BNAS 300 New Jobs: Too Early to Celebrate
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Editor's Note: I can't stand press releases such as the following press release. I refer AMG readers to my indepth reasoning in a 2006 AMG thread here. Here's the gist: This event is announced by Governor Baldacci, covered by the press, as a done deal: BNAS has a new company and 300 new jobs. Yet all we really have is a promissory note that may or may not happen. The promised jobs at the Old Town GP Mill (Red Shield) never happened, but Gov. Baldacci, heading into an election, had tons of great press lauding his masterful turning of straw into gold. With AMG perhaps the only entity that followed the Red Shield story, pointing out, "Sorry, Maine. It's still straw."
I hope Kesrel does open for biz at BNAS with 300 jobs. But let's keep the champagne corked until we see the "Open for Business" sign and we have the names of the 300 new employees.
The words in bold are my handiwork. They show, IMO, the fragile nature of this event. Will it come to pass? Time will tell.
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Governor Celebrates New Company to Locate at Brunswick Landing
July 23, 2010
AUGUSTA - Governor John E. Baldacci today joined Brunswick area local, State, business and redevelopment officials to announce the commitment of Kestrel Aircraft Company to locate to Brunswick Landing, the site of former Brunswick Naval Air Station. The air station is in the process of decommissioning, which will be complete in 2011.
“While the federal government made a mistake five years ago to decide to close Brunswick Naval Air Station, the State and region joined with partners to aggressively reinvigorate the economy of the area and to bring opportunity to its residents,” said Governor Baldacci. “Today we are proud to recognize the continuing efforts of the Midcoast Regional Redevelopment Authority and all our partners in the area who have worked hard to attract good companies like Kestrel Aircraft Company to Brunswick Landing.”
Kestrel Aircraft will be developing and manufacturing composite turboprop aircraft at their site at Brunswick Landing. According to company officials at the announcement today, at full production Kestrel will have invested $100 million and is expected to create more than 300 good-paying jobs in Brunswick.
“The decision of Kestrel Aircraft Company to locate their base of operations at Brunswick Landing is a testament to the talented workforce here in Maine,” said Governor Baldacci. “It also demonstrates the success that can occur when local, regional, state and federal governments are all working cooperatively with the private sector on economic development. The international appeal and worldwide demand for the composite technology being used by Kestrel will benefit jobs throughout the State, boost Maine’s economic competitiveness and showcase Maine’s world-class innovation economy.”
Kestrel plans to enter into a lease option for Hangar #6 and start the initial design phase of the project this November. The company will hire roughly 50 to 70 engineers for design and prototype development, and expand by an additional 250 people when they begin production.
“Kestral Aircraft Company will complement the already strong composite technology cluster in the Midcoast and the development of the Maine Advanced Technology and Engineering Center, which will be located at Brunswick Landing,” said the Governor.
The Advanced Technology Center, which is a partnership between the University of Maine and Southern Maine Community College, received significant funding this year when voters approved $4.75 million for the program.
“The redevelopment of Brunswick Naval Air Station has been a top priority of my administration, a priority that is also shared by the Maine Legislature and the people of Maine,” said the Governor.
For more information about the redevelopment authority, please visit: www.mrra.us
To his credit, the guy behind Kestrel, Alan Klapmeier,
cautioned the (TV) audience at the above celebration that it will
be years before employment hits 350. Alan just loves building airplanes,
and he took Cirrus to #1 over Cessna. But his new baby is just starting
the long expensive journey to certification.
Is there a market for another single-prop airplane?
Is this company financed adequately for a three-year development project?
Should be interesting.
How do we find out the details of the lease?
No mention of the $15 million investment that Maine taxpayers will be pumping into this deal.
Can you explain where you got the figure of $15 million? I have not seen where Maine tax payers are being asked for that.
Sure...
$10,000,000 bond
$ 3,000,000 interest on bond * depends upon the term of the bond and the interest rate at the time the bond is issued.
$ 1,500,000 grants
for starters. That doesn't include incentives we don't know about yet. I need to calc the interest out to get a better feel at today's rates. The state likes to issue them for 10 years but with the upcoming financial debacle they are facing, I have a feeling they will be under pressure to extend maturities. (see re-fi of state pensions and extension to 2028 for full funding)
Just think that all of the taxpayer incentives need to be disclosed.
Has a $10m State bond been identified or is it speculation? MRRA has bonding authority of its own.
I noticed it in news reports last week. No details provided in the story. One way or the other, it's coming out of the wallets of the dwindling taxpayer base in Maine. Proceed cautiously is a good idea on this one.
So, nothing to back up your allegation about $15m coming from Maine taxpayers. It may happen, but until it does, why not wait and see before being negative? I expect that there will be grants, but they will not be exclusive to Maine taxpayers, they will be Federal funds.
While details of this bond are lacking,
Alan has already stated that the bond commitment will
make it easier to procure the balance of the needed financing.
Again: how do we, the taxpayers of Maine, obtain the details of the lease
and the bond?
