Towns to make counteroffer to would-be Katahdin mills buyer

Posted March 14, 2011, at 1:12 p.m.
Last modified March 15, 2011, at 10:26 a.m.

MILLINOCKET, Maine — East Millinocket and Millinocket town leaders will make a counteroffer to Meriturn Partners LLC on Tuesday that they say would give Meriturn less than the $48 million in tax breaks over 10 years that the would-be mills buyer originally requested.

The East Millinocket Board of Selectmen and Millinocket Town Council ended the nearly 1½ -hour meeting at the former Great Northern Paper Co. guesthouse on Monday night by agreeing to write and fax the plain-language offer to Meriturn partner Lee C. Hansen by Tuesday afternoon.

Mark Scally, chairman of East Millinocket’s board, called the offer “actually more of a way of making what they proposed work and making it legal,” though he did say it would involve less than a $48 million concession by the towns.

“The towns are in full agreement as to the scope and breadth of the offer. That doesn’t mean that there’s no room for tweaking and negotiating,” Scally said Monday. “We have a baseline figure for what each town would need to survive and maintain a stable tax rate. I can’t reveal what that baseline figure is. It’s a counterproposal.”

Of the $48 million, Scally said, “that figure is out now.”

Meriturn signed a letter of intent to purchase the paper mills in East Millinocket and Millinocket from Brookfield Asset Management of Toronto by April 29 provided several conditions were met, including reaching a labor agreement.

If the deal collapses, Brookfield has said it would close the East Millinocket mill on April 22, eliminating about 450 jobs. Restarting the Millinocket mill, which had closed in 2008, would create about 200 jobs.

The unions announced Thursday that they had made a tentative labor deal, but no details have been released. A union official on Monday said the unions are awaiting bids from health insurance companies and would not hold a rank-and-file union vote, which would be required before the labor deal is final, until all the bids are in.

Under Meriturn’s earlier proposition to get an estimated $48 million in tax breaks over 10 years from both towns, the East Millinocket mill’s tax bill would decline from $2.1 million to about $46,800 in annual payments to the town starting in the 2011-12 fiscal year, which begins July 1. Millinocket would see a decline from $2.6 million to about $50,000, Millinocket Town Manager Eugene Conlogue has said.

Both tax deals would continue for 10 years. Through their lifetime, Conlogue figured that the tax breaks would amount to about $26 million from Millinocket and $22 million from East Millinocket.

Councilor Michael Madore said he felt that the latest proposal “was a win-win for the two communities and Meriturn and I think for all intents and purposes we have come to what is best for all sides.”

“We want the company; we want the mills to start up,” Madore added, calling the latest proposal “fair” and “equitable.”

“It’s a gracious offer,” Scally said of the towns’ latest proposal.

Hansen is due to be in Maine Tuesday and Wednesday. Scally and Conlogue said they did not expect to meet with him.

Besides a long-term property tax deal and the union contracts, Meriturn must secure an agreement with the Maine Department of Environmental Protection on the disposal of an old mill dump in the Dolby flowage area of East Millinocket and find a partner to run a biomass boiler that would provide electricity and steam to the Millinocket mill for its papermaking processes.

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