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September 26, 2019

CLT firm LignaTerra will anchor Lincoln forest innovation park

Photo / Maureen Milliken The former Lincoln Paper and Tissue site, closed since 2015, will become the Maine Forest Products Innovation Park, with cross laminated timber company LignaTerra as the first announced tenant.

A $31 million production plant by cross laminated timber manufacturer LignaTerra Global LLC will be the first tenant at Lincoln's planned Maine Forest Products Innovation Park.

The park is being developed at the Lincoln Paper and Tissue site. LignaTerra will construct a 300,000-square-foot manufacturing plant on 20 acres, with another 20 acres held in reserve for future expansion, Jay Hardy, Lincoln's economic development director, told Mainebiz.

North Carolina-based LignaTerra, which will operate as LignaTerra CLT Maine LLC, produces cross laminated timber, an engineered wood product that is an environmentally friendly alternative to concrete and steel. It’s been used for some time in Europe, but the technology is just beginning to gain traction in the United States.

CLT and other mass timber products are becoming an important part of the future of the construction industry and can be a major part of the emerging forest economy in Maine, Hardy and others involved in the project said.

The plant will also manufacture glulam, a wood product for columns and beams that is also made with layers of dimensioned lumber bonded with moisture-resistant adhesive.

The Maine Forest Products Innovation Park is being developed on the 350-acre site where the mill closed in 2015. Also planned are a solar array by hep energy, of Portland, a possible biorefinery and more. The town owns 80 acres on the site, which it got in lieu of taxes owed when Lincoln Paper and Tissue declared bankruptcy, It has an option on the rest of the site, which Hardy said will be executed once cleanup details are ironed out.

"This is a brand new start for the town of Lincoln," Hardy said Tuesday. "None of this would be happening without LignaTerra deciding to come to Lincoln."

The town is giving LignaTerra the land — Hardy said the value of it is negligible compared to the value LignaTerra will add by being there. He said investing in the town's future "means meeting businesses halfway."

Adding up to 100 jobs

The LignaTerra parcel is on the "greenfields" portion of the former mill site, so no cleanup is involved. Hardy said that securing the company as the anchor tenant will help provide the resources to clean up the site's brownfield area, which is still be assessed by the Environmental Protection Agency.

The site has much of the infrastructure already in place for manufacturing, which makes it ideal for LignaTerra, as well as other tenants, Hardy said.

Nick Holgorsen, managing director and founding partner of the company, told Mainebiz Tuesday that the company will add employees as production ramps up. By the end of the second year of production, it will have two shifts with about 100 employees.

He said the area workforce, "people used to be around a paper mill," is also an asset. "In a town and county hit hard, we're trying to revive some of these jobs," he said.

LignaTerra is taking advantage of local and state incentives for job creation, "and have reviewed how those may enhance our plan to offer additional packages to our workforce."

He added, "We look forward to working with the new administration on these, as well as workforce development strategies that can benefit the community as well as our production.”

A timeline for when construction would start hasn't been set yet as the details of the project are finalized.

Holgorsen said in the meantime, the company is updating machinery confirmations, consulting on several large mass timber projects and formalizing strategic collaborations.

Natural resources, built resources

The Penobscot County town's proximity to Interstate 95, access to natural gas, and more make it ideal for LignaTerra, as well as other manufacturing firms, both at the innovation park and elsewhere in Lincoln, Hardy said.

The town's location in the heart of the state's timber belt add to the appeal for forest industry-based businesses, he said.

"Right outside of town, across the Penobscot River, we have the largest cluster of qualified logging contractors in the state, all in one place," Hardy said. He said those loggers "are the first link in the supply chain," and are among the most talented and quality loggers in Maine. 

"We have the natural resources here, we have the built resources here," he said.

Holgorsen said location is key for the company, and the region could become a "national leader in timber products."

“Central Maine, and Lincoln specifically, has proven to be an ideal location for value-added timber products," he said. Advantages are the proximity to healthy, working forests; access to major transport infrastructure; availability of "a hardworking and qualified workforce"; and "motivated community leaders willing to go the extra mile to rejuvenate innovation and commerce."

'Embracing CLT'

Cross laminated timber is seen as a major player as the new era of the forest industry involves, and Hardy said that Lincoln, in the heart of Maine's timber belt, is ready for it. He and others stressed, too, that it's a sustainable product that can help ease the impact of climate change.

"Maine needs to be embracing and producing CLT," he said. 

