The state may offer a Canadian company more than $12.6 million in tax relief to purchase land and build a heavy equipment auction site in West Greenwich.

The state Senate passed a bill Tuesday that would form a “public investment agreement” between the state Economic Development Corporation and Ritchie Bros. Properties, which is looking to develop a 240-acre site at the intersection of Routes 95 and 102. The bill now goes to the House, which may break for the summer as soon as tomorrow.

Submitted by Sen. Kevin A. Breene, R-West Greenwich, the bill proposes that when Ritchie Bros. opens its facility, the state EDC take 80 percent of the sales tax generated by auctions at the site –– money that would normally go toward the state’s general revenue –– each quarter and pay it to the company until it reaches $12.6 million with interest (at a rate of 4.75 percent) or for up to 10 years.

The state EDC, however, is not in support of the bill because it does not create many new job opportunities, says spokesman Andy Cutler.

According to the company, the new site would generate 15 to 25 full-time jobs and 45 to 72 part-time jobs.

“At the time, a $12.6-million investment to create 15 to 25 full-time jobs did not seem to make sense,” and the EDC made no commitment to offering any tax relief to the company during talks last year, said Cutler. “This deal was done outside of the EDC.”

Breene argues that, in the long run, the auction house will create additional sales tax revenue.

“If you don’t have the company come to town, then you don’t have the revenue coming through,” he said. “I wouldn’t hang my neck out if I didn’t think this would be bringing the state money.”

Senate President Joseph A. Montalbano, D-North Providence, said that the Senate leadership supported the bill for those same reasons.

“Getting the development […] built here and those jobs here, justifies the sales tax reduction, which helps them finance the construction,” he said. “And then the 20 percent [in sales tax revenue in the first 10 years] that we do get is 20 percent more than we get now.”

Ritchie Bros. Auctioneers, which has its U.S. headquarters in Lincoln, Neb., claims to be the world’s largest auctioneer of industrial equipment.

Established in 1958 in British Columbia, it auctions assets and materials from construction, transportation, marine, mining, forestry, petroleum, real estate and agricultural industries. The company reports gross auction proceeds in excess of $3.18 billion, according to its Web site.

In West Greenwich, the company wants to build a permanent site that would serve clients in New England, New York and eastern Pennsylvania.

The site would consist of a covered auction space with an attached administration office, a paint and refurbishment building, and a processing building, said Breene. The company says that its auction buildings typically total 35,000 square feet, while a refurbishment building totals 30,000 square feet.

The company already has local go-ahead for the plan, receiving Town Council approval for a zone change in December 2007, according to Breene, who is also the town manager.

“What the town likes about the plan is that it fits the rural character of the town and, at the same time, helps both the town and our neighbors, Coventry, with hotel, restaurant and beverage tax” revenue, he said.

According to the company, its auction facilities generate 10,000 to 15,000 new visitors to its home states annually. And over 25 years, the new facility could generate as much as $1.18 million in state sales tax revenue each year.

Ritchie Bros. spokeswoman Kim Schulz said the company chose the site because of its “direct visibility” off a major highway as well as access to international airports, deepwater ports, and the attractions and amenities provided by the state’s major cities.

“Part of our growth strategy is to build permanent auction sites in markets where our customers have asked for our services and we’ve been interested in locating somewhere in New England for quite some time now,” she said.

Located across from the state’s only 24-hour truck stop, the site is currently the home of Raven Construction Company, which conducts limited gravel excavation there, according to Breene. State corporations information shows the construction company is run by Norman P. Marsocci, of Coventry. He is also owner of 102 Properties Ltd., in Coventry, which holds title to the land, according to Schultz.

Ritchie Bros. is also in negotiations to buy a number of smaller parcels of land in the area, including about five undeveloped acres owned by the Catholic Diocese of Providence and another 10 acres along Route 102 that is owned by a number of private investors from West Greenwich, according to Schulz and Breene.

Tuesday was not the first time that Breene had been before the Senate with a tax-break proposal for the company.

Last year, he proposed a bill that would have the state pay the company an annual amount equal to two-thirds of the sales tax revenue generated by auction sales, until $12.6 million (with 7.5 percent interest) was reached. That bill had been held for further study by the Senate Finance Committee.

And a version of the bill submitted in March called for 85 percent (rather than the current 80 percent) of the sales tax revenue to revert back to the company.

Montalbano, the Senate president, said that changes in the proposed interest rate and duration of the proposed tax agreement made an amended version of the bill this year more appealing to the Senate leadership.

And the deal is with precedent: in 1995, the state agreed to a 20-year, $72-million sales-tax package with the developers of the Providence Place mall. That deal, among other things, allowed the Providence Place Group to keep two-thirds of every sales tax dollar generated at the mall for up to $3.68 million annually the first 5 years and $3.56 million annually the next 15 years.

Montalbano said the deal with Ritchie Bros. is even more promising than that deal because “unlike a mall, it is activity that we don’t have in the state right now, that we don’t have in any New England state right now.”

kgregg@projo.com