In Steve Levesque’s view, Maine has plenty of underused aviation resources: runways, hangar space, industrial power supplies.

What it doesn’t have is money – the kind of money that would help attract the likes of Boeing or Airbus to the state.

Levesque, executive director of the Midcoast Regional Redevelopment Authority, has been talking to both of the aviation giants, touting the assets of Brunswick Landing, the former Brunswick Naval Air Station. He’d love to get one of them to commit to an operation in Brunswick, joining the five other aviation companies already there.

“Aviation businesses are one area where we can gain market share,” said Levesque.

For that reason, Levesque trekked to Augusta on Jan. 12 to testify in support of a bill that would establish a $50 million capital fund. The bill, submitted by Sen. Stanley Gerzofsky, D-Brunswick, was passed by both houses of the Legislature and is now law. If successful, the fund would give Maine extra financial firepower and make it more competitive with states such as Michigan, New Mexico, Texas and California, which have similar capital programs.

“We don’t have enough capital to attract business to Maine,” said Gerzofsky. “It’s a big hole and this is one way to fill it.”

If implemented, the capital fund would be an outlier in Maine economic development circles. First, it would be available only to companies that create or retain 250 jobs that pay 125 percent of the state’s median wage, or roughly $20 per hour. Second, it would operate like a mutual fund – investors would put money into the fund, where it would be bundled with other investments and then loaned out to eligible companies.

And lastly, the fund would not be backed with taxpayer money. That requirement is a nod to the backlash generated by investments made through the state’s New Markets tax credit program, the subject of a 2015 Portland Press Herald investigation. The most egregious example of a failed New Markets investment happened in 2014, when $40 million was committed to the Great Northern Paper company, triggering $16 million in taxpayer credits. None of the money was used to make improvements at the mill, which ultimately closed, putting more than 200 people out of work. But Maine taxpayers will continue to pay off $16 million in tax credits until 2019.

“There will be no taxpayer obligation with this fund,” said Gerzofsky, noting that the state’s experience with New Markets is what motivated him to create a different kind of capital fund. “No taxpayers will be on the hook for this.”

Most economic development funds are financed through bonds backed by the “full faith and credit” of the state. But this fund would be capitalized by big businesses that have their own bonding authority, such as Boeing, which has an A bond rating from Morningstar. Or institutions that oversee large portfolios – such as a pension fund, or college endowment – could elect to invest in the capital fund and support economic development in Maine.

As an example, Gerzosky mentioned Bowdoin College in Brunswick, which in 2014 had an endowment fund of $1.2 billion.

“This would be a way for them to invest in Maine jobs and businesses, rather than Wall Street,” he said.


Although the bill became law without the governor’s signature, there is a significant amount of work ahead to get it operational. First, rules must be written to administer the fund, which would fall to the Finance Authority of Maine. Then a prospectus would have to be developed and investors wooed.

Gerzofsky said it would likely be marketed through state agencies such as FAME, the Maine Technology Institute, Maine & Company, Levesque’s redevelopment authority and the state Department of Economic and Community Development.

Bruce Wagner, the CEO of FAME, agrees that the state needs more capacity to do larger loans. FAME has a $5 million guarantee cap on commercial bank loans, and the largest loan on its books now is a $7.5 million loan to St. Croix Tissue company to help finance two new machines installed at the paper company in Baileyville.

“We do get requests for higher amounts – we’ve had them in the $25 million range,” said Wagner, who would like to see the new fund established.

FAME has been pursuing other means of attracting investment to Maine. It is trying to launch an EB-5 visa program, an initiative used successfully throughout the U.S. that has attracted $2 billion from foreign investors. The program offers expedited citizenship processing to a foreign national in exchange for a $500,000 or more investment in an economic development project. Vermont’s ski industry has used its EB-5 visa program to attract more than $300 million.

Chris Pinkham, executive director of the Maine Bankers Association, said the capital fund is a welcome addition to the state’s financing options. Maine-based banks are limited by recent federal rules that cap lending at no more than 20 percent of a bank’s capital. So banks like Bangor Savings Bank, which has $350 million in capital, or Camden National, which has $390 million, are limited to $70 million and $78 million lending limits, respectively.

That makes it unlikely that they could step in and finance a single project in the tens of millions of dollars.

Finding a way to fill that gap is instrumental in getting big players to come to or stay in Maine, said Gerzofsky. He said he’s had conversations with two companies – one from outside Maine and one that is here already and wants to expand – that fit the requirements to use the new fund. He declined to name the companies.

The advantage to the businesses would be lower interest rates and a higher risk threshold than what is generally offered by a commercial lender, Gerzofsky said.

“It really is impossible to put together a $50 (million) or $70 million package here in Maine,” he said.

Gerzofsky cited an example from about five years ago when Kestrel Aviation, a company involved in experimental composite aircraft, tried to line up financing to open a design and manufacturing facility in Maine. Although the state arranged roughly $20 million in tax credits, Wisconsin trumped Maine’s package by providing nearly $60 million in tax credit financing and another $10 million in state and local loans.

“That opened my eyes to our financial situation,” Gerzofsky said.

In the past two years, he’s been looking for other financing options to support Maine companies. But after the New Markets controversy, he feels strongly that tax credit programs aren’t the way to go.

“My main concern is not to put taxpayer money at risk. That’s rule No. 1,” he said.

Other lawmakers concurred. The bill went through three work sessions to ensure there would no taxpayer liability in the fund before it went to floor votes. In the Senate, only Eric Brakey from Auburn voted against it because he wanted to amend the bill’s language so it could never be modified by future legislatures to allow for state bonding.


Chris Kilgour, CEO of C&L Aerospace, an aviation company in Bangor, said he hadn’t heard about this new fund, but it wouldn’t hurt to have more access to capital. He noted, though, that money is only part of what makes a company decide to locate or expand an operation. Kilgour came to Maine from Australia in 2010, buying out Telford Aviation in Bangor, and has grown his company to employ 150. He just launched a new division that focuses on refurbishing corporate jets.

“It’s a piece of the puzzle,” he said of the financing. “Providing the workforce is the other side of it.”

Kilgour said states like Alabama and North Carolina have done a good job attracting companies because they tie workforce training to financial incentives.

“You’ve just got to be insistent on training,” he said. “We steadily employ a lot of people here, but if we landed a contract that required 50 aircraft technicians, it would be difficult.”

Business Editor Carol Coultas can be contacted at 791-6460 or at:

[email protected]