SCARBOROUGH — Wex and town officials have reached a tentative agreement that would give the company a $2.25 million property tax break on the $50 million operations center it plans to have built at The Downs.
Under a proposed 15-year credit enhancement agreement, the town would return $150,000 per year in taxes to the international payment-processing technology firm that Fortune Magazine named one of the fastest-growing, publicly traded companies in 2019.
The operations center would be near the grandstand and the racetrack at the Scarborough Downs, at the heart of the village center that’s part of a planned $621 million mixed-use redevelopment of the harness-racing property.
Scarborough’s tax incentive was among the lowest offered by 12 communities where developers pitched competitive proposals for Wex’s operations center, said Safet Cobaj, Wex’s vice president of global real estate.
Still, if the town doesn’t give Wex a tax break, it could scuttle the company’s plan to move to Scarborough and possibly expand its footprint at The Downs.
“It’s a potential deal-breaker,” Cobaj said. “The tax incentive needs to be confirmed before we can finalize a deal in Scarborough.”
Tax watchdogs in town don’t like the agreement, with one blogger calling it a kickback or a signing bonus.
“The Wex deal means $2.25 million more tax dollars will flow into corporate pockets rather than into town or school support,” Steve Hanly wrote on his blog Look Out Scarborough!
The Town Council began its public review of the proposed agreement during workshop and regular sessions Wednesday night. A public hearing is expected to be held Feb. 5, with a final council vote on Feb. 19.
Founded in Maine, Wex has more than 1,000 employees in Greater Portland and a total of 4,900 associates in 11 countries worldwide. The company has generated total revenue of $1.66 billion and net income of $132 million in its most recent four quarters.
Last March, Wex moved its headquarters from South Portland to a new $40 million, 100,000-square-foot building in downtown Portland that’s designed to hold 400 employees.
Last week, Wex announced plans to consolidate six remaining South Portland offices at a new 200,000-square-foot operations center to be built at The Downs. It would eventually house as many as 1,200 workers in various call center, service center and other roles.
The building would be built and owned by the developers of The Downs and leased to Wex. Wex also has secured the right of first refusal on two other parcels in The Downs where two additional buildings might be constructed, town officials said.
The Downs is being redeveloped by Crossroads Holdings, a firm made up of the Risbara and Michaud families of Scarborough. The 500-acre harness-racing property is in the center of town, stretching from Route 1 to Payne Road, near the Maine Turnpike.
Having Wex involved in The Downs has drawn interest from other business owners and accelerated the development timeline for the entire project, said Rocco Risbara, a Crossroads principal. They plan to start building the operations center this year and Wex wants to move workers there by spring 2022. But the deal isn’t signed yet.
“Wex is definitely the golden goose of office users, but we stand to lose them if they don’t get this agreement,” Risbara said. “They need to feel the love from the town.”
The tentative tax agreement was reached in executive sessions between Wex representatives and Town Manager Tom Hall, staff of the Scarborough Economic Development Corp. and the Town Council. Under Maine’s Open Meeting Law, public bodies may hold closed-door sessions to discuss real estate use related to competitive economic development proposals, but any final action must be taken in public.
If the council approves the agreement, Wex would pay an average of $838,171 in annual property taxes, which would add up to $12.57 million over 15 years. The town would return a total of $2.25 million, or 18 percent, to Wex.
That’s significantly less than the economic incentives offered by other communities where developers pitched proposals for Wex’s operations center, Cobaj said. However, the amenities offered by the developers of The Downs, its location between two highways and the potential for expansion made Scarborough rise to the top.
“This is our gesture to show we want them,” said Paul Johnson, council chairman. “It is conservative, but we’re offering them the best deal we can.”
Town Manager Tom Hall noted that the council previously approved a credit enhancement agreement that will reimburse The Downs developers as much as $81 million in property taxes over three decades. In return, they must meet certain goals in building a mix of commercial, light-industrial, recreational and residential development that’s well underway, including 48 condominiums, 48 apartments and 30 single-family homes.
The developers planned The Downs believing that many people want to live, work and play in a community that offers a wide range of businesses and a blend of housing, recreation and entertainment venues near a walkable village center.
Hall acknowledged that having a company like Wex at the center of The Downs increases the likelihood that other businesses will want to be there, including restaurants, shops, day-care centers and other service providers and retailers.
“It starts to make the vision a reality,” Hall said. “(Wex is) of a size that has some gravitational pull.”
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