Katahdin area leaders meet with LePage on mill deal

Posted March 08, 2011, at 9:01 p.m.

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AUGUSTA, Maine — Gov. Paul LePage met with leaders from the Katahdin region for more than an hour Tuesday, discussing an investment firm’s proposal to take over paper mill operations in Millinocket and East Millinocket in return for a hefty tax break.

The governor, whose professional resume includes turning around at-risk businesses and years in the pulp and paper industry, offered some “good tips” for community leaders to pursue as they negotiate with Meriturn Partners LLC, said Mark Scally, chairman of the East Millinocket Board of Selectmen.

“He told us how to fine-tune the deal,” said Scally. “We just want it to work fairly and equitably.”

Neither regional officials nor the governor’s office would provide much detail about the meeting, which dealt with a fluid and sensitive business negotiation of great importance to the Katahdin area.

Millinocket Town Manager Eugene Conlogue said he felt better after having met with the governor.

“I think the governor’s very interested in what’s happening in the Millinocket area, and he’s going to be very helpful in the long run,” said Conlogue.

Meriturn signed a letter of intent Feb. 11 to purchase the former Great Northern mills from Brookfield Asset Management of Toronto by April 29 if several conditions are met. East Millinocket and Millinocket town leaders said Meriturn seeks a $48 million tax break over 10 years from both towns and would buy the mills for $1.

Scally said Tuesday that Meriturn plans to invest in the mills, as well, but he couldn’t provide details as those discussions were held in closed business sessions.

Town officials will meet with their attorney and assessor Thursday, followed by another executive session with Meriturn officials. A Meriturn official declined to comment Tuesday.

Officials meeting with LePage on Tuesday included Scally, Conlogue, state Rep. Herbert Clark, D-Millinocket, state Sen. Douglas Thomas, R-Ripley, and others. Administration officials in the meeting included Department of Environmental Protection Commissioner Darryl Brown and John Butera, senior economic adviser, according to LePage spokesman Dan Demeritt.

“I think there’s some more negotiating to do — it’s a tough place for everybody to be in,” said Thomas. “The goal is to get those mills up and running, but they’re not there yet. I think that was the general agreement.”

Under the Meriturn proposal, the East Millinocket mill’s tax bill would decline from $2.1 million to about $46,800 starting in the 2011-12 fiscal year, which begins July 1. Millinocket would see a decline from $2.6 million to about $50,000. Both tax deals would continue for 10 years. Through their lifetime, the tax breaks would amount to about $26 million from Millinocket and $22 million from East Millinocket.

Under that scenario, both towns would have to drastically cut municipal services and likely consolidate schools because of the drop in tax revenue, or, alternatively, significantly increase property taxes for residents and other businesses.

If the deal collapses, Brookfield said it would shut down the East Millinocket plant April 22 with 450 jobs presumably lost. If a deal is reached, those jobs would be retained and roughly 200 more would be created when Meriturn reopens the paper mill in Millinocket, which closed in 2008.

Demeritt said the town officials were not approaching the state looking for multimillion-dollar help; they were very cognizant of Maine’s challenging financial situation, he said.

“It was a chance for the communities to talk to the governor about what the current proposal would mean to them in terms of their tax base,” said Demeritt.

LePage said he’d support aid through any existing state programs and policies, such as the recalculating of state aid to local schools should tax revenues drop and other relief provided for under state law.

Thomas noted the communities don’t have any money, the state doesn’t have any extra money and Meriturn has made a fairly substantial request.

“Let’s hope they’re willing to settle for a little less,” he said.

A Monday night meeting of East Millinocket officials and residents resulted in a straw poll directing leaders to go back to the table and attempt to hammer out a better deal with Meriturn.

“It’s clear the communities have some decisions to make in terms of how they want to move forward,” said Demeritt.

Demeritt said the state has begun to look at how it could help Meriturn clean up an East Millinocket dump site used by the mills, “but we’re nowhere near any kind of agreement on what the costs could be and what the state’s final role will be.”

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