November 27, 2012

Legal battle brewing over former Brunswick air station tax break

Town wants to tax Kestrel Aeroworks' holdings at Brunswick Landing; redevelopment authority asks governor to intervene

By Steve Mistler
Staff Writer

A legal fight is taking shape as the agency that is redeveloping the former Brunswick Naval Air Station seeks to exempt one of its tenants from paying property taxes.

click image to enlarge

A Kestrel Aeroworks airplane on display at The Great State of Maine Airshow, at the former Brunswick Naval Air Station, in August 2011.

Portland Press Herald file photo by Shawn Patrick Ouellette

The Midcoast Regional Redevelopment Authority has indicated that it may sue the town of Brunswick to recoup $116,700 in taxes that the authority has paid for Kestrel Aeroworks, an aviation company that employs 35 people.

The authority also has approached Gov. Paul LePage's administration about proposing legislation to ensure that Kestrel will be tax-exempt.

The tax issue is the latest disagreement between the redevelopment authority and the town as it seeks greater involvement in the future of the 3,300-acre base, now called Brunswick Landing.

Steve Levesque, the authority's executive director, said Tuesday that taxing Kestrel could make Brunswick Landing less attractive to prospective aeronautical tenants and complicate the authority's effort to replace the estimated 4,800 jobs and $330 million in annual income that left the region when the Navy left last year.

But Brunswick officials say the authority promised Kestrel that it wouldn't pay taxes despite early warnings from the town that Kestrel's operations were taxable.

They also say the authority and its tenants are cutting deals that deny town officials a say in the redevelopment efforts and deprive Brunswick residents of property tax relief.

"I think MRRA may have represented to Kestrel, and may be representing to other businesses, what their tax status is without checking with us," said Ben Tucker, vice chairman of the Brunswick Town Council. "And that may explain why MRRA is now paying Kestrel's taxes."

Kestrel Aeroworks is among the redevelopment authority's 21 tenants at the former Navy base. In January, the startup aircraft manufacturer moved most of its operations -- including its highly touted but prospective 600 manufacturing jobs -- to Wisconsin after securing a financing deal that trumped Maine's offer.

The company still employs about 35 people in Brunswick through a 20-year lease with the redevelopment authority, which receives about $85,000 a year in rent from Kestrel.

Town records show that the first half of Kestrel's tax bill came due Oct. 15. The authority paid the taxes, but it's now taking steps to get its money back and ensure that Kestrel is tax-exempt.

Memos between the authority's legal counsel and the town's attorney have set the stage for a court battle.

Levesque said the authority has not decided to sue Brunswick, and its 11-member board has not authorized him to do so.

"It's one of the options we're looking at it," he said.

Brunswick Town Manager Gary Brown said Tuesday that Levesque indicated in September, after the tax bills for real estate and personal property were issued, that a lawsuit may be filed.

But, he said, Levesque shouldn't be surprised by the town's position.

He said he informed Levesque by email in June 2010, well before Kestrel's deal was signed, that Brunswick planned to tax the operation.

"The other thing that bears some scrutiny here is that MRRA appears to have made financial obligations to Kestrel without ever telling them about the town's position," Brown said.

Levesque said he didn't recall that email but the authority's position has been made clear to the town all along.

Kate Dougherty, a spokeswoman for Kestrel, said the company supports the position of the redevelopment authority.

"As far as we're concerned, it's a matter of being competitive, not just in the region but all of Maine," she said.

Asked whether Kestrel would leave Brunswick if it had to pay taxes, Dougherty said, "I wouldn't venture to go there."

"We don't believe in making decisions based on theoretical or future outcomes," she said. "When something happens, we act and do so quickly."

(Continued on page 2)

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