AUGUSTA — The LePage administration wants to take a lesson from Wisconsin after that state’s public development authority lured away a planned aircraft manufacturing plant and hundreds of jobs once destined for Brunswick.

Maine needs a public agency of its own, perhaps the Finance Authority of Maine, to apply for the same federal tax credits that Wisconsin used to land the new Kestrel Aircraft plant, George Gervais, Maine’s economic development commissioner, said Tuesday. Kestrel announced Monday it was moving its project from Brunswick to Superior, Wis., after Maine officials unsuccessfully tried to save the deal.

“The goal is to take some action on that and see what we can do to not put ourselves in that position in the future,” Gervais said.

Not everyone is sold on the need for such a change.

It would cost money for FAME or another agency to take on the new financing program, and private development agencies already are bringing tens of millions of dollars worth of the federal tax credits to the state each year, some experts say.

Kestrel announced in 2010 that Brunswick Landing would be the site for a new plant, which will make six- to eight-passenger turboprop planes and could employ as many as 600 workers.


The plan was based in part on the New Markets Tax Credit Program, a federally subsidized tax incentive that allows a business to recoup some of its investment.

CEI Capital Management, a branch of Coastal Enterprises Inc., provided a $20 million tax credit to Kestrel. The credit effectively reduced the company’s costs on a first phase of the project by about $5 million.

However, the company’s chairman and chief executive officer said he expected additional tax credits that never came through. Alan Klapmeier, the CEO, began looking for other locations and financing deals last fall.

The Wisconsin Housing and Economic Development Authority offered Kestrel $30 million in tax credit allocations immediately, a second allocation of $30 million by the end of this year, and a commitment for a third allocation of $30 million in 2013 if the authority has it available.

A spokeswoman for the authority said Tuesday said that the initial $30 million in tax credits will come from unused allocations it had left over from past years. The agency will work with Kestrel to get the additional tax credits, said Brenda Marquardt, the authority’s marketing director.

Supporters of the project in Maine had no additional tax credits to put toward into the project.


CEI had used its most recent allocation of credits for other projects in Maine and elsewhere. The Midcoast Regional Redevelopment Authority has applied for $20 million tax credits to use for the project, but it won’t learn until late February if it will be awarded any tax credit to offer.

And Maine officials, unlike those in Wisconsin, didn’t have a pubic agency to turn to for spare tax credits.

“It’s very clear to me that the only thing that was different in our proposals was that,” Gervais said. “What Wisconsin had from the beginning was (the financial support from a dedicated state development authority). We didn’t have that.”

Gervais said administration officials want to develop the financing capacity within a state agency, but haven’t decided on FAME or any other entity. “The discussions have not been in detail yet on that because this is so fresh,” he said.

Beth Bordowitz, chief executive officer of FAME, said the administration has not asked that it take on the tax credit program. FAME never applied for the tax credits before because CEI and other private entities were doing the work, Bordowitz said.

“We hadn’t really though there was a particular need for it (at FAME), but it’s something we would look at,” she said.


The agency also would have to weigh the costs of handling the program, which would involve legal and financial support, she said. “There’s a lot of infrastructure to running that program, so it’s something we would consider carefully.”

Charlie Spies, chief executive officer of CEI Capital Management, said the lack of a state agency allocating tax credits in Maine has not been a disadvantage. A federal report last year said Maine was fourth per capita in the country as far as the use of the tax credits, said Spies, who also is a former CEO of FAME.

“I think our record speaks for itself,” Spies said.

CEI is the biggest provider of tax credits in Maine and has brought more than $220 million worth of credits to the state in the past nine years, he said. CEI works in other states as well, but about one-third of its tax credits stay in Maine, he said.

While some states follow the Wisconsin model and have public development agencies doing the work, many leave the work to private entities, he said.

Spies said he would work with FAME or any other state agency in an effort to increase Maine’s capacity to land future business investments. However, simply creating a new entity to apply for credits doesn’t mean more Maine projects will win support, he said.

“It’s very competitive nationally,” he said.

Christopher St. John, who is on CEI’s advisory board, said losing the Kestrel deal to Wisconsin doesn’t automatically mean Maine needs more agencies filing applications for the credits.

“Wisconsin a much bigger state and probably has bigger capacities,” he said. “I don’t think we should jump to the conclusion that we did anything wrong or that we should bend over further backwards. We already bent over pretty far for this company.”

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