Millinocket manager to seek tax liens on mill property

Posted June 26, 2013, at 5:20 p.m.
Last modified June 26, 2013, at 7:51 p.m.
Peggy Daigle
Natalie Bazinet | Aroostook Republican
Peggy Daigle

MILLINOCKET, Maine — The town could seek tax liens on properties owned by Cate Street Capital LLC and Specialty Minerals Inc. as early as Friday in response to what Town Manager Peggy Daigle called the town’s cash flow crisis, officials said Wednesday.

Daigle will seek Town Council permission on Thursday to put liens on Cate Street’s Katahdin Avenue paper mill site and on properties there owned by Specialty Minerals, she said.

The value of all site property is $62 million — 24 percent of the town’s total taxable value, Daigle said.

“We don’t want to see any equipment leave town,” Daigle said Wednesday. “It is more of a protective response than anything else.”

Attempts to reach Specialty Minerals officials were not successful. Cate Street spokesman Scott Tranchemontagne declined to comment.

The council is due to vote Thursday on the proposed $12.8 million town and school budgets. A referendum is set for July 9.

Cate Street is delinquent on a $450,000 property tax payment for the second half of the fiscal year that was due April 1, Daigle said.

Specialty Minerals has paid its $106,665 annual bill for the $4.04 million of property on the site. The Specialty Minerals liens would ensure that the town has a priority position among creditors “regardless of where the property goes,” Daigle said.

“It is an unusual step to take in this circumstance, but it is a necessary step to protect taxpayers,” Daigle said.

Specialty Minerals recycled calcium carbonate from the mill’s wastewater. The mill shut down in September 2008.

Liens on Cate Street’s properties put the company “on notice to make sure that we get paid,” Daigle said.

Cate Street hasn’t paid its $350,000 second-half property tax payment, but the town will not press a lien anytime soon.

“We are not in a cash flow problem at the moment, and we have an excellent working relationship with them,” said Clint Linscott, chairman of the Board of Selectmen. “They have high hopes to move forward with everything they have said they will do.”

Besides operating the newsprint mill in East Millinocket, Cate Street has applied for a $30 million loan to install the first of five torrefied wood manufacturing machines in Millinocket.

Daigle’s requests for liens is part of a broader, aggressive strategy to alleviate the town’s projected $3 million to $4.5 million cash shortage. A letter she is sending to town taxpayers this week outlines the problems.

Ultimately, the town has about $800,000 cash, or enough money to run the town and school services for 2½ weeks, Daigle said.

“We are taking as long a time period as we can to hold back on payments to our vendors and save money,” Daigle said. “For example, the vendor painting lines [on town roads] has agreed to accept payment in the fall.”

Councilors ordered Daigle to cut half of the $640,000 retiree health insurance annual payment from the $6.63 million budget proposed for the Millinocket School Department.

Without the cut, the town’s mill rate would increase from 26.4 mills to 31.18 mills, Daigle said, driving property taxes on a $50,000 home from $1,320 to $1,559.

“To put [the $640,000] in perspective, we could eliminate the Police Department and we would still have to come up with about $150,000,” Town Council Chairman John Davis said.

School board members have begun discussing the reduction of that, Daigle said. Davis said the school board must do more to curtail school expenses.

The town’s $11,416 monthly health-plan reimbursement paid to a dozen town retirees and $53,666 monthly payment to 93 school retirees will be left unpaid until August, Daigle said.

Town officials began to apply for a $3 million Tax Anticipation Note this week. Tax bills normally mailed in October will go out July 8 and town officials will begin seizing 24 of 39 foreclosed properties for a foreclosure sale this fall, Daigle said.

Town government and schools, Daigle said, have 10 to 12 months to redefine themselves or residents could face steep tax increases.

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