AUGUSTA — Augusta became the first municipality to approve a tax break for a proposed natural gas pipeline that would run from Richmond through Augusta and nine other communities to Madison.

Local and company officials said the Kennebec Valley Gas Company project could boost economic development in the region by bringing businesses, organizations and residents a cheaper, domestically produced fuel alternative.

With Thursday’s unanimous City Council vote, Augusta is the first of the 11 municipalities the pipeline would pass through to approve a tax increment financing deal, or TIF, to help it become reality.

“We’re very pleased Augusta is the first town to adopt the TIF and make possible the development of a natural gas pipeline in the Kennebec Valley region,” said Richard Silkman, a principal owner of Kennebec Valley Gas, after the vote.

Councilors approved a deal, similar to that being sought in all the other communities, that would return 80 percent of property taxes on the pipeline in Augusta for the first 10 years of the 15-year TIF agreement. In years 11 through 15, 60 percent would be returned. After the initial 15-year TIF period, company officials said the firm should have enough clients on the line, and enough debt paid off, to pay its full property tax bill for the pipeline.

Over the 15-year agreement, the TIF would return about $1.2 million in Augusta property taxes back to the pipeline developer.

Company officials, and Councilor Michael Byron, a former commercial lender and a member of a city subcommittee that reviews TIF proposals, said the project would be cost-prohibitive without the TIF deals.

Councilors asked about the safety of the pipeline and referenced news reports about a Pacific Gas and Electric Co. line that burst in San Bruno, Calif., on Sept. 9, 2010, killing eight people and destroying 38 homes.

Silkman said the California pipeline was an older line, and said most gas line fires are caused by workers digging nearby and striking a pipeline as they work.

“It’s a very well-regulated industry,” he said. “The problems you hear about are usually related to somebody doing something they shouldn’t have done. And that can happen with any kind of fuel. Natural gas has an excellent track record.”

Company officials said natural gas prices, according to current forecasts, could save users 30 percent to 40 percent in fuel costs for heating and industrial uses, such as by paper mills.

City Development Director Michael Duguay said the main line route would come through Augusta roughly from Hallowell along Whitten Road, to Leighton Road near the western border of the city, Bog Road in north Augusta and into Sidney.

A distribution line to which local users could connect would come off the main line to serve parts of the city.

Keith Edwards — 621-5647
kedwards@centralmaine.com