Lincoln Paper, town work out TIF agreement

LINCOLN – The town will get $6.4 million in economic improvement funds, including funds for its first industrial park, and Lincoln Paper & Tissue LLC will get $6.8 million in tax breaks over the next 20 years under a proposed TIF agreement, Town Manager Glenn Aho said Tuesday.

The Town Council voted 5-0 after a public hearing on Monday night to approve the 20-year tax-increment financing deal, or TIF, with Lincoln Paper & Tissue. Only one resident spoke.

The deal will not be completed until the state Department of Economic and Community Development approves it, Aho said. That review process is ongoing. No approval date has been set.

If approved, the TIF will help bind the mill to the community, modernize the plant and help guarantee the company a prosperous future. It also will allow the town to grow and diversify its economy and help it become a prominent regional economic hub, Aho said.

“I think [mill co-owner] Keith Van Scotter balanced his needs with what he knew to be our needs and was very fair,” Aho said Tuesday. “The mill officials could have asked for even more, but he understands our situation and respects it. Both sides saw the needs of the other and were respectful of those needs.”

When a town realizes an increase in valuation created by an investment, it also experiences a reduction in its share of state revenues and an increase in county taxes. A TIF allows a town to “shelter” the new valuation from the calculations of state revenue sharing, education subsidy and county tax assessment, in effect creating more money for the town.

With a TIF, however, the money that a town gains must be invested in community economic development projects, such as industrial parks or infrastructure improvements that aid businesses.

Town officials have picked three industrial-sized lots on River Road near the Penobscot River and the municipal airport as the location of a new industrial park that eventually could be purchased with TIF funds.

Under the tentative agreement, the town will set aside $1.8 million, or $40,000 to $148,000 annually, during the life of the 20-year agreement to buy the land and create the park, which will be called Lincoln Industrial West.

“From our planning perspective, it makes the best sense to have these lots designated as TIFs because of their location,” Aho said. “It’s a project that has been in Lincoln’s plans for years and years and now we are making physical progress.”

The rest of the $6.4 million, about $4.5 million – or $167,000 to $377,000 annually – will go toward other economic development projects or bills, including some town worker salaries and print, radio and television advertisements, according to the TIF agreement.

Under the deal, the mill will be required to invest $250,000 to $566,000 annually of its 20-year $6.8 million tax break back into its operations, specifically as part of a total $45.6 million upgrade that will include a co-generation electrical plant and a new $36 million tissue machine, the agreement states.

The new machine is part of a plan to add 40 full-time jobs to the plant’s 356-member, $21 million payroll, and alleviate backlogs on the plant’s two 50-ton-capacity tissue machines. Construction of the new machine is ongoing. Lincoln Paper officials said they expect it to come on line in the fall.

The deal also prevents the loss of $7.4 million in anticipated state aid over the next 20 years that would have been caused by the doubling of the mill property’s value, Aho said.

Attorneys for the mill and the town have been working on the agreement for several months.