MADISON — It’s a waiting game for officials in Madison and Anson as abatement requests from 2016 on the closed Madison Paper Industries mill and its associated hydroelectric assets in both towns remain in limbo awaiting decisions that could cost the towns more than $1 million in rebates.
“The matter is still between the towns’ attorneys and the mill’s attorneys. We haven’t heard anything,” Madison Town Manager Tim Curtis said Friday.
Both sides are still waiting for a hearing date for the case to be set before the state Board of Property Tax Review.
The former owners, UPM-Kymmene Inc. and Northern SC Paper Corp., a subsidiary of The New York Times Co., are challenging the assessment of the property as of April 1, 2016, according to Curtis.
The town of Madison set the value of the property at $73 million — about $37 million for the hydropower assets and about $35 million for the papermaking plant. Curtis said the assessments were made when the paper mill was in full operation, so the values are correct from the town’s point of view.
The worst case scenario would be for the town of Madison to owe the company $931,316 plus interest, Curtis said.
“They came back to us in a letter to their lawyer and said, ‘We don’t think it’s worth anyway near that. We think the hydro asset in Madison is worth only $20 million and the papermaking facilities are only worth $5 million,'” Curtis said. “So we had a $48 million gap between what we assessed the value at and what they wanted to be at.”
In the wake of the closure of Madison Paper Industries, the company last year asked town officials in both Anson and Madison for a reduction in the amount of property taxes that were paid last year. The mill ceased production in May 2016, laying off 215 people in the state’s fifth paper mill closure in two years.
The mill owners announced the sale of the mill site in December, saying the mill property was sold to a “joint venture” of New Mill Capital Holdings, of New York; Perry Videx, of Hainesport, New Jersey; and Infinity Asset Solutions, of Toronto.
In March, local officials said they were actively courting bottled water company Poland Spring in a bid to bring economic life back to the shuttered Madison paper mill property, an early sign that there could be new prospects for jobs and investment there.
Curtis and Gregory Schain at New Mill Capital Holdings in New York City said any agreement for the sale of the mill property is also on hold, pending the sale of the hydroelectric facilities. The mill’s hydropower assets are being marketed separate from the mill transaction. There are bidders for the hydro assets, officials say.
Poland Spring is seeking a new site in western Maine for a $50 million water bottling plant and access to at least two additional springs that would boost the company’s production capacity by nearly 45 percent, the Portland Press Herald reported last month. Poland Spring has not actually bid on the hydro assets, but Madison area officials are making the pitch.
The local Board of Assessors, which in Madison also is the Board of Selectmen, denied the company’s abatement request last year. Madison does not have a town Board of Assessment Review as does neighboring Skowhegan, which went through an abatement with Sappi North America last year.
Curtis said that because the property is an industrial complex valued at more than $1 million, the appeal automatically goes to the state board for review.
“This whole battle is over what was Madison Paper worth on April 1, 2016,” Curtis said. “What the town of Madison said was that it was an operating papermaking facility on that date, so if you took a snapshot of that date, that’s what it was worth as an operating papermaking facility. The town’s stance is that what happened after that doesn’t really matter.”
The company cannot file any requests for abatements on the value of the properties as they stood empty on April 1, 2017, which is another matter and will be visited after tax bills go out sometime in August. For now, municipal spending is being scrutinized by the Board of Selectmen and department heads as the annual Town Meeting approaches in June.
“Because we are preparing for our budget season, this is kind of a looming cloud,” Curtis said. “If the town of Madison has to write a check back to Madison Paper for several hundred thousand dollars, that’s going to be very, very difficult for us.”
Last year the company paid $1.5 million in taxes for the personal property, the papermaking facilities and the hydro assets based on the assessment of $73 million. If the state board rules in favor of the company, the town will lose close to $1 million, Curtis said. Their tax burden would drop from $1.5 million to $500,000.
The abatement request comes even as the Madison board of assessors last year approved an $8 million reduction in value for the mill on top of a $150 million reduction in value in 2014.
The picture is much the same in Anson, where the company was assessed at $16.4 million in 2015 and paid $328,349 in taxes, according to Tammy Murray, the town administrator. The new assessment made last year is $20 million, Murray said Friday, and that’s the figure the company is appealing. The valuation increase in Anson comes from a reassessment of the hydropower assets.
“Everything is pending right now. We haven’t heard anything from the court or a response back from them on anything yet,” she said.
Attorney Jonathan Block, at Pierce Atwood in Portland, the lawyer representing the company, did not immediately return a call for comment on the matter Friday.
Doug Harlow — 612-2367