JAY – If power plant officials get their way, the town of Jay will be out more than $3 million in taxes already assessed, and that concerns Town Manager Ruth Marden, she said Monday.
Androscoggin Energy LLC, which is in Chapter 11 bankruptcy protection, has filed a lawsuit in U.S. Bankruptcy Court in Bangor claiming Jay has overvalued the plant and taxed it too much. It wants the real estate valued at nothing and the personal property equipment for tax years of 2004-05 and 2005-06 reduced to $10 million each year.
The natural gas-fired cogeneration plant, which produced steam and electricity until it was idled in November 2004 when the company filed for bankruptcy protection, is valued by the town at about $114.68 million for 2004-05 and $117.17 million in 2005-06 for equipment, machinery and real estate. Jay assessed it nearly $1.9 million in taxes in 2004-05 and $1.81 million in taxes this tax year.
In bankruptcy court proceedings in February, a confirmation order required Androscoggin Energy to pay about $1 million in back property taxes owed for 2004-05 with Androscoggin Energy reserving rights as to the amount of taxes.
The order also required the plant to put the second half of the 2005-06 property taxes, about $908,140 owed to Jay, in escrow pending the outcome of the bankruptcy court decision.
The company paid half of its taxes for each of the tax years named.
If the bankruptcy court now finds in favor of Androscoggin Energy’s complaint, the town of Jay would end up refunding taxes to the company, Marden said.
“I am concerned,” Marden said, about the effect on the town and the plant’s value in the future.
“Of course, next year it will be under new ownership,” Marden said, “and it’s going to depend on if remains a viable, producing plant. There are so many things that can happen.”
The bankruptcy court affirmed a deal in February to transfer ownership of Androscoggin Energy to International Paper. The energy plant is on IP’s mill property in Jay. The court also approved $1 million to settle $90 million in claims, including a jury award of a breach of service contract suit and other claims. That deal is expected to be complete in mid-March.
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