Great Lakes Hydro, town settle tax issue

Posted May 21, 2010, at 11:45 p.m.
Last modified Jan. 29, 2011, at 11:35 a.m.

EAST MILLINOCKET, Maine — A settlement of a property tax dispute with Great Lakes Hydro America on Friday should increase town revenue, eliminate burgeoning attorney’s fees and encourage the utility to invest in its facilities, officials said.

Mark Scally, chairman of the Board of Selectmen, said the end of the abatement dispute was good news for the town and the utility.

“I was pleased with how it went. We didn’t have high hopes for mediation. Our legal firm did not have high hopes,” Scally said Friday. “They were quite surprised when we pulled it off.”

The board voted 5-0 to agree tentatively to the settlement on May 17, town Administrative Assistant Shirley Tapley said, but it was not complete until Brian Stetson, general manager of Brookfield Renewable Power, which owns Great Lakes Hydro, signed the agreement on Friday.

Stetson first requested an abatement of the company’s 2007 taxes in April 2008 due to “significant differences” between the town and state valuations of its facilities. East Millinocket, he has said, valued the two hydroelectric facilities the company operates in town at $36,475,000. That is $14,995,000 higher than the state’s $21,480,000.

Stetson has said that the town taxes the power company based on 100 percent of its buildings and equipment and 65 percent of its dam structure being in the community. He said that amounted to an average apportionment of 81.1 percent of the company’s facilities.

Meanwhile, the state assesses 35 percent of all the company’s facilities as being in Unorganized Territory. Adding the town’s 81.1 percent apportionment with the state’s 35 percent creates a total apportionment of 116.1 percent, Stetson said.

Stetson did not immediately return a telephone message left at his Millinocket office on Friday.

Under the settlement, the town valuation remains largely unchanged through the 2007-09 tax years, staying at about $36 million, but will drop to $26 million in 2010 and $25 million in 2011 and 2012, documents show.

The town and Great Lakes agreed that the apportionment for 2010-2012 will be 81 percent of the valuation going to the town and 19 percent going to the state or Unorganized Territory, the agreement states.

Great Lakes also agreed to drop its pending appeals for 2007 and 2008, with each party bearing its own legal costs, and to not pursue an appeal of the tax assessment on its properties for the 2009 tax year.

The settlement affords both sides a stable tax rate until 2012 and a cessation of the “need to raise exorbitant amounts of money for legal fees,” Scally said.

The town allocated $110,000 for legal fees for the 2009-10 fiscal year and has depleted more than 80 percent of that account, Tapley said. The fiscal year ends June 30.

The stable tax rate will help allow the utility to continue to pursue its plans to invest more than $92 million in its equipment, usually through the replacement of old machinery with newer, over several years, Scally said.

“This guarantees that we won’t be back at the table for three years,” Scally said, “and hopefully we can develop a methodology acceptable to both parties after the agreement runs its course in 2012.”

Scally said he doesn’t know whether Great Lakes was also pursuing its abatement dispute with the state.

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