The closed Madison Paper Industries mill is seen from across the Kennebec River in Anson on May 16, 2018. Morning Sentinel file photo

MADISON — Maine’s highest court has sided with a local municipality in a years-long dispute over property valuation of a now-closed mill that has cost taxpayers $200,000.

In a decision filed Tuesday, Maine’s Supreme Judicial Court ruled that the town of Madison was correct in its valuation of the mill at the time of appraisal.

“It’s a relief more than anything else,” said Madison Town Manager Tim Curtis. “This was the last appeal for Madison Paper, there is no more recourse for them to fight the 2016 valuation.”

Madison Paper Industries notified the town in March 2016 that the mill would be closing and ceasing operations at the end of May 2016. Madison, along with municipalities statewide, base the valuation of properties on what operations are in place on April 1 each year, and on that date the mill was fully operational.

The mill was assessed at $72 million in 2016 — down from $229 million in 2013 — and the town asked its owners to pay about $1.5 million in taxes. However, Madison Paper “only wanted to pay on a value of roughly $25 million.”


The high court’s decision marks the third appeal from Madison Paper Industries, owned by UPM-Kymmene Corp. of Finland.

The first attempt to be granted an abatement of its 2016 property taxes before the Maine State Board of Property Tax Review was not successful. The mill lost again when it presented its case to the Somerset County Superior Court. In both instances, the courts sided with the town.

The mill closed in 2016, with more than 200 jobs lost in a town of about 4,800. The mill had made supercalendered paper used in magazine publishing since 1978, producing about 195,000 tons of paper annually.

Mill representatives argued that because Madison Paper notified the town of the closure before the date of property valuations — April 1 — the valuation of the mill should have been reduced to scrap value as any sale would prohibit the manufacture of paper, which would result in the mill’s liquidation.

Jonathan Block of Pierce-Atwood, who represents Madison Paper Industries, did not return a voicemail on Wednesday afternoon.

The legal battles, which began at the Maine State Board of Property Tax Review and were then appealed in Somerset County Superior Court, have cost the town’s taxpayers around $200,000, Curtis said.


“If we had lost and we had to issue an abatement, taxpayers would have had to pay over $1 million,” Curtis said.

The Maine State Board of Property Tax Review ruled in its decision handed down in August 2019, that “On April 1, 2016, the mill, as then used, was producing paper and operating unrestrictedly in the black.”

Court documents say that MPI was incorrect in claiming that there was “an error of law by deciding that the mill should be valued based on its “current use” as of April 1, 2016, rather than its “highest and best use,” which MPI asserts was its liquidation or salvage use.

In a previous interview, Curtis said that the valuation at the mill was treated as any other business in town would be.

“The valuation is based on what’s going on as of April 1 of that year,” he said. “In some extreme cases where property owners may own a house on April 1 and it burns down on April 2, they’re still going to get a tax bill on the house as it existed on April 1.

Under the Maine Constitution, all taxes on “real and personal estate” shall be assessed “equally according to the just value thereof,” which is determined on “the basis of its best and highest use.”


Curtis said that the court’s decision shows consistency with decisions made in other courts, saying that when UPM decided to close the mill and sell it, the use of the mill was restricted, which forced the valuation down.

“When UPM decided to close down Madison Papers and sell it, they restricted the sale so that the site could never be used to make paper again,” Curtis said. “They forced the valuation down by restricting its use, then said they were overtaxed.”

In a previous ruling by the Maine Superior Court, Chief Justice Robert E. Mullen cited that since the mill was a “state of the art” facility designed to produce paper, prohibiting a purchaser from using the mill for its intended purpose “essentially meant that liquidating it was the only thing that a buyer could do with the mill.”

Tuesday’s decision echoed these same thoughts, citing that “its owners were not in any financial difficulty” and they had announced the mill’s closure “without “communicating cooperating with the Town,” Likening MPI’s actions to those of a residential property owner deciding to tear down an unwanted home.”

“The Board found in essence that the mill had been closed and its equipment and machinery sold as scrap under restrictions because its owners did not want to operate it anymore and did not want anyone else to operate it,” the document says. “… the owners’ business decisions should not dictate the mill’s “highest and best use.”

In 2014, Madison Paper asked for a significant reduction in its value from $229 million to $80 million, because of the state of the paper market. That reduction in value was granted by the town and was a significant blow to the taxpayers.

“This kind of removes a heavy cloud from over the town that has been hanging out there since the mill closed,” Curtis said. “I am anticipating moving on to better days.”

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