Complex negotiations

We at the Department of Economic and Community Development share in the region’s disappointment in learning of the collapse of Karen Gehman’s recent bid to purchase the HoltraChem facility in Orrington. We are concerned, however, that the recent BDN articles regarding this venture may have left readers with the wrong impression of the role the state plays in these projects.

In our numerous discussions with Ms. Gehman and HoltraChem, we outlined the various ways that both state and local economic development entities could assist in the process. We also explained what we could not do, such as provide 100 percent financing with public funds. During the process, we kept in regular contact with Gehman in order to monitor the progress of the project. We remained available to answer any questions she had about the available programs as well as to offer any appropriate assistance within the parameters we outlined.

This project did not fail because the state or Gehman dropped the ball; it failed because it was an extremely complex project. This is not an uncommon situation in the world of economic development. Many projects never come to fruition; that is the nature of the business. There are many great ideas that will fail for many reasons. Does this mean that we should not work on these higher risk projects? Certainly not. We never know which project may be the one that succeeds.

It is not, however, the proper role of the state to negotiate a sale price or provide 100 percent financing with taxpayer dollars. State programs are designed to augment or enhance a financing package put together through the private sector. Until a financing structure is identified and negotiated, there is nothing to augment. At this stage, it would be premature for the state to do more than to describe our programs and how they may fit into the overall scheme once the initial structure and plans are solidified. Once negotiations are complete and a financing structure is determined, the state can appropriately assist in filling in any gaps, whether they be in financing, training, infrastructure or tax relief.

In handing such ventures, it is our policy to maintain complete confidentiality. Although we may be excited about the project and very hopeful that it will succeed, it does not serve any purpose to make the negotiations public before a deal has been struck. To do so only serves to create expectations within the community for a project which still has many hurdles to clear. The fact that these are often complex negotiations means that deals won’t be hammered out in a week, and five days of media scrutiny doesn’t necessarily serve a constructive role in the negotiations. Steven H. Levesque Commissioner Department of Economic and Community Development Augusta