JAY – Townspeople voted Monday to transfer up to $150,000 to the legal services account for the town to defend itself in a valuation dispute with former owners of a natural gas-fired power plant.

Only one resident out of about 25 attending the special town meeting opposed the transfer.

Resident Paul Gilbert moderated the meeting at the Jay Middle School cafeteria.

Androscoggin Energy LLC, former owner of the power plant located at the former International Paper Androscoggin Mill site, both now owned by Verso Paper, filed for bankruptcy Chapter 11 protection in November 2004 and idled the plant at the same time.

It then filed a lawsuit against the town in bankruptcy court claiming the town overvalued the power plant in 2004 and 2005.

At stake is about $3.3 million in taxes.

A bankruptcy judge has asked the town to get a fee appraisal of the plant done for the 2004 year, selectmen’s Chairman Bill Harlow told those gathered.

The plant was valued by the town at $114.68 million for 2004-05 and $117.17 million in 2005-06. Jay assessed the company nearly $1.9 million in taxes in fiscal year 2004-05 and $1.81 million in taxes in fiscal year 2005-06.

Androscoggin Energy claims the plant should have been valued at $10 million for each of those tax years. The company also claims other gas plants decreased in value during those years, Harlow said.

Town attorney Michael Gentile said Jay based its valuation assessment of the plant on information Androscoggin Energy submitted to the town as of April 1, 2004, and April 1, 2005.

Gentile, who said he didn’t agree with the judge to allow the company to go back two years, said the town has to go out and get a full fee appraisal done on the plant’s value in 2004.

The town will have to look at the cost depreciation method, other plant sales in that year, projected income and other factors, Gentile said.

When asked where would the money come from if the town loses the suit, Gentile said, if the town lost across the board, depending on the outcome, there would be another town meeting to transfer money from the undesignated account to the abatement account to repay the company.

There is about $5 million in the town’s undesignated account, which was formerly called surplus.

Basically $3 million equals three mills on the tax rate, he said, or $3 per $1,000 of valuation.

“The problem here is we’re not doing it upfront, we’re doing it backward, which makes it more difficult,” Gentile said of going back to appraise the plant’s value more than two years ago.

Resident Dick Sproul asked what the chances are of the town winning.

Gentile said the town has a very good case for 2004 and a reasonably good shot at 2005, but may lose some valuation that year.

Sproul asked if the town needed $150,000 for legal services.

Gentile said the modeling and income appraisal cost is expected to be $70,000 and Corporate Valuation, industrial appraisers, is $25,000.

The money is not just for legal fees, he said, but for expert witnesses as well.