Ask MRRA for a copy of the lease. If MRRA issues the bond, and lease pyments and other revenues cover the payments for the bond, how are Maine taxpyers on the hook for this? Why the rush to negativity? That is no more appropriate than the rush to the positive spin. As a neighbor to the base, I am willing to wait and see.
Ask MRRA for a copy of the lease. If MRRA issues the bond, and lease pyments and other revenues cover the payments for the bond, how are Maine taxpyers on the hook for this? Why the rush to negativity? That is no more appropriate than the rush to the positive spin. As a neighbor to the base, I am willing to wait and see.
I see this as a positive development and hope it works. But more facts and less spin from the development folks would be nice.
Remember how many times Baldacci "saved" the Old Town mill? There is a reason for skepticism.
Mid Coast Mainer...
Again, I reiterate, I hope this is a successful venture for the company, the state and the Brunswick region. I hope scores of businesses move onto the Brunswick Landing and the area generates more private sector jobs than there were total jobs on the base in its heyday of sub-hunting. Let's just understand the investment planned.
None of this is "corporate welfare," right?
And only $2 million a year for space rental? Wow...that's gonna be some profitable business, with 300 workers.
Any guesses as to what a plane like this would sell for? Would $1 million cover it?
2007 Cirrus SR-22s go for 300K to 400K.
I'm thinking the numbers aren't adding up here.
"Any guesses as to what a plane like this would sell for? Would $1 million cover it?"
The Kestrel will sell for 2 to 3 million dollars.
Amazingly, a turboprop costs MORE to build than a pure jet.
So they have to make the turboprop have a bigger payload, more flexible take-off, etc
to give it a market niche.
"Niche" has it's own connotations...
The amount of money taxpayers will cough up runs to the millions. What you see on the surface is the $10 million the MRRA is committed to find to support this operation. At least $600,000 of that will come directly from Brunswick taxpayers through the town's development fund.
Hidden from view are the myriad programs this entity will be eligable to tap namely the New Market Tax Credit which allows the investor to take a tax credit of 5% per year for the first 3 years and 6% for the next 4 years. for a total of 39%. Multiply that by the supposed $90 million Kestral is supposed to invest and you begin to talk about real money.
Couple the above with the fact that Kestral will qualify for Pine Tree Zone benefits which include Corporate Income Tax Credit, Insurance Premium Tax Credit, Income Tax Reimbuursement, Sales and Use Tax Exemption on personal property and real property and access to reduced electricity rates and you realize why many of these negotiations are conducted behind closed doors.
The problem with all of this is that it is not available to the competitors of Kestrel and none of the benefits that accrue to Kestrel will be paid back and the taxpayers will have no equity in Kestrel for the investment of their money. Someone else is going to lose business and end up laying off employees as a consequence proving this is not a zero sum game, but where someone wins and someone loses. It is a game the government should not and is constitutionally unauthorized to play in.
Editor's Note: Press releases, news stories similar to the BNAS spin.
Governor Applauds TD Bank on Job Expansion
July 30, 2010
AUBURN - Governor John E. Baldacci today celebrated the grand opening of TD Bank’s Auburn Call Center. The company said eventual staffing at the center could be as high as 500 employees by 2011, bringing its total employment in Maine to nearly 3,000 people.
http://www.maine.gov/tools/whatsnew/index.php?topic=Gov+News&id=118905&v...
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SENATOR COLLINS APPLAUDS OPENING OF TD BANK CALL CENTER IN AUBURN
July 30, 2010
AUBURN, Maine - U.S. Senator Susan Collins today participated in the grand opening ceremony for TD Bank's new, 60,000 square-foot, "green" call center in Auburn. This call center is expected to create hundreds of new jobs in the Lewiston-Auburn area.
"A little more than a year ago, we gathered here to celebrate the promise of hundreds of new jobs. Today, that promise has become reality," said Senator Collins.
http://collins.senate.gov/public/continue.cfm?FuseAction=PressRoom.Press...
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News Releases
TD Bank Opens New Green Call Center in Auburn, Maine
Center features many local elements, targets LEED Gold certification, and brings hundreds of new jobs to Maine.
AUBURN, Maine, July 30 /PRNewswire/ -- Today, TD Bank, America's Most Convenient Bank®, will celebrate the grand opening of its new world-class call center in Auburn, the bank's latest addition to its presence in the state of Maine. Elected officials, including Governor John Baldacci, and U.S. Senators Olympia Snowe and Susan Collins, will join TD Bank in unveiling the new facility. The environmentally friendly call center features local design elements and will create hundreds of new jobs for the Lewiston-Auburn region. The new call center is located in the west side of the Auburn Mall at 550 Center Street near the intersection of Turner Street and Kings Road.
