BRUNSWICK

A local cab company recently received a $247,000 loan from Brunswick Development Corporation to buy new vehicles and equipment, hire more drivers and convert its fleet to compressed natural gas fueling systems.

The agreement was approved by the BDC’s board of directors on July 24, and cab company owner Dale King already has begun upgrading some of his fleet.

However, the loan’s terms and who provided it have led to questions of whether its award was ethical or appropriate.

Brunswick Taxi is the only cab company in town, and its owner  — King — is the husband of Joanne King, a former chairwoman of both the Town Council and BDC’s seven-member board of directors.

Other BDC directors include current Town Council chairwoman Suzan Wilson and At-Large councilor John Richardson Jr.; Town Manager Gary Brown and Finance Director John Eldridge are ex officio members.

Brunswick Development Corporation is a private, non-profit entity established in 1995.
It was established with the intention of catalyzing the town’s economic development and for 18 years has served as the town’s banker, benefactor and real estate broker.

BDC routinely lends money to local businesses. Recent recipients include Maine Street retailers Gelato Fiasco for $91,300, and Cool As A Moose for two loans totaling $350,000. The group also granted money for two feasibility studies: $20,000 for a neighborhood ice rink at Cook’s Corner, as well as $15,000 to determine whether a storage shed on Union Street should be renovated into a year-round home for the Brunswick Farmer’s Market.
Additionally, Midcoast Regional Redevelopment Authority received $250,000 to help with renovation of Building 250 into Tech Place, a Brunswick Landing-based small business incubator.

However, none have been awarded terms as favorable as the recent loan to Brunswick Taxi.
King is being charged a relatively low interest rate, 4.25 percent over 10 years. Other local banks’ commercial lending rates vary from 4.25 to 4.75 percent, most with 15-year terms, and require considerable collateral to secure the loan; King was not required to post any assets as collateral.

Although interest began to accrue as of Aug. 1, no payments are due on the loan until Sept. 1, 2016. Moreover, as long as King and the taxi company follow the terms proscribed by BDC, the loan’s entire principal — as well as more than $50,000 in interest — will be forgiven by the end of its third year.

The loan includes:

— $150,000 to buy six new vehicles.
Many of the company’s existing vehicles are old and with very high mileage, and they require extensive maintenance to remain in service. Buying new cars will reduce maintenance and increase efficiency and profits, as well as improving the business’s “image,” according to the loan’s terms.

King also agreed to paint the town’s logo on his vehicles. Bearing the town’s official artwork may give the impression that the company essentially is a municipally-sanctioned taxi service rather than a privately owned business, but nothing in the agreement dissuades the implication.

— $30,000 to buy a handicapped-accessible minivan to serve hospital or assisted-living facility customers.

— $45,000 to buy a new 14-passenger van to serve increased business from Bowdoin College, Brunswick Landing, hospital and Brunswick Transportation Center traffic.

— $10,000 for global positioning tracking and navigation units.

—  $12,000 for compressed natural gas fueling conversion kits for all new cabs.
Brunswick does not yet have a compressed natural gas fueling station; however, Topsham developer Priority Real Estate Group plans to build such a station at Cook’s Corner within several years.

The agreement also states that King will retain possession of the cab company for at least three more years, or may sell it only to his daughter. He also is beholden to maintain current staffing levels, and hire two new full-time employees within two years.

If he keeps to the agreement’s terms, the loan’s balance will be scrubbed by Aug. 1, 2016, and the loan effectively amounts to little more than a gift to a local businessman.

Multiple attempts to reach King and BDC chairwoman Larissa Darcy for comment were unsuccessful.

Personnel in the state Attorney General’s and Secretary of State’s office say the loan breaks no laws; perusing the town’s constitution and the Brunswick Development Corporation’s own by-laws confirms that no statutes have been broken.

One critic is resident and general contrarian Pembroke C. Schaeffer, who maintains the Internet blog, www.theothersideofbrunswick.com. A regular at town meetings, Schaeffer lambasted the taxi deal on his blog and posted details of the promissory note.

BDC was funded with a $1.7 million loan from the town as seed money in 1995. The upstart economic development group initially purchased land at Business Parkway and built the Brunswick Technologies building.

BDC later sold the building for $3.1 million, paid back the town’s investment, and used the rest of its profit to establish a pool from which it has continued to lend money to other town businesses for expansion.

More recently, it prominently has figured into town business during the past year because of two high-profile land deals that some residents have decried as beneficial to the town’s government but a drain on its tax payers.

The new police station stands at the corner of Stanwood and Pleasant streets on land that was  purchased for the town by BDC. In return, the town agreed to trade the current municipal office building at 28 Federal S. to the BDC for sale or reuse. Town Councilors in July approved sale of both 28 Federal and its neighbor, Parks and Recreation’s former home at 30 Federal St., to  BDC for $225,000 — far less than the buildings’ combined appraised value of more than $500,000.

On Aug. 22, BDC signed a purchase and sale agreement with Coastal Enterprises Inc., a Wiscasset-based nonprofit, to buy both buildings for $300,000. CEI intends to raze both aging buildings and in their place build its new state headquarters.