The Quoddy Tides

Eastport, Maine

2007 February 9

Perry split over LNG deal

Quoddy Bay offers $3.6 million a year

by Eileen Curry

Perry selectmen have announced reaching an agreement with Quoddy Bay LNG that would require the company to make payments to the town of $3.6 million annually, or more than $90 million over the next 25 years, if the negotiated agreement is accepted by Perry residents in a referendum vote next month.

The agreement is the result of negotiations between the Perry Board of Selectmen, the town's attorney, Erik Stumpfel, and Quoddy Bay LNG. The Oklahoma-based developer is hoping to construct a 2-billion cubic feet per day liquefied natural gas import facility at Split Rock. Quoddy Bay LNG filed its formal application with the Federal Energy Regulation Commission (FERC) in December of last year.

During the February 5 selectmen's meeting, Chairman David Turner read the terms of agreement that were to be discussed at an informational meeting the following evening. Under the agreement, Quoddy Bay LNG would make minimum annual payments, including taxes, to the town of Perry of $3.6 million per year for 25 years, adjusted annually for inflation. The payments would be expected to start in FY 2008. The company would develop an emergency response plan and facility security plan as part of the FERC license application process to cover the costs of additional fire protection and public safety services from the town; $300,000 per year of the costs would be included in the annual amount. A one-time $1 million donation would be earmarked for renovation of the Perry Elementary School, with $600,000 for expansion and $400,000 for educational equipment and additional infrastructure. The LNG developer would also contribute an additional $100,000 per year to create a college scholarship fund for students from Perry; pay to upgrade Old Eastport Road and Cannon Hill Road and repair them as necessary upon completion of the LNG project; reimburse the town of Perry's legal and professional costs associated with the project; purchase certain nearby residential properties at 150% of fair market value if the owners wish to sell; 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; and negotiate with local fishing organizations regarding the impact on commercial fishermen. It was also announced that Quoddy Bay LNG's $3.6 million annual payment would apply only if the town approves a tax increment financing (TIF) district that would reimburse Quoddy Bay LNG for any property taxes paid in excess of the annual amount. Perry voters would be asked to vote on the TIF district at a later date.

Selectman Turner said, "It is ultimately up to the voters of Perry to determine if the town accepts this agreement. The majority of the board of selectmen believe it represents an excellent outcome for the people of Perry. Throughout this process, our effort has been to secure a fair agreement that will benefit the town and its taxpayers."

In response, after the agreement was made public, Selectwoman Jeanne Guisinger read from a prepared statement, stating, "There are two critical issues to bring to this discussion. First, everyone in Perry is aware that the voters of this town held a special town meeting last Thursday, February 1, and voted to require the selectmen to conduct all future LNG negotiations with a special negotiating committee made up of a broad representation of Perry citizens. Mr. Turner and Mr. Adams questioned the validity of that meeting, but they cannot ignore the enormity of the collective voice. It was an unshakable show of support for community involvement in the process and a strong vote of no-confidence for the present approach. Yet less than 24 hours later, with total disregard for voters' concerns, Selectmen Turner and Adams, with attorney Erik Stumpfel of Eaton Peabody, closed this deal with Quoddy Bay LNG." Guisinger voiced dismay about the negotiated deal and noted, "Most people would spend more time than that buying a used car." She added, "Voters in the town of Harpswell said no to $8 million. The Passamaquoddy Tribe has supposedly been offered $12 million. Could a negotiating committee have done any better? Well, they certainly couldn't have done any worse."

More comments followed from the audience. Several questions were posed to Turner regarding the validity of the special town meeting to form a negotiating committee and if he planned on challenging the results by going to court. Turner read a statement regarding "the non-binding town meeting," saying, "There was no refusal [by selectmen] under section 2521 (4); the selectmen voted to place the petition article on the next warrant issued to maximize voter participation on this important issue. That should pass any court test of `reasonable.' Normal Perry voter turnout is 300 - 400. Only 75 voters voted at the illegal meeting to support the much-amended article. In the last election at the polls, there were 53 absentee ballots alone." Turner also stated, "The MMA [Maine Municipal Association] advice is that the February 1, 2007 vote will not be binding on the town, since it was not a town meeting."

