ON Semiconductor asks South Portland for change in tax break deal

It’s unclear what the successor to Fairchild Semiconductor wants to alter in the agreement, which calls for annual investments in the plant at 333 Western Ave.

SOUTH PORTLAND — ON Semiconductor, formerly Fairchild, wants to amend its tax increment financing agreement with the city for its 20-acre manufacturing facility on Western Avenue.

City Manager Scott Morelli said ON’s request was the subject of a City Council executive session Monday, but he declined to discuss how the company wants to change the document. ON Managing Director Joshua Madore didn’t respond to a call for comment.

 

Morelli said ON’s request will be discussed publicly at a council meeting as early as next month.

The Phoenix-based microchip maker purchased rival Fairchild Semiconductor last September in a $2.4 billion deal that had been in the works for nearly a year. The purchase included Fairchild’s plant and offices in South Portland, which employed about 650 people at the time of the sale. ON’s statement about the acquisition didn’t say how Fairchild’s existing plants would be affected, but it did promise aggressive cost savings in the future.

Fairchild, the seventh-largest taxpayer in the city, is still listed as the property owner on municipal tax and assessment records. The company’s holdings, including land, several buildings and equipment, are valued at $39.8 million, with a yearly tax bill of $703,685 in the fiscal year ending June 30.

In place since 1994, Fairchild’s TIF agreement was renegotiated and extended in 2011, before it would have expired in 2014. The extended agreement, which runs through 2024, requires the company to invest $12 million annually, averaged every three years, in the plant at 333 Western Ave.

In return, the city shaves off a portion of the company’s property taxes each year, returning half to the company and placing the other half in a TIF fund used for sewerage improvements and economic development projects.

The amount that Fairchild invests in its properties varies from year to year, said city Finance Director Greg L’Heureux. The company invested $13.7 million in 2015, $7.5 million in 2016 and $8.8 million last year, when Fairchild received a $45,826 tax reimbursement and $45,826 of its tax payment went into the TIF fund.