JAY – Selectmen revealed a tax-break proposal Monday that would let International Paper keep a majority of its investment, but also add to Jay’s tax base. Town officials also included safety provisions to protect the town if other paper machines go down.
Selectmen’s Chairman Bill Harlow announced the tentative tax-increment financing agreement is for IP to keep 60 percent of its investment in rebuilding a paper machine and upgrading its groundwood process. The town would keep 40 percent of the mill’s investment that would increase the town’s tax base.
The tax-break proposal would hinge on Jay voters’ approval in a referendum tentatively set for June. Selectmen are waiting for official documents to be drafted before taking a formal vote that would send the proposal to voters.
Androscoggin Mill Manager Mike Craft asked selectmen last week to enter a tax increment financing agreement if IP invests between $90 million to $100 million to rebuild a paper machine that produces coated paper for magazines and catalogs. The upgrade would help the mill be more competitive in the global marketplace and help assure its long-term viability in the community.
IP has agreed to a referendum and pay for its cost, Harlow said Monday.
Town Manager Ruth Marden said the agreement also calls for IP to pay yearly administrative fees to cover the town’s manpower expenses to figure the tax-increment financing. For years one through five, IP would pay $1,000; years six through 10, IP would pay $1,250; years 11 to 15, IP would pay $1,500 and years 16 through 20, IP would pay $2,000.
The company would also pay the town’s legal fees connected to preparation and review of documents and cover the town’s appraisal fees pertaining to the TIF.
“We have to hire an industrial appraiser to value the mill now and value the mill after the rebuild to figure the TIF,” Marden said.
Town officials also want language included in the agreement that if any new jobs were added due to the rebuild that they be given to qualified local people from Jay, Livermore, Livermore Falls or Wilton. But, Craft had said in his announcement last week, he didn’t foresee new jobs being added due to the upgrade.
Marden said language would be added to the agreement to protect the town if other paper machines went down during the TIF.
“We wanted some reassurance if any of the other paper machines, No.’s 1, 2 or 5 went down, it would not negatively impact the town as severely,” Marden said.
If No. 1 goes down, then IP’s part of the TIF for No. 3 would be reduced by 10 percent making it a 50-50 split. If machines No. 2 or No. 5 go down, then IP’s share of the No. 3 tax-break agreement would be reduced by 25 percent and town’s share would increase by 25 percent. That means IP would keep 35 percent of its investment in No. 3 TIF district and the town would keep 65 percent.
If everything is approved and the company invests in the No. 3 under the agreement, IP would get a tax bill based on the full amount of valuation.
For example, if IP invests $100 million in the TIF district, it would receive a tax bill of $1.58 million. That’s using the current tax rate of $15.80 per $1,000 of valuation. After a certain period of time, agreed upon by both parties, which in most TIF agreements is 15 days, IP would get back 60 percent of its investment or $948,000, using the example for factoring. The town would keep 40 percent or $632,000 for the tax base. The town would also get to keep the interest made on the full $100 million investment for the 15 days or set period.
dperry@sunjournal.com
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