AUGUSTA — City councilors unanimously approved a tax break to help a proposed natural gas pipeline come through, and into, the city.

The Thursday vote makes Augusta the first of the 11 municipalities the pipeline would pass through to approve a tax break, though each of the municipalities have been asked to approve similar deals.

Local officials said the Kennebec Valley Gas Company project could boost economic development in the region by bringing a cheaper fuel alternative.

“If it can be constructed economically, it can help reduce our dependence on foreign energy sources and provide some options for our businesses,” said Peter Thompson, president of the Kennebec Valley Chamber of Commerce.

Company officials said natural gas prices, according to current forecasts, could save users 30 percent to 40 percent in fuel costs for heating and industrial uses, such as by paper mills.

The proposed pipeline would run from an existing compressor station in Richmond to Madison, passing through many central Maine municipalities along the way, including Augusta.

City Development Director Michael Duguay said the mainline route would come through Augusta roughly from Hallowell along Whitten Road, to Leighton Road near the western border of the city, Bog Road in North Augusta and into Sidney.

Richard Silkman, a principal with Kennebec Valley Gas, said the pipeline will generally follow rights of way along roads and be buried about 3 feet underground in a strip of land about 3 feet wide.

“We’re very pleased Augusta is the first town to adopt the TIF and make possible the development of a natural gas pipeline in the Kennebec Valley region,” Silkman said after the vote.

Councilor Edward Coffin and resident Stanley Koski, a former councilor, expressed concern about roads in the city being returned to smooth condition after being torn up to bury the pipeline.

“The thought of digging four-foot pathways in many of our streets, to put in the infrastructure for this scares me a little bit,” Koski said.

City Manager William Bridgeo said standards requiring roads to be restored would be made part of the credit enhancement agreement with the pipeline developers. Those developers sought to alleviate officials concerns.

“We’re not digging and running, we plan to be here for the long haul,” Silkman said.

The company is seeking 15-year tax increment financing deals from each municipality the pipeline would pass through. In the first 10 years of the TIF agreement, 80 percent of property taxes on the project would be returned to the company. In years 11 through 15, 60 percent would be returned. After the initial 15-year TIF period, company officials said the firm should have enough clients on the line, and enough debt paid off, to pay its full property tax bill for the pipeline.

Over the 15-year agreement, the TIF would return about $1.2 million in property taxes back to the pipeline developer — a company led by principals Silkman, Mark Isaacson and Anthony Buxton.

Seven miles of mainline, steel pipe, pressurized and coated to prevent corrosion, would be installed west of Interstate 95 and, eventually, up to 12 miles of smaller, non-pressurized, plastic distribution lines would be installed within the city, allowing businesses and other users along the route to connect.

Potential users could include the state, The Marketplace at Augusta shopping area in north Augusta, the University of Maine at Augusta and the new MaineGeneral Medical Center being built on Old Belgrade Road in north Augusta.

Duguay said the first phase of distribution lines would be about eight miles, with additional local lines being installed later, if feasible.

Portland-based Kennebec Valley Gas won conditional approval from the Public Utilities Commission Aug. 16 for the estimated $70 million to $80 million project.

Keith Edwards — 621-5647

[email protected]


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