‘These guys give capitalism a bad name’: Millinocket blasts GNP, gets payment of $225,000

Posted July 03, 2014, at 2:10 p.m.
Last modified July 03, 2014, at 7:09 p.m.

MILLINOCKET, Maine — Town leaders agreed to a four-step installment plan and received $225,000 of Great Northern Paper Co.’s $1.18 million in overdue personal property taxes on Thursday.

The Town Council voted 5-2 during a special meeting at 11 a.m. Thursday to accept the amended payment plan that promised the $225,000 payment by day’s end. Councilors dropped their earlier plan to pursue a lien on GNP papermaking equipment at the company’s Katahdin Avenue industrial park if full payment did not arrive by 2 p.m. Thursday.

By 6 p.m., councilors received an email from an attorney saying that the $225,000 payment had been wired to the town, and Town Manager Peggy Daigle had returned to the town office and confirmed its arrival, council Chairman Richard Angotti Jr. said.

“When I see the numbers myself, I will be tickled to death,” Angotti said Thursday. “Hopefully in a few weeks we will have all of it.”

Besides the $225,000, the plan calls for a $340,000 payment on July 8, a $360,000 payment on July 14 and the remainder of the $1.18 million on July 21, the addendum states.

Councilors blasted GNP — the town’s largest single taxpayer — and GNP auctioneer Koster Industries for failing to comply with agreements to pay the total $2.17 million tax bill, plus interest and fees, by June 17. That’s when Koster auctioned GNP property to raise funds to resolve GNP’s tax bills with the Internal Revenue Service and Millinocket’s lien filed on May 27.

The auction agreement itself promised payment by June 30, Town Councilor John Raymond said.

“I have never encountered anything like this,” Councilor Richard Theriault said during the meeting. “I am a lifelong conservative; I believe in big business. But these guys give capitalism a bad name.”

“We have played around with these guys long enough. They have kicked us to the curb too many times,” said Councilor Bryant Davis, who with Theriault cast the opposing votes.

Alexandra Ritchie, spokeswoman for GNP manager Cate Street Capital, corrected Raymond, saying the agreement did not specify payment by June 30.

“GNP is acting in accordance with the agreement, in that as soon as purchases are completed and proceeds are collected from the auction process, these funds will be paid directly to the town to satisfy the outstanding tax payments,” Ritchie said in a statement released Thursday. “There were approximately 20 different purchasers, including some international buyers, who participated in the auction, and it takes time to finalize these purchase agreements and collect the associated funds.

“As soon as these funds are collected, they are being paid directly to the town of Millinocket,” she added.

Town Manager Peggy Daigle and other councilors said they felt they had little choice but to take the offer from Koster and GNP to establish the payment schedule.

Koster officials have told Millinocket’s attorney, Rob Crawford of Portland, that they have been collecting auction proceeds from buyers, but they say the process is time consuming. The purchasers include Asian businesses arranging currency exchanges and others paying for purchased goods in installments, Crawford and Daigle have said.

Daigle and the council majority felt they would rather take a small payment now and installments later than wait for a lump sum that could take several more weeks. Held in abeyance to allow the auction, the town lien remains enforceable and protects Millinocket’s debt, Daigle said.

“We are not giving up any money,” Daigle said. “I don’t want anyone out there to think we have undercut what we have coming to us. It is unusual, yes — incredible that we have to go through this to get our money.”

As of Thursday, GNP owes Millinocket $2.17 million in gross overdue property taxes, $103,661 in interest and $10 in fees. The council voted 7-0 on Monday to amend the payment agreement to eliminate a step in the payment process required by a tax increment financing agreement that would effectively speed up the payment process.

The TIF agreement requires Millinocket to return half of the $2.17 million property tax, or $1.08 million, to GNP annually. Under the first revision to the auction agreement, the town would simply accept the $1.18 million and forego the payback.

“They are not worthy of the time we have spent on this,” Stratton said of GNP and Koster.

“My question, though, is with this $225,000. How soon will this be in our account?”

Daigle said she emailed the agreement that councilors signed Thursday to Koster by 11:50 p.m. She and councilors said they hoped to hear back by the end of the business day.

“Even though it is not what we would like to see happen, this is probably making the most out of a very difficult and uncomfortable situation,” Daigle said.

Residents Charles Pray and Anita Mueller expressed sympathy for the town’s position, saying that councilors were bargaining in good faith, but GNP and Koster apparently were not.

“I think you should reject this. I think you should live by the first agreement” and enforce the lien, Pray said. He predicted that GNP would “end up being a paper shell corporation with no assets or no values.”

“Why,” Mueller said, “are we continuing to play a game when they are not playing by any rules?

The East Millinocket mill shut down in February, with 212 of 256 workers laid off. The Millinocket mill hasn’t run since 2008. Mueller asked how much in legal fees the town is paying to pursue the tax debt. Daigle said the town’s attorney hasn’t billed the town yet, but the fees are likely to be “substantial.”

“People are concerned if we take the hard line here and don’t play softball that Millinocket will be blamed for East not reopening,” Mueller said. “The old adage is that victims create victims is true here.”

Raymond responded that the town would face big legal fees and a lengthy struggle in any event.

 

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