being Noisy!

Nice Going! What else are you going to Screw Up for Maine? Time you were Impeached as Governor! Not Everyone Voted for you, and there are a Lot of us that Don't like you!

Shape up or get out!

CLAIRE GAMACHE's picture

This is sad

Gov. Walker needs some positive press right now with the recall petitions coming in today but for him to steal this from his most ardent admirer Gov Lepage is just plain sad. Sometimes Republicans are the kind that eat their young. I mean he could have given a sweetheart deal to any number of companies but he had to pick this one??

RAYMOND FRECHETTE's picture

Good job Governor Lepage

We must thank Governor Lepage for insisting on getting the financial information requested before giving away more money to this endeavor. Governor Walker may feel comfortable giving money away without having all the facts needed to justify giving away this much money, but Governor Lepage is more prudent. Solyndra in California is a prime exaample of the folly of giving away money without doing the necessary homework. Thank you Governor for not wasting tax money.

Hopefully the State can take away what it has offerred Mr. Kestrel as he has not livedd up to his responsibilities.

Jonathan Albrecht's picture

The 600 jobs are an illusion.

Add up the cost to the state and local community and the jobs are due to the government not the company. We might as well have the state hire the 600 workers, have them do nothing and we'd still be better off then giving this company welfare.

ANTHONY NAZAR's picture

It's corporate welfare...

...when a corporation receives preferential treatment and, though I don't like corporate welfare, if it's going to be the standard, then Maine must offer it to compete.

Good grief - Wisconsin!. Of course they are smarter than we are. They allow for the recall of elected officials who don't act in the peoples' interests.

In this case - parsimony (read being cheap) - didn't pay off. I'm sure it will be justified in the name of lowering taxes (look at the budget, there's tax breaks for the 1% again). In this case, Maine allowed 600 jobs for the 99% to walk away so the 1% would donate to a Republican PAC or two.

BTW - corporate welfare doesn't come just in the forms of TIFS and guaranteed loans. It's also encouraging the slaveholders to come to a town near you, drive out local business and use our Medicaid system to pay health care insurance for the part time employees who staff their cheap plastic crap stores.

Taxes are the dues we pay for living in a civilized nation and the role of government is to do for its citizens that which they cannot do for themselves.

Tax credits are corporate welfare

They're a form of giving companies the edge for opening businesses, or sort of corporate giveaways.

Want to really complain about a company getting so much money from us? Try Walmart. Every time they announce they're opening a store in any state, it's always because they've gotten very generous tax breaks from that state.

They're the world's largest employer, make billions of dollars and still need tax breaks to open locations.

Heck, if they can get away with it, why not a small company?

Guess we don't need the 600 jobs that were promised by this one. Hope Wisconsin doesn't regret the offer. Perhaps we won't, either.

Brian Allen Small's picture

Let Em Go To Wisconsin

Remember a company called MBNA? Maine gave them every tax break known to modern man to come here.

Where are they now?

Baldacci couldnt lure a McDonalds here never mind any worthwhile business!

Bob Woodbury's picture

Just another victory...

...for our jobs first governor. We don't need your stinking 600 jobs. Go to ... Wisconsin.

 's picture

I agree, another victory for

I agree, another victory for lepage, wish we had Governor Baldacci back, he brought them here, HE would have kept them, lepage just waves bye-bye.

Jason Theriault's picture

Boot em.

Tell em to GTFO. Their name is mud here.

Jason Theriault's picture

Disagree? GTFO too

This stinks, and I don't mean in a 'Gosh darn, too bad for us'. Kestrel played us. Now we are going to have facitiles tied up with an aircraft manufacturer who only going to be half here. I say boot em so we can find a manufacturer who is going al in with Maine, not just use us to get better funding elsewhere.

JOANNE MOORE's picture

It's all a game...

with these "fly-by-nighters". They never play with their own money, but rely on corporate welfare or taxpayer dollars and when they go bust who is left holding the bag? Yup, the taxpayer.

Hell, just give 600 people the 100 million. That would boost the economy when those dollars were spent. ; )

GARY SAVARD's picture

I'm not saying this is the

I'm not saying this is the case with Kestrel, however, I'm sure that I am not the only one here that has watched developers with big imaginations and no funding sources play the "we'll bring hundreds of good jobs to the area" game in an attempt to get financial assistance for their projects. $100 million is a lot of money to throw at the wall. If this were indeed such a sure bet, there would be bankers knocking on their door.

Mike Meserve's picture

When did tax credits really

When did tax credits really become the standard over location to have jobs in certain places??? Why not just find an area that is good for your business and just setup shop? BNAS would of been perfect but I guess we don't give enough tax breaks so company's could save more money that they can pocket.

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