February 26, 2010

Businesses lining up as state expands incentives

ANN S

— By . KIM

click image to enlarge

Gregory Rec/Staff Photographer: Marc Keffer, owner of Stone Coast Fund Services, expanded his business into this new space on Fore Street in Portland in part due to incentives offered through the state's Pine Tree Zone program. Photographed on Thursday, december 10, 2009.

Staff Writer

The expansion of the Pine Tree Development Zone to Cumberland and York counties netted 27 applications from businesses this year.

The program originally offered tax benefits as an incentive for businesses to grow in economically distressed parts of the state. This year, because of the recession, it was expanded to cover qualifying businesses that want to start up or expand anywhere in Maine.

''It's opened the door and really incentivized these companies to push forward with their expansion plans,'' said Brian Hodges, director of tax incentive programs at the Department of Economic and Community Development.

Businesses approved for 2009 can receive tax benefits for 10 years. Starting next year, a two-tier system will be in effect with some locations eligible for 10 years of benefits and others for five.

The department received a total of 65 applications for 2009. Twenty-seven were for communities in Cumberland and York counties that had not been part of the zone.

Of the 27, about half are start-ups. Eleven are in the information technology sector, seven in manufacturing, four in financial services, four in biotechnology and one in environmental technology.

The availability of Pine Tree Zone benefits played into PlumChoice's decision to open a location in Maine.

''That's one of the reasons,'' said Ted Werth, chairman and CEO of the Billerica, Mass.-based company. He said other factors include the available work force and Scarborough's proximity to headquarters.

The company sells technical support services to Internet service providers, computer makers and retailers. It opened a facility in Scarborough in October. About 125 people will be working at the facility in support of 350 work-at-home technicians recruited from a 150-mile radius.

Despite the recession, the total number of Pine Tree applications was higher in 2009 than it was for any other year. Since the program began five years ago, the number has ranged from a low of 18 in 2004 to a high of 62 in 2007.

''I'm thrilled that businesses are responding,'' said Rep. Nancy Smith, chairwoman of the Legislature's Business, Research and Economic Development Committee. ''And whether it's businesses that are choosing to come to Maine or existing businesses looking to expand, I think it's a success to have that many applications come in.''

Making the entire state eligible for the full 10 years of benefits in 2009 was a way to prompt businesses on the fence, said Smith, a Monmouth Democrat.

The two-tier system, meanwhile, addresses concerns from eastern and northern Maine about competing with the southern part of the state, she said. Starting in 2010, communities in Cumberland and York counties will be eligible for the 10 years only if they meet unemployment standards. Otherwise, they will be eligible for five years.

For Maine Renewable Energy Consortium, margins are so narrow that every bit of help makes a difference, said Jim Damicis, business development manager. The business is developing a combined heat and power facility in South Portland, with plans to sell power to nearby Portland Shellfish and Hannaford supermarkets. The project is expected to employ eight to 12 full-time technical operators, engineers and support technicians.

''The Pine Tree zones lower our bottom lines for the next 10 years,'' Damicis said.

Stone Coast Fund Services wanted to capitalize on the growing demand for third-party hedge fund administration. The company, which now has 32 employees in Portland, is anticipating it could increase the number of funds it services by about 20 percent in each of the coming five years. That could translate into as many as five jobs a year. The company's certification by the Pine Tree Zone program has helped it move into new office space double the size of its previous in anticipation of that growth.

''We certainly had planned to grow,'' said Marc Keffer, the owner. ''But what the Pine Tree benefits did was give us some concrete ability to move forward and take advantage of some specific opportunities.''

The program is also important because of what it says about Maine, said Sara Morris, a director at the company.

''The existence of that program and the fact that it was broadened was emblematic of the business environment in the state,'' she said.

The program expansion will help in the recruitment of business to Maine, but the state may have missed some opportunity, said Peter DelGreco, vice president of operations for Maine & Company, a private nonprofit group that works with businesses considering locating or expanding here.

''It was a tough time nationally for marketing budgets,'' he said. ''(But) if there could have been a way to spread the word better, I think that would have made a difference.''

To qualify, businesses must create jobs in eight areas that also include aquaculture, composite materials technology, advanced agriculture and forestry technology and manufacturing. The jobs must offer both group health insurance and a group retirement plan and meet at least the average income for the county. Jobs that are relocated from one part of Maine to another do not count toward the requirement.

Applicants must state that they could not pursue their business plans without the benefits of the Pine Tree Zone program.

The benefits -- which include credits for corporate income and insurance premium taxes and reimbursement for income, sales and use taxes -- are not granted until companies follow through with the plans in their applications, Hodges said.

Staff Writer Ann S. Kim can be

contacted at 791-6383 or at:

akim@pressherald.com

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