Fairchild Semiconductor is seeking to extend a provision in its tax increment financing agreement with South Portland that would give the company annual tax breaks of about $100,000.

The breaks would apply in most of the next 13 years, if Fairchild meets certain thresholds for investments at its plant on Western Avenue.

The company’s proposal addresses a provision in the agreement that’s due to expire June 30. Fairchild and the city would continue to split the taxes on the plant’s value above the $33.5 million baseline set by the agreement.

Last year the value exceeded the baseline by about $22.8 million. That number is projected to fall to $21.6 million this year and remain close to $14 million over the last dozen years of the TIF. The drop in value reflects the planned removal of the company’s 6-inch silicon-wafer production lines as its focus shifts to 8-inch production lines.

The taxes for the value above the baseline – the taxes that Fairchild wants to split with the city – are projected to be about $339,000 this year, $231,000 next year and $222,000 through 2023.

The amounts that Fairchild would save under the proposal are a small portion of its overall tax bill. Its property taxes this year are about $1 million, down from $1.6 million last year, said Greg L’Heureux, the city’s finance director.

The competitive nature of the semiconductor market means that Fairchild must save every dollar it can that is not spent on developing wafers, Mike Lee, the company’s financial controller, told the City Council this week.

Under Fairchild’s proposal, the tax breaks would apply in years that the company invests $12 million in the plant, based on an average over three-year periods.

The city’s reimbursement from the state through the Business Tax Exemption Program would more than make up for money that Fairchild would not pay, L’Heureux said. 

Staff Writer Ann S. Kim can be contacted at 791-6383 or at:
akim@pressherald.com