The Katahdin region’s largest taxpayer has agreed to pay $1.25 million in overdue property taxes to East Millinocket and Millinocket by mid-August, officials said Friday.

Cate Street Capital leaders committed to paying the $900,000 in property taxes the company owes for the 2012-13 fiscal year during a meeting on Monday, Millinocket Town Manager Peggy Daigle said.

“We anticipate the property tax [Cate Street owes] being brought up to date by mid-August,” Daigle said Friday.

East Millinocket has a tentative commitment from Cate Street for the $350,000 it is owed for a half-year payment, said Clint Linscott, chairman of the Board of Selectmen. Linscott has been in talks with Cate Street for a few weeks, he said.

“It is not guaranteed. That is what they are working on, for a goal,” Linscott said. “So far, anything they have agreed to, they have held true to their word with the town of East Millinocket. They are trying to get their head above water and they have worked very hard.

“I foresee that as they get more solid, they will commit to [paying] more things,” Linscott added.


Based in Portsmouth, N.H., Cate Street owns the new Great Northern Paper Co. LLC mill in East Millinocket and an industrial park and paper mill in Millinocket.

The company awaits word on its application to the Finance Authority of Maine for a $30 million loan to launch a torrefied wood facility at its Millinocket site, said Scott Tranchemontagne, a company spokesman, who confirmed the property tax agreements with both towns.

The application is under review, said Beth Bordowitz, the authority’s CEO.

Tranchemontagne said the company’s promises “simply reaffirm our commitment to the towns. It has always been our intention to be good neighbors and honor our commitments.”

Tranchemontagne has attributed the company’s cash shortage to the seasonal rise in wood prices caused by “mud season” — the spring thaw that makes wood harvesting more costly — and poor market conditions.

Cate Street’s cash problems are part of Millinocket’s money woes. As of Friday, the town had about $625,000 cash, down from $800,000 a month ago. Daigle told the Town Council in mid-June that the town faced a cash-flow crisis because $800,000 was only enough to fund schools and government services for another few weeks.


Councilors agreed to mail property taxes early to keep the town out of bankruptcy court. That move, and town workers’ holding back temporarily on some vendor and insurance payments, has kept town government going since then, Daigle said.

Bankruptcy protection “remains as an issue we have to think about if we fail to modify our business practices,” Daigle said. “At this point it is more a point of looking at it as a preventative measure, what we have to do to avoid it.

“We are doing reasonably well considering the difficulties we have had,” she added. “It is not business as usual. We have to look at every penny that goes out and decide whether it needs to be paid now or can wait.”

A written commitment from Cate Street to pay its property taxes, which Daigle will seek, will allow the town to apply for a $1 million Tax Anticipation Note, or loan, to get the town through the crisis, she said.

“The goal will be to draw down on it as little as possible,” Daigle said.

Councilors also voted 4-2 on Thursday to pare $322,000 from the school department’s budget. Councilors Michael Madore and Richard Angotti Jr. opposed. Superintendent Kenneth Smith has said the $6.2 million budget left by the cut would harm education by forcing the elimination of five teacher positions and three programs.

Councilors, and school board member Matthew Farrington, believe the cutting of the $322,000 from $644,000 in medical benefits the school department pays retirees would not harm the education provided students. School board members said that cut cannot legally be made unilaterally.

Millinocket residents are due to participate in a school budget validation vote from 8 a.m. to 8 p.m. Tuesday, July 30, at Stearns High School.

The passage of the school budget will square the entire town’s budget, Daigle said. Under Millinocket’s form of government, the school system is a department of town government, with councilors overseeing the town’s finances and the school board deciding policies and where school money should be spent in the school system.

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