Is LePage playing politics with state funding?

Posted Tuesday, July 31, 2012 in Investigation

Is LePage playing politics with state funding?

AUGUSTA -- When Paul LePage announced in early July that he would not respect the will of the voters and put the bonds recently approved on the market, eleven towns were left high and dry.  The towns had been told in September of 2011 that they would receive grants to finance civic improvement projects.  When the freeze on bond sales was enacted unilaterally, the towns did not know how to finance projects that had been in the works for months.

Rep. Jeff McCabe (D-Skowhegan) wrote to the Governor’s office asking that the sale be allowed to go forward so that a project in his town could proceed, but LePage responded with a note that informed him that the sale of bonds would go through as soon as 'fiscally prudent'.  The governor went on to suggest that Skowhegan vote in its own bond measure to raise the needed funds.

According to excellent reporting by Gerald Weinand in Dirigo Blue, however, Republican Gary Knight of Livermore Falls received a much different response from LePage about a historic redevelopment project in his own town.  That project also relies on the same funding mechanism - Communities for Maine's Future bonds - as the Skowhegan project.  But for some reason, the Livermore Falls project was handled quite differently.  In this article in the Livermore Falls Advertiser, Knight is quoted as saying:

I appreciate I appreciate fiscal responsibility, but that there’s got to be another way of doing this. I reminded him [Gov. LePage] that he was at the project site.

The Governor said, “I never opposed the project. It’s all about the bonding.” The bottom line is that we’re going to get approved. There’s no doubt in my mind that it’s a done deal.

According to the Advertiser story, Knight says that a bridge loan would be provided.

Despite the governor's insistence that the towns 'think outside the box', the reality is that the governor's office did all the thinking in this case.

The developer of the Livermore Falls project, Kevin Bunker, called the Governor’s office in a panic, stating that he needed the promised funding within 48 hours or risk losing the major tenant for the space. Members of the Governor’s staff met with George Gervais, commissioner of the Department of Economic and Community Development (DECD), who had called an emergency meeting to brainstorm a solution. It was decided that the Maine Rural Development Authority (MRDA) would provide $400,000 of gap financing in the form of loan, which would be guaranteed by a $400,000 bond.

Adrienne Bennett, communications director for Gov. LePage, responded to Dirigo Blue's request for clarification about the different standard between the Livermore Falls funding and the Skowhegan situation:

The Livermore Falls project also had a VERY CRITICAL deadline. If the deal didn’t close by July 18th the financing would have been lost and HealthReach as a tenant would have been lost. Kevin [Bunker] also had $150K of his personal money at risk. They (Kevin and co.) were proactive and worked with us to find a solution.

Again, all the other projects can seek other financing (MRDA, FAME, CEI, bank, local development corp., etc) – we have encouraged all of them to. The Gov’s letter/memo is financial assurance that they will get the money back (at some future point). Livermore Falls was in the bottom of the ninth with private money involved.

The Town of Skowhegan had money on the line, too.  It is on the hook for fees accrued by consultants hired for the downtown parking lot project. Rep. Jeff McCabe also said that private businesses have been impacted in his community, too.

McCabe received a second letter from the Governor this week in which he again reiterates why he has refused to issue new bonds, despite their having been approved by voters:

Lastly, your questions regarding the Livermore Falls situation are typical of those looking for government and taxpayer handouts. Perhaps you and the folks in charge of the Skowhegan project should spend more time discussing a solution and thinking outside-the-box, similar to those involved in the Livermore Falls project.

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