MRRA still operating with deficit

BRUNSWICK

Despite an improving economy and increasing lease and sales revenue, Midcoast Regional Redevelopment Authority officials say the agency will end the current budget year in June with an estimated deficit of about $360,000.

Committee members are busy preparing next year’s operating budgets for MRRA, as well as its subsidiary organizations,

Brunswick Landing and Brunswick Executive Airport.

The total Fiscal Year 2014 budget is expected to increase 32 percent, or $1.6 million, to $6.6 million.

MRRA’s proposed operating budget is $1.6 million, up from the current year’s $1.2 million. The airport’s budget will jump by almost $200,000.

Likewise, electricity costs for the former base have doubled, from $950,000 to almost $1.8 million, partly due to old and inefficient transmission systems, also because many more previously vacant buildings have come on-line during the past year and are being offered for sale or lease.

“It’s still very much a learning curve for us,” MRRA Deputy Director Jeffrey Jordan told the Finance Committee this week. “We’ve taken on a slew of new buildings this year with no history of (their) maintenance costs.”

The full Board of Directors will get the finished budget proposal during its May 22 meeting.

Regarding the deficit, Jordan said the news sounds worse than it is. Various areas of the agency’s revenue ledger are showing improvement over years past, and the Property Committee continues to wade through its list of available properties and prospective tenants or buyers.

Total lease revenues for 2013 will be $1,499,845; projected revenues for 2014 are $1.2 million.

However, MRRA continues to reel from the cumulative effect of the Navy’s disinterest with regard to property maintenance, a deep economic recession during the agency’s formative years, and continuing revenue bond freezes levied almost two years ago by Gov. Paul LePage.

Staffers have also expressed frustration over communication delays when Navy officials in Washingron take furlough days as required by the automatic federal budget cuts known as the “sequester.”

Much of MRRA’s financial woes are the result of having to plow much more money than originally expected into repair and renovation of buildings that the Navy first let languish, and then left behind when the base’s eventual decommissioning became a certainty.

Additionally, many of the infrastructure systems intrinsic to the base are old and inefficient, requiring total replacement rather than retrofit or upgrading.

For example, Jordan said, heating costs for available or occupied buildings alone can run $40,000 or more per month during the dead of winter.

There are other concerns, as well:

— Grant money from the Office of Economic Adjustment — a division of the Department of Defense that helps communities weather base closures — will begin to phase out next year.

— The U.S. Navy is due a 25 percent share of all lease and sales revenue beyond the first $7 million generated. Jordan expects that threshold to be crossed by September.

— MRRA will pay about $166,000 in property taxes for Kestrel Aeroworks and Goodwill Industries as a one-time expenditure due to lease agreements with both tenants.

Immediate goals are to find large tenants for the old and new hangars currently under construction, and to arrange an updated assessment of building conditions.

jtleonard@timesrecord.com

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