The Bangor Daily News from Bangor, Maine • 3

1 i ")r INSIDE SOMERSET Vatican threatens dissident nuns pa Suspect charged in Grenier slaying Pgi7 Departing education chief hails Page 9 MAINE'S LARGEST DAILY Terrel Wmlrx 32 30 CENTS VOL 96-NO 174 BANGOR MAINE WEDNESDAY DECEMBER 19 1984 Weinberger wins the battle of the budget Reagan has tentatively approved $34 billion in domestic spending cuts for 1986 but many members of Congress have called for substantial defense cuts as well Initial reaction in Congress to the defense spending announcement was negative Sen John Chafee R-RI No 3 in the GOP Senate leadership declared the proposed savings were and added really not a credible Chafee predicted that Republican leaders would dramatically rewrite budget proposals unless he changes them himself to reduce the defense buildup further House Republican Leader Robert gan's) determination that all agencies and departments including the Department of Defense will be involved in the plan to reduce the White House spokesman Larry Speakes said The announcement intended to answer demands from Congress for Pentagon spending concessions to offset deep cuts proposed for dozens of domestic programs leaves Reagan with a dilemma over how to achieve an additional $40 billion in savings estimated to be needed over the next three years to meet his goal of a $99 billion annual deficit in 1988 Speakes repeating that Reagan is opposed to higher taxes was vague on where more spending cuts might come From the Wire Services WASHINGTON President Reagan agreed Tuesday to slow the pace of his military buildup by $281 billion over the next three years leaving his budget plan almost $40 billion shy of cutting the deficit in half by 1988 The slowdown announced by the White House exceeded what Defense Secretary Caspar Weinberger offered last week but is less than half the $58 billion in total Pentagon savings urged by budget director David Stockman The defense secretary thus emerged as the winner in a protracted budget battle within the Reagan administration decision is based on his (Rea Michel of Illinois was said by an aide to be unhappy with announcement thinks what (Weinberger) outlined falls far short of what we need to reach agreement in the House" on an overall deficit-reduction package said the aide The defense secretary said the Pentagon would protect major weapons such as the B-l bomber and MX missile and that Congress should be satisfied with the extent of the 1986 budget slashing have a very satisfactory budget result and decision announced by the president and one that will enable us to continue regaining the necessary de- terrent Weinberger said have at the same time made a substantial contribution to the deficit-reduction effort And we have budget authority reductions that are substantial but not crippling as some of the proposals would have Stockman had sought a slowdown in Pentagon spending of $8 billion in 1986 $20 billion in 1987 and $30 billion in 1988 Asked if the Pentagon considered the $87 billion reduction the bottom line in presenting a budget to Congress Weinberger replied we do and we've made that point to the The defense secretary said the overall spending authority of $3137 billion will amount to real growth in the Pen budget somewhere in the vicinity of 6 percent a Weinberger said the size of the national budget deficit was worrisome But he added: also a very worrisome thing that we had a 20 percent decline in real terms by anybody's measure in defense during the The $87 billion reduction in actual defense spending in fiscal 1986 will be accomplished by accepting the proposal for a pay freeze and cut for civilian employees through reductions in inflation projections and fuel costs through a change in planned pay See WEINBERGER on Page 2 Cash problem slows pace of developer Income spending make healthy gains Personal Income rpi Dollars In Billions October November 84 3099-8 Analysts say the economy is rebounding WASHINGTON (AP) Americans enjoyed a healthy gain in personal income last month and increased their spending even more in gains that Reagan administration and private analysts said were signs of a rebounding economy The Commerce Department said in report that personal incomes rose 07 percent in November Personal consumption spending which includes virtually everything but interest payments on debt rose at an even faster 09 percent rate last month The spending gain followed a 02 percent decline in October a 14 percent increase in September and no change in July and August In a separate report the government said housing construction dipped 07 percent in November as homes were built at an annual rate of 153 million units the slowest pace in almost two years But even there observers found cause for optimism noting that building permits a barometer of future activity were up 107 percent It was the first increase in permit authorizations since June and analysts said it showed that the sharp drop in mortgage