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January 13, 2012

Gardiner gives initial OK to tax deal for gas pipeline

Officials in Gardiner have given initial approval to a tax deal for the developer of a proposed $85 million natural gas pipeline through central Maine, but only if Kennebec Valley Gas Co. agrees to extend a line to the city's business park.

The city council on Wednesday approved the initial tax increment financing agreement as well as a credit enhancement agreement if Kennebec Valley Gas meets certain criteria, including building a distribution line to the Libby Hill Business Park and area schools, according to the Kennebec Journal. Councilors said the city would be at a disadvantage when it comes to energy prices should Kennebec Valley Gas not make natural gas available to its business park. Richard Silkman, a partner in the Portland-based company, said he hopes to provide natural gas to the park, but emphasized that demand for gas is currently low since there are few businesses there. The park has five tenants, and 12 lots are available. City councilors must still give the tax break a second and third reading before awarding final approval.

The 56-mile pipeline, if approved, would run through 12 central Maine communities. The Maine Public Utilities Commission has given the plan initial approval, but Kennebec Valley Gas needs TIFs from all communities to make the project economically feasible. So far, the company has secured agreements in Augusta, Fairfield and Oakland, while Hallowell and Waterville have given preliminary support. Madison and Farmingdale have voted against TIFs.

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