The state has made strides in the last two years towards that end. Production of mass timber is being studied at the University of Maine, where the school's Advanced Structures & Composites center is researching the use of Maine-sourced timber for composites to use in place of steel and concrete.

The center is also looking at way's to organize the supply chain to make the state more attractive to mass timber companies, Russell Edgar, operations and wood composites manager of the center, told The Architects Newspaper earlier this year.

Montana-based SmartLam, which also produces CLT, announced in 2018 it will open a plant tin Maine, and was awarded a $3 million grant from the Maine Technology Institute toward its $23 million plant. Further plans have yet to be announced.

Holgorsen said that LignaTerra has spent eight years advancing the markets for the technology, and is seeing a transition in acceptance. Before "it was an outlier with improbable odds of being chosen as the structural building system," but now, with advancement in research and development, and code acceptance, it's "often considered a preferential method by architects and owners."

He said once a project has been built in a region, it leads to more. "We get that the industry doesn’t like change — so once a proof of concept has been realized, the comfort level shifts, and clients begin to focus more on the benefits of the system and less on their uneasiness of trying to learn a new method."

He cited a report generated by Oregon's state government that found 84% of architects surveyed said the leading factor in not specifying mass timber in their projects was availability. "We aim to change that, in central Maine and beyond," he said.

In the company's 25-year history, it's completed thousands of structures across the globe. "So even though CLT is somewhat new to the USA, it is not a brand-new concept," he said. "In its basic form, it comes down to wood and glue, which is not revolutionary.”

He noted Gov. Janet Mills' speech Monday to the United Nations General Assembly, at which she said Maine would be carbon-neutral by 2045.

“There is abundant, verifiable data regarding the use of timber and its ability to combat climate change," Holgorsen said. "Trees sequester carbon and release oxygen, and only need rain and sunlight to do so."

Well-managed forests make the process sustainable, he said. "Compared to other non-renewable building products, and the associated energy required and pollution emitted to process, the only choice for environmental responsibility can by timber."

Stepping up the plate

LignaTerra announced in February 2018 it would locate in Millinocket, but financial issues with the site led to that agreement falling apart late last year. Much of that involved a tax lien that came with Our Katahdin's purchase of the site, and was resolved this summer.

Hardy said the discussions about the the company coming to Lincoln started shortly after that.

"I credit LignaTerra for stepping back up the plate and swinging again," he said. "We've got all the right ingredients in place — the financing, the site."

Holgorsen said the company has written confirmation of funding that has allowed the project to go forward.

“It has been a bit of a roller coaster since our previous announcement last year," he said. In Lincoln there are "substantially less obstacles" than there were in Millinocket.

The former mill site is in a tax increment financing zone, which means revenue comes back to the town for reinvestment. It's also an opportunity zone, which means investors get tax breaks by turning capital over quickly, investing in a fund for a zone site and sticking with it for a number of years.

The town and LignaTerra worked with Acadia Capital Management, of Bangor, on the financing.

Hardy and Holgorsen said Brien Walton, CEO of Acadia Capital Management, has been another key in the deal coming around.

"[Walton] He and his team are generating a groundbreaking model for Lincoln’s plan to develop a timber innovations center that can be replicated in other areas of the state and beyond," Holgorsen said.

"There is no cap stack — this is an all-cash transaction," he said. "Our budget proposes $31 million in real property."

The funding execution is ongoing, and more details may be announced in the future, Walton and Holgorsen said.

Holgorsen said, though, "It does include large venture capital firms interested in part by the benefits that opportunity zones provide.The formal closing is imminent but ongoing, as investors are liquidating various capital assets to place in the opportunity zone fund." Investors have six months to invest to invest capital in a fund once it's gained to take advantage of opportunity zone tax breaks.

A formal announcement of LignaTerra and Lincoln's partnership will be held Friday in Lincoln.

There will be more details on other plans for the park, including hep energy's solar array on a 100-acre site that includes the mill's century-old bark pile, in the future, Hardy said.

"Right now it's about LignaTerra," he said. "It's important for Lincoln, but what's really important is what this mean's for the state,and the forest products industry."

He said that, with 95% of the state's land forested, the industry is a physical element that needs space and places to thrive.

"If all politics is local, then all development is local, too," he said. "In the end, you have to take an industry, and make it in a particular place, you have to hire people, have a payroll. "Forest products are not ever going to exist in the cloud. If you're making something out of wood, you're not going to be in the cloud.

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