SKOWHEGAN — The Board of Selectmen voted 5-0 Wednesday night to have the town manager sign an agreement with Sappi Fine Paper Co. to cap the value for taxation at the company’s paper mill at $380 million. It was a compromise solution to save jobs and put an end to disagreements that have dragged on for months, officials said.
In exchange, Sappi agrees to withdraw its tax abatement requests against the town for 2014 and 2015. The compromise represents an agreed upon $64 million in reduced value for taxation beginning the coming fiscal year.
Under the agreement, the town will lose about $1.2 million in taxes for fiscal year 2016-17. In the years following, the town assessors will update the property valuation, but not to exceed $380 million in 2017-18 and 2018-19. No abatement will be sought by Sappi, and there will be no supplemental assessments for taxation by the town, according to the settlement agreement.
Olga Karagiannis, manager of corporate communications at Sappi Fine Paper offices in Boston, did not return an email request for comment Wednesday. Skowhegan Town Manager Christine Almand said she didn’t expect a formal comment from Sappi until all the paperwork is signed, sealed and delivered.
“The Board of Assessors approved and signed the agreement last night,” she said. “The selectmen voted to authorize me to sign the agreement tonight, and I’m waiting for signatures from Sappi electronically.”
“They’re signing their copy. We’re signing our copy,” board Chairman Donald Skillings said after the vote.
Skillings said the agreement is the best way to keep the company running and the town with its largest taxpayer still in place.
“I think it provides both parties some stability in the near future, the next few years,” he said. “I believe that it will be productive for the town of Skowhegan and for the Sappi corporation, who will be able to save some jobs and move forward.”
A tentative agreement was announced a week ago in a joint meeting of the Board of Selectmen and the Board of Assessors.
The previous reduction in the mill’s value, from $567 million to $463 million, approved by assessors in 2014, cut the company’s tax bill to $7.94 million, or about 48 percent of the town’s total property tax revenue.
Skowhegan selectmen agreed earlier this month to spend $150,000 to hire a professional appraising company to assess the value of the Sappi mill in the town’s battle over the value of the mill for taxation and the paper company’s abatement appeals.
The town had assessed the paper mill for taxation at $463,630,900. The company claimed the property should be taxed based at the lower value of $326,343,426.
The compromise comes in at $380 million as the established value for taxation.
The Skowhegan Board of Assessors denied a request last April from Sappi to cut the property tax value of its paper mill on U.S. Route 201 by more than $137 million. The same board voted 3-0 on April 23 not to grant the abatement request, based on the recommendation of the town’s contracted assessors’ assistant William Van Tuinen, which would have resulted in the loss of $2.3 million in revenue for the town.
An appeal to the town’s Board of Assessment Review also was denied. The paper company later filed an appeal of that ruling with the Maine Board of Property Tax Review. The request, filed by S.D. Warren Co., a subsidiary of Sappi and the legal owner of the property, followed months of negotiations between the town and the mill that resulted in a $100 million cut in the tax valuation of the mill in 2014.
Sappi claimed that reduction was not enough to reflect actual diminished value of the mill. Sappi paid $9.3 million in property taxes to the town in 2014.
The town recently received an announcement from Sappi of an abatement request for 2015 in the amount of $171 million, which also will be withdrawn under the agreement.
Van Tuinen previously has said that the compromise will result in an increase of property taxes in Skowhegan or a reduction in some services, but it amounts to saving jobs and keeping Sappi in place and working.
S.D. Warren Co., a subsidiary of Sappi and the legal owner of the property, operates on about 1,651 acres of land on U.S. Route 201 in Skowhegan. Sappi actually is two mills: a pulp mill, where raw timber is delivered and processed; and a paper-making mill, where three large paper machines turn out the finished coated product — about 800,000 tons a year.
There are about 800 employees at the Somerset mill in Skowhegan, including 170 salaried employees. The hourly workers are represented by four labor unions.
Sappi, with New Balance Athletic Shoe Inc., is one of the top two employers in Somerset County. The company ranks among the top 20 employers in Maine when employees from its Westbrook mill are included, according to state labor statistics.
Doug Harlow — 612-2367