JAY – Town Manager Ruth Marden doesn’t know yet what International Paper’s disabling of the No. 1 paper machine will mean to the town next year. She does know that IP’s share of the $112 million tax-increment financing agreement approved in 2003 will increase to the town’s benefit of a 50-50 split.
A company spokesman said Monday that IP plans to disable the No. 1 paper machine so that it never produces paper again.
Any changes to the company’s personal property valuation would be made on April 1, 2006, Marden said Tuesday.
The town put in safeguards in the tax-break agreement in 2003 when IP proposed investing $112 million in upgrades to the mill, including rebuilding paper machine No. 3.
At the time, Marden said town officials “wanted some reassurance if any of the other paper machines – Nos. 1, 2 or 5 – went down, it would not negatively impact the town as severely.”
The 2003 TIF agreement allowed IP to recoup 60 percent of its taxes, while the town would receive 40 percent. With the machine expected to be off the tax rolls next year, the agreement would have the ratio go to 50-50, reducing the with the percentage of taxes that IP may recoup to 50 percent.
Jay assessing agent, Paul Binette, said Tuesday that the most recent appraisal done in 1997 put IP’s total taxable personal property valuation at $562 million. The No. 1 paper machine was assessed at $52.9 million at the time, he said. The share is about 9.4 percent of the total personal property value.
Since that appraisal, “We have additions and deletions, upwards trends and downward depreciation, and tax increment financing districts,” Binette said.
More precise and current data will be available as soon as possible, Binette said.
IP will have four machines after the No. 1 is torn down. IP has a 12-year agreement for a supply contract on the No. 5 machine, which makes industrial papers such as popcorn bags, with the new owners of IP’s industrial paper business.
The paper company sold that portion of its business earlier this year and is in the process of selling or spinning off its coated papers business, which includes the Jay and Bucksport mills that specialize in making coated paper.
Marden said that with mill officials reviewing their options on the Jay mill, she wants the mill to be as attractive as possible.
“This somewhat diminishes the attractiveness of the business,” Marden said of IP’s decision to disable No. 1.
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