December 28, 2018

Tax lien remains obstacle, but CLT still seen as Millinocket mill site anchor

Photo / Maureen Milliken
Photo / Maureen Milliken
Our Katahdin president Sean DeWitt, center, standing, listens as audience members ask questions during a public information meeting on plans for the former Millinocket mill site Thursday. About 80 people attended the meeting, held at the Katahdin Region Higher Education Center in East Millinocket.

MILLINOCKET — Despite failed attempts to move an IRS tax lien, Our Katahdin is still pursuing tenants for the 1,400-acre former Great Northern Paper mill site, with a cross-laminated timber producer remaining a prime target for an anchor tenant.

Nearly $9 million in grants and other capital is stacked up and ready to build an infrastructure and make other improvements to the mostly vacant site, where the mill closed in 2008 and was largely torn down in 2014.

The only obstacle is the $1.4 million tax lien on the property that nonprofit group Our Katahdin inherited when it acquired the property for $1 two years ago from by Cate Street Capital, which bought the mill site in 2011. The lien is in the name of GNP West, the holding company formed by New Hampshire-based Cate Street.

"There are quite a few tenants we're talking to, but the IRS lien is in the way," Our Katahdin president Sean DeWitt told nearly 80 area residents who attended a meeting Thursday night.

The meeting, an update from Our Katahdin on its plans not only for the site but other regional economic development initiatives, came 10 days after the group announced that LignaCLT Maine LLC announced it couldn't wait any longer for the lien to be resolved and pulled out of plans to site a 300,000-square-foot production plant on 35 acres at the site.

The firm, owned by North Carolina-based Ligna Terra, would have been the first cross-laminated timber producer in the state.

Appeal to the IRS

Efforts to resolve the lien by the three paths the IRS provides have been rejected — that the lien is not Our Katahdin's liability, that the group doesn't have the means to pay it and proof that if businesses could locate at the site, the lien could be paid.

Our Katahdin is appealing the ruling, as well as getting assessments not only of the mill site but also property at 230 Penobscot Ave., the former department store the group is renovating.

Our Katahdin officials said Thursday that the IRS has overvalued the group's assets, and some of the determinations don't make sense. For instance — 230 Penobscot Ave. was listed as being worth $110,000, what the group had raised and paid to replace the building's four roofs.

Another $400,000, a one-time payment Our Katahdin received in a business equipment tax reimbursement that had been held up in superior court for years before it was paid in 2017 was treated as annual income, DeWitt said.

Aside from the appeal, Our Katahdin is working to find other ways to resolve the lien, including possibly guarantors for loans or agreements with potential tenants to help pay it off.

While some tenants interested in locating at the site say the lien doesn't bother them, they can't get financing while it's in place because banks won't guarantee a loan for development on property that may be seized by the IRS.

The volunteer economic development group was aware of the challenges the lien presented when it acquired the property, DeWitt said.

Still, he said, "When we inherited this mill site, it didn't come with a playbook."

Capital to improve the site has grown to $8.76 million, including a $5.31 million U.S. Department of Commerce Economic Development Administration grant awarded in September.

The figure also includes a possible $1.64 million in New Markets tax credits, and other grants.

"That stack of $9 million? With that lien in place, none of that moves," DeWitt said.

'Always going to be forest-dependent'

Steve Sanders, director of mill site redevelopment, said that while the industrial park that grows on the site won't only be dependent on wood products, that is still a large part of the focus.

With access to 4 million acres of woods — the largest contiguous privately owned forest in the U.S. — "We're always going to be forest-dependent here, and we have to utilize that," Sanders said.

Despite LignaCLT withdrawing from plans that were expected to provide an eventual 100 jobs, a cross-laminated timber producer is still considered the likely anchor tenant at the site.

The International Building Code this year provided more provisions for mass timber, and more CLT companies will like grow out of that, Our Katahdin officials said Thursday.

The group has also been in discussions with two biorefineries that turn fiber into fuel, aquaculture firms and data centers.

The hydropower available at the site is a draw for almost all the industries that are interested, and Our Katahdin has applied to the state Public Utilities Commission to life the provision hydropower at the site may only be produced for a wood mill.

Successes beyond mill site

Our Katahdin officials also stressed the other successes for regional revitalization that go beyond the mill site.

The work to renovate 230 Katahdin Ave. is progressing, with a coworking space and retail planned for the 10,352-square-foot building.

Coworking entrepreneurs Liz Trice, of Peleton Labs in Portland, and Lisa Liberatore of CoVort coworking in Bangor recently contracted with Our Katahdin to help design the space.

A three-town broadband utility has been formed, the second public one in the state, to bring high-speed fiber broadband to Millinocket, East Millinocket and Medway.

Lucy Van Hook, community development director of Our Katahdin, described it as "the backbone of economic development and diversification" for the region.

The Katahdin Gazetteer is a "visioning process" drawn from meetings with towns from throughout the region, including from the Patten area, that will draft plan for the area's future.

The theme Thursday was that those plans and the whatever happens at the mill site go hand-in-hand as a way to make the area economically sustainable — attracting younger families and workers and diverse businesses to the region.

"The thing we've wanted all along was [that mill site redevelopment] be an asset to the community," DeWitt said.


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