To view the multimedia assets associated with this release, please click: http://multivu.prnewswire.com/mnr/tdbank/45278/
Once the call center reaches full capacity of 500 employees in 2011, TD Bank will be employing nearly 3,000 Mainers at its stores, operations centers in the historic Bates Mill building and other Lewiston facilities, and at TD's co-headquarters in Portland.
https://mediaroom.tdbank.com/index.php?s=43&item=249
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TD Bank opens call center in Auburn, Maine
July 30, 2010
AUBURN, Maine—Gov. John Baldacci says TD Bank is helping boost the Maine economy by opening a new call center in Auburn that is expected create 500 jobs by next year.
http://www.boston.com/news/local/maine/articles/2010/07/30/td_bank_opens...
pmconusa above writes an excellent post until s/he writes "It is a game the government should not and is constitutionally unauthorized to play in." State governments are not governments with limited, delegated powers like the federal government. When the feds act, they must act under a specific consitutional authorization. The same is not true for the states. After the American Revoultion, the states had all the sovereign power that had been held by the King. The states have all powers held by the King, within the limits imposed by state and federal constututions. So when a state acts, the question is not what authorizes the state to act. The question is whether that action violates a constitutional limit. It is a much different analysis than when judging federal action.
PMCONUSA: At least $600,000 of that will come directly from Brunswick taxpayers through the town's development fund.
Please identify your source on this? I have looked at the Brunswick budget on line, as well as the CAFR and do not see such a fund. Have you spoken with someone on the Council or is this as accurate as your constitutional understandings? Perhaps you are confusing this with a grant application that the town was asked to consider that is federal funds, not town funds.
The $600,000 is the same amount the Town of Brunswick was prepared to give from its Economic Development Fund to Oxford Aviation through its purchase of a paint booth for airplanes. In response to the constitutional question governments are constituted for one purpose to preserve and protect like, liberty and the pursuit of happiness, the latter being a synonym for property. Laws are promulgated for that purpose and are intended to apply to everyone, since everyone is taxed to pay for them. If in constituting government we have enabled it to use taxpayer funds to subsidize people or companies of our representatives choosing then we have writen our constitutions too broadly to allow this practice.
If, on the other hand you believe that federal, state and local governments should use your money to subsidize private industry in competition with the free market, welcome to Obamaland.
The money for the paint booth was CDBG funds, not town of Brunswick funds. Go back and check the facts before you make allegations.
In Brunswick, according to Town Manager Gary Brown and the executive director of the Midcoast Regional Redevelopment Authority, the council may be asked to authorize a $400,000 Community Development Block Grant application that could be used to assist MRRA's purchase of an $800,000 paint booth to accommodate Oxford Aviation's plans to refurbish jetliner-sized aircraft at BNAS.
The above is from a search on the Forecaster web page.
CDBG money is taxpayer money regardless of who gets to dole it out, in this the Town of Brunswick.
Look at this deal from another perspective. If the hanger did not exist, Kestrel would have to fund its construction with its own assets or borrow. The building, according to the 8/31/2009 isssue of the Forecaster, cost the navy $34 million and Kestrell will lease a little over half of it for $186,000/month. If it had to borrow slightly more than half its value or $19 million at 3.5% if would be paying about $650,000/month. Therefore the MRRA and the taxpayers are subsidizing Kestrel to the tune of $464,000 per month. If you think this kind of deal passes the smell test, I have a bridge to sell you.
"If the hanger did not exist, Kestrel would have to fund its construction with its own assets or borrow".
They don't have any assets.
This is the classic example of building a business out of paper.
This is also a classic example of Big Brother's Economic Development Philosophy.
There are basically only two ways Big Brother can help businesses:
1) Stay out of the way, keep taxes and regulations to a minimum
or
2) Regulate unceasingly, keep taxes high, and give taxpayers' cash to a favored few businesses.
Kestrel wins #2.
The hanger exists! Is anyone else interested in renting the damn thing? If not, then what's the problem. Highest bidder, only bidder.
charlie
But you stated it was Town of Brunswick Development funds. It is wrong to suggest it is local money and then justify the misrepresentation by simply covering it with the it is still taxpayer money.
Admit the mistake without clouding the issue with a seperate argument.
When the Toan of Brunswick obtains Community Development Funds it becomes the Tow of Brunswick's money. Talk about missing the forest for the trees. Alan Klapmieir sold his company for $100 Million. How much of that he got himself is not known. Therefore he has funds (assets) to spend on a new venture, but why spend your own money when you can leverage it with OPM. Particularly when you don't have to share any of the benefits. In order to make this enterprise viable the MRRA will have to make the airport viable, that is to operate it as a private airfield.
Private aviation has been in the doldrums for years because of its increasing cost. There is no growth in this market and in order to gain entry you have to take market from someone who already has it. Its a lot easier to do when you don't have to invest your own money. The point of my comment was I don't think it is a function of government to invest taxpayer money in private enterprises, regardless of how many jobs it appears to create. The free market rewards those who take the risk to provide people with the goods and services they want or need and punishes those who don't with the loss of their investment. The government's only role is to even the playing field and not taking sides. Millions have already been spent and more are being obligated by the actions the MRRA has taken or planned. You would think the lesson of Loring would have prevented this fiasco, but government has yet to acknowledge Loring was anything but a success. Go figure.
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Many airplane companies were going to set up headquarters over the years in Portsmouth, NH at the old Pease Airforce Base. 20 years later, no one is building planes and the all of the commercial airlines have either left or gone bankrupt.
I agree, its much too early to celebrate.