The Quoddy Tides

Eastport, Maine

2007 March 23

Informational meeting recaps financial agreement for LNG

by Eileen Curry

On Wednesday, March 14, a second informational meeting was held regarding a referendum question asking Perry voters whether they support a Financial Framework Agreement between the Town of Perry and Quoddy Bay LNG. The meeting was similar to a previous meeting two weeks before.

This time, about 10 people listened as town counsel Erik Stumpfel of Eaton Peabody gave a second overview of the agreement and answered some questions from the audience, mostly concerned about the Tax Increment Financing (TIF) proposal, which according to Stumpfel would require an approval from the town if the framework agreement is passed by voters. Stumpfel said, "If the TIF is not approved, Quoddy Bay would be not obligated to make the guaranteed payments provided in the Financial Framework Agreement." The final agreements and TIF approvals would not constitute local permit approvals. TIF was described as providing municipalities with a local tool to finance the cost of private development. Maine municipalities may redirect some or all of the new property taxes from an investment project within a designated district to assist in that project's financing.

Financial projections with TIF, without TIF, with 50% TIF, with 100% TIF were presented by Stumpfel, and he was asked by several people how TIF could be used if the liquified natural gas project was given the green light. Stumpfel said that the financing could not be used for general town government funding, schools or public recreation buildings. The TIF district would reimburse any property taxes paid by Quoddy Bay in excess of the offer of $3.63 million per year. Stumpfel said that TIF funds could be used for "public infrastructure, fire or police" equipment or programs. "Selectmen will have to design an outline of town projects to implement TIF," Stumpfel said. "It is a common practice to vote on this issue before a TIF district is set up. There aren't many projects like this one, and I think that TIF benefits a town."

Resident Brian Theriault asked some questions about Quoddy Bay LNG's obligation to the town if the framework agreement were approved by voters. He commented, "The specific guarantees have not been discussed. What are our assurances to consent to any or all of this? How enforceable is this agreement?" Stumpfel answered, "The town can implement surety bonds with the company or have a personal guarantee from the guarantor. There are tools the town can impose and use to lock this in. It is pretty standard stuff."

Quoddy Bay LNG Project Manager Brian Smith made assurances that the company would be obliged "to pay the $3.6 million per year, the guaranteed amount, including taxes." Smith stood by the agreement package and its provisions.

The Emergency Response Plan, the local impact provision in the framework agreement, brought up some questions during the meeting. Quoddy Bay LNG has offered up to $300,000 per year of the company's annual payment to the Town of Perry for ERP costs. The company said it will pay all additional ERP costs above this amount, including capital facility costs. "Where did the figure come from?" was one questions. "FERC [Federal Energy Regulatory Commission] must have an idea of what it would cost. Was it just hauled out of a hat?" Smith answered, "Your fire chief, Paula Frost, gave this amount. She decided that is what the cost would be to upgrade any equipment or costs for the fire department. We worked with area towns to see what would need to be done. In all honesty, their goal is not to fight fires at the facility, it is only to protect the inhabitants of Perry and its properties. We are required to supply and provide the [fire or emergency] protection on the site. The town should definitely participate in any future permitting process to come and to discuss the outcome of it."


© 2007 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.