OLD TOWN, Maine — Old Town Fuel & Fiber, which closed its pulp mill in mid-August and laid off about 180 workers, owes the city more than $1 million in back taxes, and this year’s bill for another $1 million is in the mail, City Manager Bill Mayo said Wednesday.
“Last year’s real estate and personal property taxes have not been paid,” Mayo said. “The past due real estate is $514,640 and the personal property is $546,658.”
This year’s taxes, which amount to $553,333 in personal property and $511,580 in real estate, are due in installments on Sept. 17, 2014, and March 18, 2015.
“The bills have already been mailed,” the city manager said.
“We have filed liens on the personal property for last year and this year,” Mayo said, noting the city will file real estate liens once those tax bills are 18 months past due.
The company blamed foreign competition and increasing wood and energy costs for the Aug. 14 shutdown. The mill produced wood pulp for paper manufacturers.
Old Town municipal leaders are still hopeful that the mill’s owner, New York-based private equity firm Patriarch Partners, can rearrange operations or sell the plant in order to get displaced workers back on the job.
East Millinocket is going through a similar situation with the closing of Great Northern Paper Co.’s mill in January. The paper mill, which makes newsprint, let go 212 of its 256 workers on Feb. 6. Great Northern Paper owes $658,657 to East Millinocket in personal property and real estate taxes. The company made a $28,036 interest payment in August.
City leaders have met with Old Town Fuel & Fiber officials, the city manager said, adding municipal decision makers have not yet started to talk about possible budget cuts necessitated by the reduced mill revenue.
“We haven’t really gone down that road yet,” Mayo said. “We’re probably a month out before we have to deal with that. If the mill opens back up, we may not have to deal with that.”
Lynn Tilton, owner of Patriarch Partners, purchased the former Georgia-Pacific mill for $19 million in a bankruptcy auction in 2008 and changed the name to Old Town Fuel & Fiber. Her firm concentrates on turning around failed manufacturing operations, and she was given accolades for her work in Old Town.
A message left Wednesday for Richard White, director of communications for Patriarch Partners, regarding the mill’s past due bills was not immediately returned.
Six companies also have filed liens or notice of claims in court against the closed Old Town mill, according to records posted with the Penobscot County Registry of Deeds. They include:
— CCB Inc. of Old Town, a commercial construction company: two notices of claim for $90,795 and $98,683.
— Portage Wood Products in Portage Lake: notice of claim for $658,772.
— Pottle’s Transportation Inc.: notice of claim for $2,870.
— PTI Warehouse of Bangor: notice of claim for $37,429.
— Sevee & Maher Engineers Inc., Cumberland: notice of claim for $77,471.
— Sullivan and Merritt Constructors, Hermon: two liens for $157,610 and $130,961.
The city of Old Town is in a holding pattern, waiting to see if the furloughed mill will pay the city what is owed, the town manager said. Without the revenue, city decision makers would probably do a combination of things to keep things running, including tapping into undesignated funds combined with making cuts to services, Mayo said.
“It puts Old Town in a difficult position,” the city manager said. “At this point, we’re just waiting to see what happens. Hopefully we’ll know something by the end of October. That is a large loss of tax revenue.”