Oklahoma firm agrees to pay Perry $90M for LNG project

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PERRY – An Oklahoma-based developer has agreed to pay this Washington County town $3.6 million annually for the next 25 years to site a liquefied natural gas tank farm near Halfmoon Cove.

After months of negotiations, the chairman of the Board of Selectmen on Monday night unveiled the financial package with Quoddy Bay LNG. The details of the package will be discussed at 7 tonight in a public meeting at Perry Elementary School.

The total package is worth $90 million to the town, according to selectmen. It is part of Quoddy Bay’s proposed LNG project, which also would include a facility at the Passamaquoddy Tribe’s Pleasant Point reservation. Residents will decide whether to accept the offer at the annual town meeting in March.

Critics of the agreement wondered if a better deal could have been reached had a negotiating committee made up of a cross-section of residents been created instead of relying on town officials.

David Turner, chairman of the Board of Selectmen, offered a summary Monday of the nine-page agreement, which he said was complex.

“These payments are expected to start in FY 2008, at least two years before the majority of the new value from the project would otherwise be taxable by the town,” he said.

Under the terms of the financial framework agreement, Quoddy Bay will develop an emergency response plan and facility security plan as part of its Federal Energy Regulatory Commission licensing process, which is under way.

Those plans will cover the costs of additional fire protection and public safety services from the town. According to the agreement, “$300,000 per year of these costs are included in the annual $3.6 million payment, while Quoddy Bay LNG will pay any additional costs in excess of $300,000 per year.” The company also will pay for the cost of any new facilities, firetrucks, police protection or other equipment required, Turner said.

The developer agreed to make a one-time donation of $600,000 to the town to pay for school renovations and expansion and $400,000 for educational equipment.

The company agrees to develop a scholarship fund for Perry and contribute $100,000 per year to the fund for 25 years, adjusted annually for inflation.

Quoddy Bay also will upgrade the old Eastport and Cannon Hill roads and repair them as necessary upon completion of construction of the LNG project.

The company agreed to purchase nearby residential properties at 150 percent of fair market value, if the owners wish to sell.

The company also agrees, according to Turner, to:

. Cooperate to make either compressed natural gas or natural gas available for local consumption.

. Give hiring preference to residents of Perry, Eastport and members of the Passamaquoddy Tribe to the extent the law allows for services and jobs in connection with the project.

. Negotiate with local fishing organizations regarding impact on commercial fishermen. The agreement did not say who would pick up the cost of legal fees for the fishermen.

The agreement calls for the town to establish a tax increment financing district.

Perry voters will be asked to vote on the TIF district at a later date. If a TIF district is not approved by Perry voters, Quoddy Bay would pay only the normal property taxes generated by the project. Turner did not say what those property taxes might be.

Turner went on to say that “unless the town decides to approve a tax increment financing district for the project for its own purposes, the town will lose an estimated annual average of $860,000 in state aid for education and general revenue sharing funds, and will pay an estimated annual average of $520,000 additional county tax.”

TIF captures a portion of property taxes generated by the new development for specific commercial growth and development projects. Funds for the TIF district must be maintained in a development program fund used to support the cost of the project and other activities that support or promote economic growth. A TIF also shelters a portion of the community’s valuation.

The chairman said that if voters agree to the plan he helped negotiate, Perry would have one of the lowest tax rates in the state.

Perry resident Linda Newcomb suggested at the meeting that copies be mailed to all Perry residents so they could study the agreement themselves.

Selectman Jeanne Guisinger, who is opposed to LNG and who has said in the past that she was not part of the negotiating team except to sit in on the last two meetings with the developer, had her own statement. She noted that at a special town meeting last week, more than 70 voters favored the creation of a negotiating committee.

“It was an unmistakable show of support for community involvement in the process and a strong vote of no-confidence for the present approach,” she said. “Yet less than 24 hours later, with total disregard for voters’ concerns, Selectmen Turner and [Dick] Adams, with [the town’s] Attorney Eric Stumpfel of Eaton Peabody, closed this deal with Quoddy Bay LNG.”

At the special town meeting last week, 72 people voted by secret ballot in favor of the creation of a negotiating committee, while 23 voted no.

By a show of hands, voters decided they would like to see the committee created consisting of the three selectmen, one member of the School Committee, the Perry fire chief, one fisherman to be selected by the Cobscook Bay Fishermen’s Association, and three members of the Perry community, one to be picked by each selectmen.

In addition, voters agreed that a member of the Passamaquoddy Lobstermen’s Association and the Fixed Gear Fisherman’s Association be selected by members of the committee. They also said they would like to see one abutting landowner and an American Indian who is a resident of Perry be included on the committee.

The group said it wanted all committee meetings open to the public and that any deal it struck with the company be discussed at a public hearing and then presented at a town meeting for a final vote.

Neither Turner nor Adams attended the special town meeting.

Monday night, Guisinger made a motion that the results of the special town meeting be accepted by the selectmen. The motion died for lack of a second.

Quoddy Bay LNG project manager Brian Smith and his associates will be available to answer questions tonight.