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To the Editor:
I have become
increasingly concerned about the amount and character of misinformation,
misconceptions and myths that are informing the discussion about
ConocoPhillips/Transcanada’s so-called Fairwinds proposal for Harpswell.
These are misconceptions and myths regarding the Fairwinds project,
Harpswell’s present and future financial situation and Harpswell’s former
fuel depot site. Increasingly, this misinformation has been printed in
ConocoPhillips’ advertisements and reports, it is appearing in the press
and letters to the editor and it is recited as fact at public meetings.
This misinformation is not supported by the facts yet it is having an
unfortunate persuasive effect on many Harpswell voters. My goal is to
identify and correct these misconceptions.
Misconception #1.
Harpswell is over taxed. This is simply not so. No tax is easy to pay,
especially a property tax. Harpswell’s tax rate – its mill rate – is among
the lowest in coastal Maine. In fact, statistics compiled by the Maine
Revenue Service show that Harpswell has far and away the lowest tax rate
of all towns in Cumberland, Sagadahoc and York Counties. Harpswell’s mill
rate is lower than all but four towns in
Lincoln County and lower than all but one town in
Knox County. Even if you believe that Harpswell may be bearing a
disproportionate share of S.A.D. 75’s annual budget we are not over taxed.
If Harpswell’s share of the S.A.D budget is of concern to the voters, we
should deal with that issue directly rather than allow that it to muddy
the discussion about Fairwinds.
The Selectmen have
postulated that the Harpswell tax rate is about to grow out of control yet
not once have any of them provided the voters of Harpswell with an
analysis of why they believe that to be so. How can we be expected to
embrace a heavy industrial project of this magnitude on unsupported claims
that our taxes are about to grow out of control.
Misconception #2.
Reduced property taxes will make Harpswell a more affordable place in
which to live. Most of us in Harpswell are understandably concerned
about the rapidly escalating cost of real estate in Harpswell and the fact
that it is making it difficult and often impossible for Harpswell’s
younger generations to stay in Harpswell or to return to Harpswell. This
is an unfortunate truth that applies to my family just as it applies to
others. Real estate prices are changing the Town as the population becomes
increasingly older and includes a larger portion who are “from away.” Many
arguments have been made that the revenue stream from the ConocoPhillips
project will somehow allow us to reverse this trend or at least slow it
down. However, an economic analysis of this argument revels that this
simply won’t happen! In fact, any tax relief from the Fairwinds project is
likely to increase real estate prices.
The proponents of the
ConocoPhillips project argue that if there is tax relief as a result of
the ConocoPhillips project, Harpswell real estate well become more
affordable or that prices will stabilize. That simply is not so, because,
while the property tax mill rate is partially driven by the value of real
property the reverse is not true. The value of Harpswell real estate is
driven by market forces – not the tax rate. The only reduction in
the market value of Harpswell real estate that is likely to occur if the
ConocoPhillips project is approved will affect property on Harpswell Neck
alone, due to the unfortunate and undesirable proximity of the property to
the LNG site.
Elsewhere in Harpswell
(which is most of the Town, geographically) the market value of real
estate will continue to rise or fall as a function of market demand for
real estate. To the extent that the ConocoPhillips project revenue does
provide property tax relief it will probably have the perverse result of
driving up the price of Harpswell real estate. This acceleration in
the rate of increase in market value will come from the fact that
Harpswell will be perceived to have a more favorable real estate tax climate
compared to other coastal towns. This factor will likely make Harpswell
real estate more attractive by comparison and will
drive up real estate prices all the more.
As we all know, there is
a finite amount of coastal real estate and an increasing number of buyers
in search of coastal real estate. This creates the classic set up for the
operation of the economic law of “supply and demand.” Regardless of the
Fairwinds project and any tax relief that the Fairwinds lease might
generate, Harpswell real estate pricing will remain a function of the
supply and demand for coastal property and, as the inventory of available
coastal real estate diminishes or remains constant against a growing
number of buyers, we can expect the price of Harpswell land to increase
accordingly. There is absolutely nothing we can do about this. A vote for
Fairwinds to obtain tax relief is a vote to increase the market value of
real estate in Harpswell and to make the affordability problem worse than
it is now.
Misconception #3. The
lease’s revenue stream will be used for tax relief. As I write this
and before the first nickel is paid to the Town, the
call has been sounded by Harpswell citizens for an incredible wish list; a
senior center, a youth center, bike paths, a swimming pool, health center,
library, withdrawal from the S.A.D. while assuming our share of the S.A.D.
bonded debt, our own schools, a college scholarship fund for all Harpswell
students,…and the list grows by the week. ConocoPhillips uses the ever
expanding wish list to demonstrate to the Town that, with the revenue from
the lease “the sky is the limit” – we can do and afford whatever we want –
a seductive siren call for sure.
