JAY – Both the town and International Paper stand to gain revenues if voters approve a 20-year tax enhancement plan in June. The company proposes to invest an estimated $112 million at the Androscoggin Mill to upgrade a coated paper machine, wood operations, a bleaching plant and transformer system.

If the partial tax increment financing program is approved, IP will be reimbursed 60 percent of the taxes it pays on the new investment and the town would keep 40 percent of the new taxes. The TIF would set up two development districts. One would cover IP’s proposed investment of nearly $109 million to rebuild the No. 3 paper machine and upgrade the wood process and peroxide plant. The other district would cover an investment of $3.5 million to upgrade the transformer system.

IP would continue to pay taxes on the original assessed value of the equipment and machinery, which combined is nearly $120 million. The tax break would only be for new investment, Town Manager Ruth Marden said.

During the life of the TIF, based on a current tax rate of $15.80 per $1,000 of valuation, the town would gain a projected $6.1 million in tax revenues and IP would retain a projected $9.2 million in tax savings.

If voters approve the new agreement June 23, it would eliminate all the old TIF districts that were formed in 1995 and never used.

The districts would serve to provide financing assistance to IP’s projects, expand and secure the town’s tax base and secure existing jobs and create the possibility of future job growth in the town, Town Manager Ruth Marden said. It would be a benefit to the town to have IP invest millions of dollars in its mill, she said, especially during these times when paper mills are closing.

“We are encouraged that a paper company is investing in this community,” she said. The TIF is also only a partial tax break for the company, she said. The town gets to keep the taxes on 40 percent of the new investment and 40 percent of its value on the tax base. If it was a $100 million investment, the town could add $40 million to the town’s valuation and IP would receive a tax reimbursement on $60 million of the value on the new equipment.

A unique clause in the TIF agreement, Marden said, requires the company to keep paper machine numbers 1, 2 and 5 producing a certain level of paper each year or IP will receive less reimbursement and the town more.

The minimum production amount of paper each year is: Number 1, 49,500 metric tons; Number 2, 55,000 metric tons; and Number 5, 25,000 metric tons. If Number 1 doesn’t produce that amount the TIF turns to 50/50. If Numbers 2 and 3 fail to produce the required minimum tonnage, the TIF is changed to 35 percent for IP and 65 percent for the town.

The paper company is also required to pay yearly administrative costs, appraisal and legal fees connected to the TIF, and the cost of the referendum vote.

Selectmen also included a clause in the agreement that IP consider for employment qualified applicants for maintenance and production positions from Jay, Livermore, Livermore Falls and Wilton. The company will also, where reasonable, use in-state vendors and supplies.

A hearing on the TIF proposal is scheduled for 6:30 p.m. Monday, May 12, at the Jay Middle School cafeteria.

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