interest rates was beginning to spur demand for houses White House spokesman Larry Speakes said the gains in income spending and housing permits pointed Adjusted Figures Source Commerce Department lems by the developer Donald Cohen Cohen expects an infusion of funds soon (NEWS Photo by Carroll Hall) THE CONSTRUCTION of this athletic complex on Central Street in Bangor came to a halt last week as a result of cash-flow prob to growth in most sectors of the economy particularly housing" Private analysts agreed Many predicted overall economic growth as measured by the gross national product would increase to around 25 percent in the final three months of the year The GNP slowed to a 19 percent rate from July through September The See INCOME on Page 2 Crisis testing Donald staying power as a developer Downtown Bangor revival is threatened By Allan Lobozzo NEWS Business Writer Donald Cohen the developer who has been the driving force behind the revival of downtown Bangor for the past two years has run into cash-flow problems that threaten to scuttle the momentum the city Has built up in reshaping its business district A long list of liens and unpaid bills has surfaced in connection with extensive renovations to existing buildings but Cohen maintains that $15 million in private financing and $800000 in bank financing that would pump new life into his projects is imminent As of the close of business Tuesday however the new money had not yet been transfered to Casco-Northern Bank have peaks and valleys in any business just coming out of a said Cohen in an interview Tuesday Cohen has said that when the loose ends are tied up on the package the subcontractors will be paid At least one contractor Peter De-Grasse of Maine Electric Co Bangor is optimistic that that will be the case paid us before and there's no reason to doubt that they will pay us this time" DeGrasse said Others including some business tenants of acknowledge the dramatic changes he has made in downtown Kevin Schmersal a pizza and sub store owner in one of the Cohen properties said that until Cohen began his development projects various downtown revitalization committees talked a lot about the need to spruce up the business district but did little if anything about it you have several large projects going all at once not surprising that there are cash-flow Schmersal says According to the Penobscot County Registry of Deeds the following companies have filed liens on Cohen properties: Franck Acoustics of Brewer has filed liens totaling more than $30000 on three properties developed by Cohen Nursery and Garden Center of Bangor filed a $6760 lien on the 277 State St location a professional office building Maine Electric has filed an $8000 lien for work done on the Adams-Pickering Block formerly clothing store on Main Street Shorette Roofing Inc of Bangor has filed a $20000 lien on the Center City Athletic Complex currently under construction on Central Street and Diamond Lumber Inc has filed two liens one for $7279 on the Adams Pickering property another on the 277 State St property for $6573 A writ of attachment was served last week by a Penobscot County deputy sheriff on Cohen and his company 1912 Associates Development Corp for an See CASH on Page 3 Analysis FBI says engineer tried to sell secrets By Allan Lobozzo NEWS Business Writer Financial brinksmanship has taken Bangor Developer Donald Cohen to the edge of a precipice and it remains to be seen if his talents as a developer and promoter will help steer him back to safety The trail of unpaid bills for real estate projects Cohen was involved with in 1984 has brought to a halt two major developments and as a result slowed much of the momentum for revitalization in the downtown Cohen arrived on the Bangor development scene unheralded in August 1982 and announced his plans to renovate three dilapidated buildings on Franklin Street Not only did he change the face of Franklin Street he also announced major projects on Main Street Central Street and State Street silencing his critics with ample proof that when Don Cohen had an idea not far behind was an army of pickup trucks scaffolds swarming with men and an orchestra of power saws As one regional business journalist said when he traveled to Bangor on assignment for his publication "All roads lead to Don However the same flamboyance that has made Cohen an exciting developer to watch also may have contributed to the financial crisis of the past month Cohen is aware of the need to build confidence in order to gain momentum in his revitalization efforts That strategy means always having fresh news announcements that the next ground breaking is just around the comer and that the building newly completed is already full of tenants The ability to sell a deal is often based on the success of the previous venture and inevitably the projects become interdependent real estate dominoes that stand or fall together Project financing is always a critical part of each deal