MILLINOCKET, Maine — The corporations that bought and sold the last paper machine in Millinocket owe $1.49 million in late tax payments to the town and are seeking a $380,000 tax break, officials said this week.
Of the $1.49 million, the New Hampshire investment firm Cate Street Capital Inc. and two corporate entities it created when it bought the Katahdin Avenue paper mill in 2011 — GNP Holdings II and GNP West Inc. — owe $1.38 million in real estate and personal property taxes for the 2014-15 fiscal year, Town Manager Peggy Daigle said Wednesday.
The rest, $117,279, is owed for 2013-14, Daigle said. All the figures include interest that had accumulated as of Jan. 15. Installment payments for 2014-15 were due Sept. 22 and Jan. 20.
The nonpayment makes it “hard for us to operate as a town because we anticipate getting $1.3 million. Anything short of that will hurt us and our way to operate,” Daigle said recently. “We have to curtail spending to make up for this.”
Cate Street spokeswoman Alexandra Ritchie did not respond to several messages seeking comment. Nobody associated with the company contacted by the Bangor Daily News has responded to requests for comment for several months.
Any dire consequences for town government and schools resulting from the tax nonpayment will likely occur toward the end of the fiscal year, which is June 30, Daigle said.
“It’s a month to month process to look at what we are spending. The last two months are the critical time because that’s when a lot of bills come due,” she said.
GNP West Inc. filed tax abatement appeals for the 2014-15 fiscal year that would, if approved, reduce that corporation’s real estate and personal property tax payments from $1.38 million to $1 million. The requests were filed Feb. 4, the documents state.
As part of the appeals, GNP’s managing director of compliance, Robert Desrosiers, said that the town overvalued several pieces of the remaining No. 11 paper machine and other equipment at the company’s Katahdin Avenue industrial park. The overvalued items, Desrosiers said, include the former paper mill’s Administration and Engineering & Research buildings.
The E&R building “is unusable due to water damage and is a liability which will need to be demolished,” he wrote in a letter to Tax Assessor Michael Noble dated Feb. 9. “The Administrative building is water damaged and gutted, but the structure is sound.”
GNP hired an auctioneer, Koster Industries, to sell its equipment from the industrial site in June and to pay taxes owed to Millinocket and the Internal Revenue Service. The auction came after the IRS and town placed liens on the equipment.
Delays in payments by Koster resulted in Millinocket not recovering principal tax payments until January. Koster blamed difficulties in collecting from auction participants. The delays caused much angst among town councilors who said that the nonpayment threatened the town’s ability to pay its bills.
Cate Street also bought a paper mill in East Millinocket for $1 in 2011 and set up several corporate entities to manage those assets. GNP sought Chapter 7 bankruptcy protection for the East Millinocket mill in September.
With unsecured creditor claims pending in U.S. Bankruptcy Court in Bangor, East Millinocket officials are unsure whether they will lose or collect about $180,000 in 2014-15 real estate and personal property taxes owed on the mill property from GNP, mill bankruptcy buyer, Hackman Capital Partners of Los Angeles, or the bankruptcy trustee, East Millinocket Administrative Assistant Angela Cote said Wednesday.
GNP owes East Millinocket about $3,197 in personal property taxes for the 2013-14 fiscal year, Cote said – another debt that might be left unpaid in the bankruptcy.
Selectmen complained during a meeting on Monday Hackman had not been communicating with town office officials about their plans or progress in remarketing the East Millinocket mill.