After politely sitting through a half-hour public hearing, Wiscasset residents overwhelmingly approved proposed amendments to the town’s Ferry Crossing – Rynel TIF 1 district during a brief special town meeting at the Wiscasset Community Center Jan. 14.
The amendment revised a Tax Increment Financing District Wiscasset voters initially created in 2004, and extends the term of the TIF from the initial 20 years to 30, ending in 2034.
Wiscasset Town Manager Laurie Smith told the voters the amendments were placed before the town after extended negotiations with Molnlycke Healthcare, the corporate owners of Rynel Inc., in Wiscasset.
Rynel is the world leading maker of foam, used in medical devices. Molnlycke is the world’s leading manufacturer of surgical and wound care products. Molnlycke, a Swedish company with 7400 employees in nine countries worldwide, purchased Rynel in 2010.
Town officials entered negotiations with the goal of helping Wiscasset be competitive in the global marketplace, Smith said. “We didn’t want to do anything that was not in the best interest of the town,” Smith said.
Rynel/Molnlycke officials indicated the company would use their share of the proceeds of the TIF to help fund an expansion of Rynel’s existing 40,000-square-foot facility on Ferry Road, adding a 32,000-square-foot addition to the $5.5 million dollar building.
The new space would house additional manufacturing operations plus an expanded research and development space and house operations from a recently acquired Minnesota business.
“The design of the new space together with the cooperative business environment conveyed by the town through the TIF puts this location into a more favorable position to justify future expansion in Wiscasset,” Molnlycke Business Development Director Jim Detert said in a letter provided to the voters at the meeting.
Wiscasset Town Planner Misty Parker explained the details of the TIF, stating that a TIF district is a standard economic development tool, which allows a municipality to designate an area for development.
An original assessed value for the TIF district is assessed prior to the TIF’s establishment. As new investment occurs within the district, the value increases but that value is not included in the town’s total valuation for state or county tax purposes, Parker said.
Tax revenue generated within the district is then used to fund infrastructure development. In this case, a portion of the tax revenue, will be returned to the developer, in accordance with the terms of a negotiated Credit Enhancement Agreement, Parker said
Parker estimated the town would be able to keep 59 percent of every new tax dollar generated within the TIF district. Molnlycke will review 41 percent as part of the Credit Enhancement agreement.
Meanwhile the added value within the TIF district is shielded from the state and county governments for tax purposes for the length of the TIF period, Parker said.
Typically increases in valuations are offset with reductions in state revenue sharing, education subsidy, and increases in the town’s county taxes, Parker said.
Speaking in favor of the amendment, Wiscasset Selectman Ed Polewarczyk said he was initially skeptical of the concept but had come around. Polewarczyk recalled his education as a municipal official watching Wiscasset’s bottom line closely, only to see the town’s county tax assessment increase because of changes in the town’s valuation.
“Here is an opportunity to shield some of our taxes from the state,” Polewarczyk said. “This is a great deal for Wiscasset.”
Smith said the estimated tax proceeds for the town are anticipated to be enough to cover the expense of the bond for development in the Industrial Park on Ferry Road.
As approved by the voters, the amendments do not change the area of the existing TIF 1 district.
For its part, Molnlycke has committed to buying the lot adjacent to the current property to allow the expansion to proceed and, prior to April 1, 2015, provide evidence of at least a $5.5 million investment in the project to realize their benefits of the TIF.
Meanwhile, Wiscasset agreed to commit its portion of TIF revenues from the project to fund the debt for infrastructure investment for the business and to support economic development efforts to help diversify the local economy.