Cohen claims that the Bangor banking community has been unsupportive of his developments Maine Savings Bank the bank that is most involved with Cohen is based in Portland Casco-Northern Bank the bank that is a critical link in his deal to finance the Center City Athletic Complex on Central Street is headquartered in Portland and Presque Isle Perhaps the local financial institutions are headed by stodgy bankers without forward vision who would rather make their money by raising service charges On the other hand it could be that the bankers who best know and understand the local community and marketplace have decided that the numbers work and that they want no part of projects One of the reasons that Maine Savings bank has gotten involved heavily with Cohen may be that his development plans coincided with the expansion into the greater Bangor market Within the last two years Maine Savings has purchased Brewer Savings Bank the Savings Loan Association of Bangor and the First Federal Savings Loan Association of Old Town Another fact that Cohen must consider even if the pieces of the current financing puzzle fall into place is his long-term reputation as a developer The slew of legal actions and unpaid bills in the past week by subcontractors could dampen their business relationship with Cohen and 1912 Associates in the future See CRISIS on Page 3 WASHINGTON (AP) The FBI arrested a Northrop engineer Tuesday after he allegedly tried to sell billion-dollar technology for concealing bombers from radar to undercover FBI men posing as Soviet officials Attorney General William French Smith said the engineer Thomas Patrick Cavanagh 40 of Downey Calif asked the agents for $25000 cash in return for the super-secret technology Smith said it has cost the United States billions of dollars to develop and produce FBI Director William Webster said the disclosure of these documents would have caused irreparable damage to US national security Cavanagh was arrested in Los Angeles and charged with attempting to transmit classified national defense information regarding an advanced military project which uses low observable technology FBI spokesman Lane Bonner said low observable technology is the material known as technology designed to prevent radar installations from detecting aircraft The United States has had a secret project to build such a plane for several years Webster said Cavanagh is charged with removing classified technical manuals blueprints drawings and a list of subcontractors without authorization from his empoyer the Advanced Systems Division of the Northrop Corp in Pico Rivera Calif Webster said Cavanagh thereafter attempted to contact and meet officials of the Soviet Union But the FBI was able to interject its own agents into the scheme posing as Soviet officials Assistant FBI Director Bill Baker said our knowledge he never actually contacted Soviet officials" Baker said that so far as the FBI knows no information reached Soviet officials Telephone calls to Advanced Systems Division were referred to corporate headquarters in Los Angeles where spokesman Tony Cantafio declined to answer any questions about Cavanagh have been notified by the FBI and we have no further Cantafio said If convicted of espionage Cavanagh could be sentenced to up to-life in prison Webster added have more people charged with espionage right now than ever before in our Building ordinance proposed in Skowhegan 6 shopping days left until Christmas Snow or rain late today and tonight Highs in mid 30s Lows in 20s Cloudy Thursday Highs in 30s Details on Page 2 Second clots postage paid at Bangor Mome 04401 Publication number (USPS 041000) Somerset Edition section will follow wording approved by the courts mobile-home ordinance has been ruled unconstitutional by the courts because it defined mobile homes as a special class of dwelling Voters will be asked to repeal the existing mobile-home ordinance during the annual town meeting in March Thomas Martin member of the Planning Board said the building ordinance would offer protection once the present mobile-home ordinance is repealed The building ordinance he said By Pat Shaw NEWS Skowhegan Bureau SKOWHEGAN The Skowhegan Planning Board acting Tuesday proposed a building ordinance to be offered during the annual town meeting in March The building ordinance being proposed is the same ordinance that Skowhegan voters rejected seven years ago Some revisions will be made to the seven-page document Added will be a section to govern mobile homes This dealt with all structures want something on the books Otherwise mobile homes will appear on back lots and side lawns" Martin said Donald Brough administrative assistant to the Skowhegan Planning Board said the building inspector would be paid by the town It would be a full-time position he added Members agreed that the $1000 exemption figure was too low The figure was increased to $5000 This means that a building permit would not be See SKOWHEGAN on PagejS.