SKOWHEGAN — The Skowhegan Board of Assessors on Friday postponed a decision on a request by Sappi Fine Paper North America to cut the property tax value of its paper mill on U.S. Route 201 by more than $137 million, which could cost the town $2.2 million in revenue.

Three meetings have been held this month on the issue of the fair market value of the mill for tax purposes. Maine law provides that property taxes must be based on the market value of a property.

Assessors, representatives of the mill, attorneys and Skowhegan’s assessor’s agent Bill Van Tuinen have addressed various methods of figuring out what the mill is worth. The sessions have been held behind closed doors due to laws protecting the confidentiality of some company information.

The paper mill is assessed for taxation by the town at $463,630,900. The company claims the property should be taxed based on a value of $326,343,426. The difference — the amount by which the company says the valuation needs to be cut — is $137,287,474. Sappi’s estimate of the mill’s value is based on a study by a Duff & Phelps Corp., a New York valuation firm.

Town Manager Christine Almand has estimated that Skowhegan could face refunding $2.2 million in property tax overpayments if Sappi prevails in its bid for a further cut in the mill valuation retroactive to last April.

After the three meetings this month there still are questions, Van Tuinen told the group Friday after the assessors returned to a public session.

“You’re in the driver’s seat as to where you want to go from here,” Van Tuinen told the three-member assessors’ board. “You can take a little time — you can sleep on it for another week or two — or say that you’ve heard enough and that it’s time to make a decision.”

The board opted to sleep on it.

Sappi filed a formal property tax abatement application in March with the Skowhegan Board of Assessors for its Somerset mill, asking that the town lower its tax commitment. The board has until May 4 to make a decision.

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 last September resulted in a $100 million cut in the tax valuation of the mill.

But Sappi claims that reduction was not enough to reflect actual diminished value of the mill.

William Knowles, an attorney with the law firm Verrill Dana of Portland, which has represented the company, said just value of a paper mill amounts to what a willing buyer would pay to a willing seller in a fair public sale. Considerations would include replacement costs, depreciation and obsolescence of machinery and the value of the paper products themselves in an increasingly digital world.

“But when I look around, I say, well, how many willing buyers … purchase paper mills today,” Knowles said. “One thing I know is that they’re not going out to look at what it costs to build one because nobody’s building one. What do they look at — they look at what kind of earning does the mill generate.”

It is the earnings produced in operating the mill that dictate what it is worth to an investor, he said.

“What can you make? How much can I pay depends on how much can I make,” Knowles said. “That’s what the real world does out there.”

Last year, Sappi paid $9.3 million in taxes. The previous reduction in the mill’s value, from $567 million to $463 million, approved by assessors last year cut its tax bill to $7.94 million, or about 48 percent of the town’s total property tax revenue.

Van Tuinen agreed to get some final questions to the company by the end of next week. The full board and company representatives will meet again, possibly for a final decision, at 3 p.m. April 23.

If the company disagrees on the final decision by the Board of Assessors, it can appeal to the local Board of Assessment Review and if the company is still dissatisfied, it can appeal to the state Board of Property Tax Review.

The town is also waiting to hear the outcome of emergency legislation that has been proposed to provide tax relief for Skowhegan as well as Jay and Madison, other nearby towns that have also been affected by sudden drops in value at paper mills.

Doug Harlow — 612-2367

[email protected]

Twitter: @Doug_Harlow


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