MADISON — A shuttered paper mill’s tax abatement request of over $1 million has been formally rejected by the state’s tax review board, according to a decision handed down Thursday.

Madison’s Town Manager Tim Curtis said the outcome, which was first announced in April, is welcome news for residents. Since Madison Paper Industries — which closed three years ago — filed the abatement request in 2017, the town drew over $500,000 from a line of credit and budgeted about $400,000 from taxpayers to help cover the potential costs had the decision gone the other way. It has since paid off the loan and — with voter approval at a Town Meeting in June — decided to apply the $400,000 to a handful of capital projects rather than put it toward reducing this year’s taxes.

Those projects, Curtis noted, include road repairs and the purchase of equipment for highways and the fire department.

Jonathan A. Block, the lawyer representing Madison Paper Industries, said Monday afternoon that he had not heard from the company about whether it wanted to appeal the decision. The group has 30 days to do so.

“This written response is good for us going forward because there’s a (limited) window for Madison Paper Industries to appeal,” Curtis said. “We don’t know whether they will appeal this decision, but we will know within 30 days.”

Madison Paper Industries, which supplied the New York Times with supercalendered paper used for advertising inserts, shut down operations in May 2016 and sold the mill property to Greg Shain of Somerset Acquisitions for $2 million in Dec. 2016. In April 2016, when the town made its tax assessments, representatives of Madison Paper Industries argued that the property should be valued as liquidated because of the company’s announced intention to close later in the year. Both the town and state appeals board considered that logic “unpersuasive.”

“On April 1, 2016, the mill, as then used, was producing paper and operating unrestrictedly in the black,” the state decision, handed down Aug. 1, reads. “A gas pipeline recently had been put in place, and the owners had been successful in securing the imposition of a tariff on the importation of Canadian paper that competed with the SC paper produced on the premises by MPI. The property was considered ‘state of the art’, and neither the NYT or UPM (MPI’s partner owners) was in financial difficulty.”

Madison’s Board of Assessors had already agreed to depreciate the mill assets by $8 million in 2016 due to “economic obsolescence” on top of approving a $123.8 million reduction in its valuation two years prior to that. While the town board opted to assess the mill assets in 2016 at $38,070,181, Madison Paper Industries pursued a $2,265,000 valuation.  The town’s tax rate for 2016 was $21 per $1,000 of assessed value.

“We’re very pleased that the state board listened to the town and understood our point that when Madison Paper Industries announced in March 2016 that it would be closing, it didn’t justify a liquidation value on their property,” Curtis said. 

The paper company also sought an assessment of $31,787,000 for that part of the company’s two hydroelectric dams sited in Madison that with the Anson dam provided 40% of the Madison mill’s energy. Officials had valued that property at $34,292,500 in 2016. The state board rejected the paper company’s request for a lower valuation on its hydro property because it did not deviate more than 10% from the municipality’s assessment, as is required by state law to prove substantial overvaluation.

In the meantime, the former paper mill site has changed hands again, with Belfast company GO Lab Inc. closing on the property next week, according to Curtis. The new owner plans to redevelop the site into a manufacturing hub for wood fiber insulation, bringing 100 jobs with it. Madison Paper Industries had employed 214 people when it shut down in 2016.

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