Millinocket leaders reach deal with GNP on $2.24 million back tax payment

Millinocket Town Councilor Jimmy Busque reads documents during a council meeting Monday.
Nick Sambides Jr. | BDN
Millinocket Town Councilor Jimmy Busque reads documents during a council meeting Monday. Buy Photo
Posted June 16, 2014, at 8:08 p.m.
Last modified June 16, 2014, at 8:49 p.m.

MILLINOCKET, Maine — Town leaders and Millinocket’s largest taxpayer agreed Monday to a deal designed to settle a $2.24 million property tax dispute and help clear the way for a $140 million pellet plant.

The Town Council voted 5-0 at a special meeting to accept an agreement with Great Northern Paper Co. LLC that secures a third position — behind an auction company and the Internal Revenue Service — in the distribution of proceeds from the company’s sale of the No. 11 paper machine and other equipment Thursday.

The auction company, Koster Industries, will provide the town with an agreement confirming the revenue-sharing plan, the three-page town agreement with GNP states.

The resolution would allow the town to close its books on the 2013-14 fiscal year, which ends June 30. If auction proceeds fail to generate enough money to cover GNP’s debt with the town, the town will revert to its $2.24 million property tax lien filed May 21, council Chairman Richard Angotti Jr. said.

Millinocket would also receive about $1 million in property taxes from GNP for the 2014-15 fiscal year in payments made in September and January, the agreement states.

The agreement does not address the status of East Millinocket or GNP’s overdue $657,900 in property taxes there.

Town leaders and GNP President Ned Dwyer, the only GNP official at the 90-minute meeting, expressed satisfaction with the deal, which Town Manager Peggy Daigle explained to the dozen residents in attendance in the courtroom where the council meets.

“All I hope is that we can start out another beginning,” Councilor John Raymond said Monday.

“We have been right there, and I think this agreement shows that we are a good corporate neighbor,” Councilor Michael Madore said. “We worked very hard at this and I hope this allows us to go forward.”

“I know it is a difficult situation. Getting through 10 drafts of a situation to get an agreement is not an easy task,” Dwyer said. “Thank you for getting us to [an agreement].”

Great Northern and Thermogen Industries LLC are two companies formed by Cate Street Capital, their corporate manager, after Cate Street purchased the East Millinocket and Millinocket mills for $1 in 2011. Great Northern owns the mills; Thermogen has proposed to build a $140 million pellet mill at the site of the Millinocket paper mill.

The Millinocket mill was closed in 2008 when it was owned by Brookfield Asset Management, putting more than 200 employees out of work. Cate Street said at the time it purchased the mill it hoped to restart it when market conditions permitted. The mill never reopened.

In a statement released late Monday afternoon, Cate Street spokeswoman Alexandra Ritchie applauded the tax-dispute resolution but offered no timeline on the East Millinocket mill’s restart or whether the auction would allow the company to pay East Millinocket the $657,900 in overdue property taxes for 2013-14.

Dwyer declined to comment after the Millinocket meeting, and Ritchie did not immediately respond a call seeking comment.

The East Millinocket mill stopped production in January, and 212 of 256 of its workers were laid off on Feb. 6, devastating the Katahdin region economy. Thermogen, which applied for an air-quality permit from the state last week, hopes to begin pellet mill construction as early as September or October and start that mill in late 2015.

“Cate Street and the town of Millinocket share the same objective of creating and maintaining economic development in the region. Collectively, we are pleased to have outlined a path to resolve GNP West’s outstanding property taxes to the town in the very near term and to be able to move forward in a cooperative manner for the benefit of the local community,” Ritchie said in a prepared statement. “We are pleased with the progress we made and look forward to continuing to work together towards future economic growth in the region.”

Last week, East Millinocket leaders voted unanimously to issue a statement of support for the local paper mill’s owner in a move some said Monday signaled they would not support filing a lien anytime soon seeking more than $650,000 in delinquent property taxes.

The Board of Selectmen voted 5-0 after an executive session during a special meeting Thursday stating it “fully supports Cate Street Capital and Great Northern Paper Co. LLC at this time,” according to Selectman Clint Linscott, who made the motion.

“I think it says that we are not ready to put a lien on them at the moment,” Linscott said Monday. “They still have a functional mill. My goal is to get the jobs back and to get vendors paid.”

Board Chairman Gary MacLeod said the statement stood on its own but added he didn’t want to take the possibility of the town filing a lien off the table entirely.

Great Northern Paper’s managers have said they hope to restart the mill later this year.

“We continue to monitor the situation very closely,” MacLeod said Monday.

East Millinocket Selectman Mark Marston said he still had hope the mill would restart. He also expressed doubt that a lien would, by itself, guarantee the town would receive the taxes it is owed.

“This is a company that is trying to get investors and get on their feet financially,” Marston said Monday. “They took quite a while to find a buyer for this [when the mill closed in 2011], and I want to support them to the last gun.”

“If these guys [GNP] are close to starting up [the mill], I can’t see that it would help anything,” Marston added, referring to a lien.

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