Indian Township data center plan still on, despite tax credits shutout
Photo / Maureen Milliken
Darrin Coffin, CEO of Indian Township Enterprises is looking for ways the Passamaquoddy tribe can partner with businesses on clean energy and other projects.
A planned data center in Indian Township was expected to launch this spring with New Markets Tax Credit approval, and though that approval didn't come through, the plan will still go forward, those involved said.
The center, which would use hydrogen-powered fuel cells to eliminate carbon emissions, would employ 20 to 25 people when it opens, needed jobs on tribal land and in Washington County as well, said Darrin Coffin, CEO of Indian Township Enterprises.
The venture got a $100,000 U.S. Economic Development Grant late last year to fund feasibility, and the hope was that the application for $3 million in New Markets Tax Credits would launch it, Coffin said in December.
But when the awards came out late last month, three months later than expected, Boston's MHIC NE New Markets CDE II was the only New England entity to share in the $3.5 billion approved for by the U.S. Department of Treasury. Some 214 community development entities applied, and 73 were approved, according to the Treasury report.
"We are still proceeding with the data center project," said Coffin Tuesday. "The project not getting awarded NMTC, along with the rest of the projects in Maine, was a setback." But said they are reworking the feasibility study and financial models to map out other sources of capital.
There are several options for the data center, said Brien Walton, chairman and CEO of Acadia Capital Management II, who has been working with ITE on the project and others. "This is $3 million of a $20 million project," he said.
Walton, whose firm is a certified community development entity, said those options that include collaborating with other tribes and seeking other funding sources, including social impact investors who aren't as focused on profit.
He said, too, that while Indian Township isn't in an Opportunity Zone, it's near two — Baileyville and Calais, just south of the tribal land. The Opportunity Zones, another program designed to spur investment in underdeveloped areas, allow 10% of the investment in a zone to be invested outside the zones. Opportunity Zone investments require action on investment within six months and proof of job creation.
"Some of these projects [counting on the tax credits] just aren't going to happen," he said. "A lot of people are going to be hurt." The federal tax credits are allocated through community development entities and designed to spur investment in low-income areas, create jobs and lower the borrowing burden. Investors who work with the entities can get a tax break on up to 39% of their investment over seven years.
Coffin said the data center jobs will pay as much as $50,000 a year, and will serve businesses and individuals requiring data storage and remote access. The plan also calls for marketing services to corporations like Microsoft, Google and Apple. Because of the trend toward cloud storage, there is a big demand for data centers, he said.
The jobs wouldn't just go to tribal members. "Tribal members won't be able to fill all the roles," Coffin said. "There’s healthy margins to be made and it will be healthy for Washington County.”
Indian Township is on Maine’s 3-Ring Binder, the fiber network designed to bring high-speed broadband connectivity to the far reaches of the state. "It goes right by here," said Coffin as he sat in his office recently, overlooking U.S. Route 1 and Lewey Lake. "90% of it isn't being used."
The center will likely be built as modular pods and will have room to grow. It was approved by the tribal council last year, and would be built close to Route 1, about half a mile from the Passamaquoddy public safety building.
They were hoping to begin ground work once the tax credits were approved, which usually comes in late winter or early spring. This year's approval was delayed by about three months, Walton said.
Last winter, U.S. Sen. Angus King’s office introduced the tribe to Joi Scientific Inc., a hydrogen energy company in Florida, which will partner on the hydrogen-based technology that will power the data center.
“Data centers have high energy intake, which causes them to have a high carbon footprint,” Coffin said.
Good stewards, adapting economically
The Passmaquoddy tribe is focused on its carbon footprint, and was awarded Developer of the Year at the American Carbon World Conference in 2017 for registering removal of 3.2 million metric tons of carbon dioxide from the atmosphere through measured tree growth over a 98,000-acre project area on tribal land.
The award was before Indian Township Enterprises was formed to guide the tribe's economic development, but ITE's focus, too, is on the environment, Coffin told Mainebiz. "We're good stewards of the land," he said. "But we need to adapt economically, too."
Other ITE projects include a solar array that will take advantage of state law that allows tribes to set up their own energy utility to create revenue, since no property taxes are charged on tribal land.
The tribal business arm is in the engineering phase of a solar project that will take tribal government buildings off the grid. The array, owned by a special purpose entity of ITE, will sell less costly power to the tribal government. The next phase will be to sell power to other communities.
“The Passamaquoddy tribe could be one of the biggest power providers and green energy produces in the state,” he said.
Also planned this year is a spring water bottling operation using an Indian Township aquifer.
ITE is also in talks with the town of Lincoln about a biomass plant on the former Lincoln Pulp & Paper site
Looking for partners
ITE was formed in January 2018 to take the politics out of business relationships between the tribe and nontribal businesses and governments. Coffin said working with Walton has helped form some of those relationships. But he also said that towns and businesses are welcome to approach ITE on their own.
"We want people to come in and have a sense of comfort," he said.
He said tax advantages should be attractive to partners, as well as the fact that it's a HUBZone, a Small Business Administration program that gives an advantage for contractors who want to build or create businesses in disadvantaged areas. There are also federal tax breaks for hiring members of tribes.
Walton said the Passamaquoddy tribe is taking great steps to build their economic sustainability. "They're the only tribe in Maine that has set up a separate business development arm," he said. "They're looking to move the tribe forward, but they don't want to do it in isolation, they want to bring communities in."
Coffin said that is a big focus.
"We're open for business," he said. "There are misconceptions (about doing business with tribes) and we want people to know that we're here, and there is someone here they can talk to. We want people to recognize the tribe has a lot of value, and collaborations can be helpful for everyone."
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