Resident John Cook followed, "So does that mean that you are not going to accept the results of the town meeting?" "That's right," said Turner.

Guisinger said, "David, there has been no formal vote on this, just a discussion." Guisinger then made a motion "that the selectmen observe the article as amended and accept the results of the town meeting." Silence followed, and Turner said, "The motion failed due to lack of a second."

Turner added that the majority of the selectmen did not intend to take the matter to a court of law to dispute. "You can take it to court if you like. It's not up to us."

Turner and Adams then voted in favor of the Quoddy Bay LNG proposed agreement being presented to town voters in March, with Guisinger voting against.

Selectmen scheduled a public informational meeting the following evening with town counsel and Quoddy Bay LNG at the Perry Elementary School.

Town attorney outlines agreement

On February 6, the town's attorney, Erik Stumpfel of the Eaton Peabody law firm, outlined the tentative agreement made between Quoddy Bay LNG and the town of Perry at an informational meeting that had about 70 people attending. In March, voters will decide whether or not they approve of the Financial Framework Agreement with Quoddy Bay LNG or if they want to create a negotiating committee made up of members of different boards and groups in town to work with the developer for another package.

At the meeting, Stumpfel outlined various scenarios of the mill rate impact of Quoddy Bay's LNG facility, the taxable status of the pipeline proposal, Business Equipment Tax Reimbursement Program and Pine Tree Zone eligibility, personal property tax exemption, impact fee ordinances, financial projections, Perry mill rate projections, and a possible tax increment financing (TIF) district. "The $3.6 million only applies if the town approves a TIF district for the project," Stumpfel said. "The TIF district would reimburse any property taxes paid by Quoddy Bay LNG in excess of the $3.6 million a year." The TIF financial agreement would require Perry voter approval. Stumpfel also stated, "Quoddy Bay LNG would pay all costs associated with any conditions of approval on project permits, sewage and waste disposal, and costs for the facility."

One audience member asked, "What would happen if Quoddy Bay [LNG] can't pay?" Stumpfel answered, "There are ways to guarantee payment, including an escrow account, payment bonds or letters of credit. There are many ways to assure performance, and the commitment here is that there will be legally enforceable way that the money will be paid every year for 25 years, regardless."

Another person in the audience asked, "Does Quoddy Bay have any investors, or is this a dream?" Quoddy Bay LNG Project Manager Brian Smith answered, "We are waiting for approval from the state of Maine, federal approval from FERC, and then we'll go to investors, big companies. Right now, this is the sole project for Quoddy Bay LNG; we are a single company of Smith Cogeneration."

Perry resident Bill Love commented, "This all sounds great, but what about an analysis of impact on growth in the community? This will make Perry an attractive place to live, there will be more children attending school, the town government will increase, and town roads will need repair. There's a missing piece. If everything stays the same, it would be okay, but we need an analysis of what that is going to do to us." Stumpfel said he "agreed with the point" and said that the state may have "tools to project future growth with." He added that he was hired only to look at the financial part of the agreement.

David Turner responded to Love, saying, "All of those things you've mentioned are already happening to us. The increase of students is already here, the fire department's newest vehicle is a 25-year-old truck, and the list goes on. Whether LNG comes or not, the only way to pay for all these things now is through your taxes. There is no industry here."

Smith answered a question about the housing village proposed for workers during the construction phase of the LNG project. "This is a relatively minor piece of any impact on taxes and schools here. The worker village is for workers only; no families or children will be living there. We wouldn't pay for that. This will house workers only and in a temporary time frame."

After Stumpfel's presentation, the panel, which consisted of Selectman David Turner, Selectman Dick Adams, Quoddy Bay LNG Project Manager Brian Smith and Deputy Project Manager Adam Wilson, made an announcement that more informational meetings about the financial agreement would be scheduled before town meeting "to answer any questions that people may have." During the discussion, Selectwoman Jeanne Guisinger was present but did not sit with the panel.


© 2007 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.