In the first full year of
the lease, after construction and the project is operational, the lease
payment will bring in nearly $9 million. Nine million dollars is a lot of
money by any measure, but as much money as it is, it is barely enough to
do all that is needed now, let alone to begin to satisfy even the smallest
portion of the Town’s wish list. When one begins to tally the costs to the
Town that it must and should assume if it enters into the Fairwinds’ lease
there is little left over for tax relief. For example: The Town has to
start off by establishing a $4 million reserve for the fishermen’s
mitigation fund – that is the upper limit of the Town’s responsibility
under the lease. Whatever is not spent in any year on mitigation can be
carried forward but – to the extent that the mitigation reserve is used –
the funds will have to be replaced. So, if most of the mitigation fund is
spent in any lease year the Town will have to set aside $4 million for the
next year, then the next, and so on, for the term of the lease. Add to
that the “set aside” investment fund that, in the exercise of prudence,
the Town must create and maintain to guard against the precipitous loss of
revenue to the Town on the day, 30 or 50 years from now, when
ConocoPhillips decommissions the facility. Most money managers would
recommend that upwards of one half of the revenue stream be used to fund
the Town investment fund in order to avoid leaving a fiscal time bomb for
our children. In the first year of the lease, assuming a flat municipal
budget and before we have our own schools or build the swimming pool, we
might have a net contribution to the Town budget of $1 million. If the
Town does what it must to be fiscally prudent and the Town budget grows at
a rate that is just a smidgen greater than the rate of inflation, the net
contribution to the Town budget likely will be only $300,000 - $500,000 in
the fist year. Thereafter, in later years, the net contribution to the
Town budget may appear to increase but, because of inflation and the
tendency for government to grow, in real terms, the net contribution to
the Town will not increase appreciably if at all. Personally, I do not
believe that contributions to the Town budget of any amount justify
the irreparable harm that the Fairwinds project will do to Harpswell, but
net contributions to the Town budget of $300,000 - $500,000 are not worth
even a moment’s consideration.
In addition, it would
behoove all of us to look at the negative experience of towns like
Wiscasset, East Millinocket, Millinocket and
Lincoln to see the consequences of total reliance on
a single industrial facility.
Misconception #4. The
former fuel depot site is so contaminated that it cannot be used for any
purpose other than the ConocoPhillips project. I serve on the fuel
depot committee and, as a member of that committee, I am aware of the
environmental conditions of the former fuel depot site. Based on the
information available to the committee and from the Maine Department of
Environmental Protection it is clear that the environmental condition of
the site and level of contamination of the site is being intentionally
distorted and misreported. The site has been “remediated” – cleaned up –
and is approved for all uses other than residential housing – period. What
little contamination remains is located deep in the soil and is rapidly
being consumed and cleaned up by naturally occurring bacteria. Let me say
this another way – the former fuel depot site is safe for all uses except
residential housing and it has tremendous potential for many uses,
commercial, recreational and otherwise.
Misconception #5.
Harpswell is under the gun for the cost of removal of buildings and the
pier if the Town does not approve the ConocoPhillips project. The
projected cost of removal of these structures is estimated to be between
$1 million and $2 million. The Town appears to be in a headlong rush to
remove these structures before we know whether any potential commercial or
light industrial tenant of the former fuel depot can use these structures
or would be willing to remove all or some of them as part of its lease
obligation to the Town. There is no need to rush to remove these
structures. The Town should continue its search for one or more suitable
tenants for the former fuel depot site and negotiate the use or removal of
the structures with these tenants.
Misconception #6. The
ConocoPhillips project is Harpswell’s last chance to develop the former
fuel depot site – if we don’t approve Fairwinds the Town will have missed
the opportunity to develop the site. The fuel depot committee
has investigated, in a non-strategic and
somewhat relaxed manner, a handful of possible light industrial or
commercial uses and tenants for the site. But the fact is that the
Town and the Committee have not taken a serious, systematic strategic
approach to the economic development of the site. If the Town approached
the economic development of the former fuel depot site in a direct and
sophisticated manner, say, in the way that Topsham and Brunswick have for
their available sites, I have no doubt that a huge number of potential
tenants for the site would be identified and that leases would ensue – if
that is what the town’s voters wish. More to the point, if the Town had
put a fraction of the time and energy into finding a suitable tenant for
the former fuel depot site as it has in dealing with ConocoPhillips, there
is no doubt that we would have had one or more appropriate tenants some
time ago. Let’s simply resolve to approach the development of the former
fuel depot site using appropriate and professional economic development
techniques and in time Harpswell will have what it wants and needs – one
or more tenants that are appropriate to the site, that may well cover all
or some of the cost of removing the structures on the site and that will
provide revenue and increase the Town’s tax base.
Misconception #7.
ConocoPhillips will save Harpswell. Harpswell does not need to be
saved, it is a wonderful place in which to live, raise a family and work –
now. The only thing that Harpswell needs to be saved from are those who
are willing to sacrifice the character, culture, environment, health and
safety of the Town and Middle Bay for a seductive and illusory income
stream.
Economic issues are only
a few of the important issues that Harpswell voters should consider in
connection with the ConocoPhillips proposal. I hope my focus on important
basic economic issues, such as taxes, property values, and the former fuel
depot site will help Harpswell voters consider the real facts and economic
considerations and not have their opinions biased by the large amount of
misinformation on these issues.
John F. Loyd, Jr.
Harpswell Resident
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