2011-12-30 / Front Page

Report: Wisconsin city woos Kestrel

By Beth Brogan, Times Record Staff

BRUNSWICK — Kestrel Aircraft Co. is negotiating with development officials in Superior, Wis., to create 300 to 600 jobs initially envisioned for Maine, a local redevelopment official confirmed today.

Steve Levesque, executive director of the Midcoast Regional Redevelopment Authority, said today that Kestrel founder Alan Klapmeier confirmed a story in the Duluth (Minn.) News Tribune reporting on a Jan. 16 public hearing at which the city of Superior would consider a development agreement with Kestrel for the company to build parts for its new single-engine turboprop plane there.

Neither Klapmeier nor his spokeswoman immediately returned phone calls today.

Superior Mayor Bruce Hagen told the paper that the city’s redevelopment authority would hold the Jan. 16 hearing to consider a development agreement with Kestrel, and that state housing and economic development officials would present Kestrel with their proposal on Thursday.

Levesque was taken by surprise this morning when told of the story, he said, and called Kestrel officials who confirmed it.

“They said no decisions have been made, but they confirmed they have been talking with (officials in Superior),” Levesque told The Times Record.

The public hearing is necessary before the city could present an incentive package to Kestrel, according to Levesque.

Calls to city and development officials in Superior were not immediately returned today.

The jobs in question were initially envisioned for Maine, and perhaps Brunswick, where Kestrel has signed a 10-year lease for part of Hangar 6, the newest and largest hangar at the former Navy base

But in October, Klapmeier told The Times Record that some of the jobs might be located elsewhere because funding expected from Wiscasset-based CEI Capital Management of Maine did not materialize.

In October, Klapmeier said he was negotiating with officials in Berlin, N.H., to open a Kestrel facility near a new biomass plant there.

Levesque said at the time that CEI Capital Management informed Kestrel in May that it could not allocate more than $20 million in New Market Tax Credits to the Kestrel project, leaving a gap of approximately $60 million.

Since then, MRRA has worked with Kestrel, Maine Economic Development Commissioner George Gervais, the governor’s office, Sen. Stan Gerzofsky, D-Brunswick, and others at the state and federal level to find additional funding.

“We’re still working on it,” Levesque said today. “We’re trying to be as helpful as we can to support the growth of the company (but) we only have so many tools. You get into a situation where it becomes a bidding war. Maine doesn’t always compete very well with other states, if that’s what it’s going to come to, but I’m not sure that’s what it’s going to come to.”

MRRA has applied to become eligible to allocate $70 million in federal tax credits, and Levesque said he will hear in January if the application was successful.

Gervais did not immediately return a phone call or email today.

“We’re all taking this seriously and negotiations are going on,” Gerzofsky said today. “I have been working with Alan Klapmeier for quite a while now and I believe they truly want to be in Maine. They have made a commitment to be in Maine. It’s just a short-term funding issue we have to find a way to overcome, in this very competitive economy ... everybody’s trying to steal jobs. A lot of investors have been trying to woo every company to come into their state, just like we’re doing, and this is becoming competitive.”

Terms of Kestrel’s lease with MRRA require the company to attempt to secure up to $90 million to support its aircraft design, development and production operation, and that MRRA would work with CEI Capital Management and others to “facilitate project financing.”

As of October, Kestrel employed about 25 people in Brunswick, including 10 designers. Klapmeier said at the time that while he always assumed all the new jobs would be in Brunswick, other communities offered advantages that he had to consider.

“We have some assets here that are pretty significant,” Levesque said. “The state-of-the-art hangar, (Southern Maine) community college, the composites alliance and the University of Maine, the work force — a lot of elements that are intangible. It’s important to us that as we go forward that whatever we do, we can support it publicly and that it makes sense from a business perspective for MRRA and for the state.”




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