Selectmen propose $25 million tax abatement for Twin Rivers

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Madawaska's financial future remains uncertain
11 July 2012

MADAWASKA – During a special Madawaska Board of Selectmen meeting on Monday, July 9, board members approved the decision to offer Twin Rivers a $25 million abatement proposal on their 2011 taxes, said Don Chasse, Chair of the Board of Selectmen.

This is significantly less than the $40 million abatement the mill requested.

In the meeting, at which 10 to 15 Madawaska residents were present, the town’s agent assessor William Van Tuinen spoke to members of the public about the upcoming decision. The board moved to a private executive session to make the decision about the abatement proposal.

Chasse said the board moved the decision to executive session, because the discussion involved sensitive financial information the mill wanted to keep protected. Town Manager Christine Therrien said the federal government protects the mill’s right to keep its fiscal information private.

The town’s representatives had until July 15 to make their decision, and furthermore, have 10 days in which to render that decision to mill authorities.

Chasse said he expects the town to notify the mill within the next week by certified mail.

If the mill accepts the $25 million abatement proposal, the town will be facing an approximately $411,000 reduction in revenue.  

Therrien said the town can file with the state for allocation of Sudden and Severe Impact funds, which would likely provide relief totaling approximately $170,000.

“It’s not a replacement of funds,” said Therrien. “It a portion of what you lose.”

This leaves the town with approximately $245,000 that they must pay from the town budget’s fund balance if the mill accepts the town’s abatement proposal.

Therrien described the “fund balance” by saying, “On a good day, if everybody paid us what they owe, and we paid all of our bills, it would be what would remain.” She cautioned that it is not what the town has available in its checking account, and payment out of this fund  will affect the money available to the town  for cash flow purpose and for offsetting taxes in the future.

Chasse and Therrien both said that it is too early to predict what the town’s upcoming financial restrictions will look like.

Referring to the fact that the abatement proposal applies solely to 2011 taxes, Therrien said, “The mill can request any amount of reduction for this year and can request it again in the years coming forward.”

“It’s a moving target,” she added. “I don’t believe that $25 million will be the end of the story.”

She explained that the $25 million abatement is what the board members felt comfortable agreeing to on the limited information they had and within the timeframe they needed to render a decision. Twin Rivers can still negotiate a larger reduction by appealing to the state.

This applies to the current decision regarding 2011 taxes and to any future abatement requests from Twin Rivers.

“It’s a very, very difficult situation,” she said.

The mill has 60 days in which they can appeal the decision.

Therrien explained that the town based the decision on what they can defend in front of the State’s Review Board. The town also based it on the limited information about the mill which Tuinen acquired, which includes market values, income, and a cost analysis for the business, and is presented to board members primarily in terms of projections.

“He has to wade through this and present federally protected information to the board,” she said. “That’s why it takes so long.”

The board of selectmen put developing the town’s 2012-2013 budget on hold until the issue reaches a resolution.

Chasse said the first step, after the mill responds to the town’s offer and the participants have settled the negotiations around this issue, is for officials to create a budget for the town.

Fiddlehead Focus first received notice of Monday’s meeting after the fact from a concerned Madawaska citizen.