East Millinocket leaders hope to set mill buyers’ tax rate

The Millinocket paper mill sits idle in March. Maine Gov. Paul LePage announced Tuesday that a buyer had come forward for the two Katahdin mills. Town leaders hope to settle a property tax deal with the potential buyer late next week after meeting with town attorneys, they said Wednesday.
Robert Bukaty | AP
The Millinocket paper mill sits idle in March. Maine Gov. Paul LePage announced Tuesday that a buyer had come forward for the two Katahdin mills. Town leaders hope to settle a property tax deal with the potential buyer late next week after meeting with town attorneys, they said Wednesday.
Posted Aug. 31, 2011, at 6:40 p.m.

EAST MILLINOCKET, Maine — Town leaders hope to settle a property tax deal with a potential buyer of the two Katahdin region paper mills late next week after meeting with town attorneys, they said Wednesday.

Board of Selectmen Chairman Mark Scally said he doesn’t expect residents would have difficulty accepting the possible tax deal with Cate Street Capital of Portsmouth, N.H., the details of which he could not yet divulge because of confidentiality agreements.

“I think these guys [Cate Street] are straight shooters and the offers on the table are fair. If we can bring this deal about, people will be happy with the outcome,” Scally said Wednesday. “The Meriturn offer was drastic, almost Machiavellian, and this one is fair.

“It does call for sacrifice,” Scally added. “I really feel that taxwise, it is not going to hurt us.”

Cate Street Capital is the second, after Meriturn Partners of San Francisco, to sign an intent-to-purchase agreement with Brookfield Asset Management of Toronto to buy the Brookfield mills in Millinocket and East Millinocket.

Meriturn walked away from the deal in late April after seeking $48 million in property tax adjustments from the two towns over 10 years.

Gov. Paul LePage’s office announced on Tuesday that Cate Street had signed an asset purchase agreement for the mills for an undisclosed price. The closure of the deal could come as early as mid-September, state officials said.

State officials are hopeful that if all goes well, as many as 500 workers eventually could be employed in East Millinocket and Millinocket. As many as 200 East Millinocket papermakers could return to work as early as mid-October, with market conditions and the Millinocket mill’s state of readiness determining when that mill might restart, they said.

All terms of the agreement were not immediately available, but Cate Street said in a statement Tuesday that it has been “studying the mills’ feasibility for months” and has about 30 days to meet several conditions for the deal to proceed.

Cate Street and state economic development officials warned that meeting the many conditions, which include tax deals and union contracts, would be challenging and call for sacrifices.

A Cate Street spokesman declined comment on Wednesday and the company’s senior vice president, Richard Cyr, did not return messages left on Tuesday and Wednesday. Union officials have declined to comment on the Cate Street offer.

Millinocket’s Town Council will meet on Sept. 13 to discuss Cate Street’s offer, among other things. The council’s Sept. 8 meeting is postponed because Town Manager Eugene Conlogue will be absent, Chairman John Davis said.

East Millinocket’s selectmen would meet in executive session with the town’s attorneys negotiating the tax deal at 9:15 a.m. Tuesday if the attorneys finish paperwork required for the meeting, town Administrative Assistant Shirley Tapley said. If they cannot finish the work, the session could be delayed.

Mindful of the 30-day deadline, town leaders want to complete their work on the tax deal as quickly as prudence permits, Scally said.

“There’s no reason we could not have a deal by the end of the week,” Scally said, referring to Friday, Sept. 9. “We understand the urgency of this and we are working as fast as we can.”

Since the Main Street mill’s closure on April 1, the Katahdin region has had an astronomical unemployment rate of almost 22 percent. The Millinocket mill closed in September 2008, idling as many as 175 workers, reportedly because of its expensive need for oil to fuel burners critical to the papermaking process.

The region consists of about 7,000 people on the southern side of Mount Katahdin in northern Penobscot County, mostly in the towns of East Millinocket, Medway, Millinocket and Woodville.

The Millinocket mill would use liquefied natural gas — not oil, as reported Tuesday — to fuel its burners until natural gas lines are installed, said Adrienne Bennett, LePage’s spokeswoman. The installation of the natural gas lines is expected to occur within two years.

The LePage administration has pledged to help Cate Street install the lines, which could significantly broaden the region’s industrial potential. Exactly how much the installation would cost, and who would pay, has not been revealed.

East Millinocket and Millinocket leaders, who have been discussing the potential tax deals with their attorneys or with Cate Street officials for about a month, have had to make severe cuts to their town governments because of revaluations of the mills.

The cuts have included layoffs and significant service reductions. In East Millinocket, a school was closed, transfer station hours cut in half, the town office closed on Thursdays and several town workers lost their jobs.

“Working with Meriturn did force us to take a good strong look at ourselves and ask, ‘If we had to, what could we do without?’ I am not saying that it was for the good, as there were good people doing a good job that lost their jobs, but it did force us to tighten our belts,” Scally said. “They were good people and when we had to let them go, we lost our dearest blood, but the people [residents] are picking up the slack.”

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