JAY — Selectpersons unanimously voted Tuesday to reduce the valuation of Verso Paper Corp.’s Androscoggin Mill and its property from $815 million to $591.9 million for 2013 and granted the company an $829,258 tax abatement for that year.

The action followed nearly an hourlong executive session with the town’s attorney, Michael “Mike” Sheehan, of Preti Flaherty law firm in Portland.

Verso Androscoggin LLC requested a tax abatement of $469 million in valuation for the April 1, 2013, assessment in February 2014. The company believes the property should be valued at $460 million, according to its abatement application.

“We do not understand how the town arrived at the numbers in the document they gave us tonight and why our tax payment did not significantly go down in proportion to the town numbers,” William “Bill” Cohen, Verso’s director of Communications and Public Affairs, said in an email after the meeting. “Since we are seeing it for the first time, we need to study the document and have additional conversations with the town to gain a better understanding of Jay’s position.” 

The town intends to continue the discussion with the mill for a long-term resolution on the mill’s valuation, Town Manager Shiloh LaFreniere said after the meeting.

The $829,258 will come from the town’s undesignated fund balance that was estimated at about $6 million in August. The town’s new valuation of the mill had been factored into the 2014-15 tax commitment.

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Verso has 60 days to appeal the decision to the town’s Board of Assessment Review, Sheehan said after the meeting. If mill officials do appeal and do not like the decision from that board, they can appeal to the state Board of Property Tax Review and from there they could take it to Superior Court and then to the state Law Court, he said.

The town had a detailed review and valuation of the total mill done following Verso’s abatement request.

The town’s assessed value of the mill and property, according to Verso’s abatement request for 2013-14, was $929 million, including approximately $140.4 million in real estate and $788.5 million in personal property.

According to the town’s written decision Tuesday, the $929 million included other property comprising part of the Androscoggin Mill but not subject to property tax assessment by the town. It also appears that the abatement request includes tax bills for property not constituting part of the mill, it states.

“In brief, the abatement request claims that the tax assessments made with respect to the subject property were manifestly wrong because the subject property was substantially overvalued, was not valued using correct application of proper valuation techniques, was valued without consideration of all relevant factors as required (by state statute) and resulted in assessments not in conformity with law,” according to the decision.

The town’s appraisal concluded that the fair market value of the total mill property as of the assessment date was $717.28 million.

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“We are not persuaded to make any adjustments to the value concluded by the town appraisal by reason of the mill summary appraisal,” according to the decision signed by Board of Selectpersons Chairman Steve McCourt.

The mill summary appraisal included a substantial obsolescence charge in its application for the cost method based on a capitalization of excess operating costs, the decision states.

“We understand that Corporate Valuations was unable to obtain sufficient excess operating costs,” the decision states. The town hired Corporate Valuations Inc. of Oregon to do the review and valuation of the mill.

“We understand that Corporate Valuations was unable to obtain sufficient information to confirm any of the underlying figures. In addition, and more importantly, we note that (Verso Paper Corp.) has stated in at least two filings with the Securities and Exchange Commission that: It is a low-cost producer of freesheet paper; it believes its coated paper mills are among the most efficient and lowest-cost paper mills; and its facilities are well-located and benefit from convenient and cost-effective access to northern softwood fiber,” the decision states.

“These statements strike us as inconsistent with any material level of obsolescence manifested in excess operating costs. Because these statements were made by the owner and operator of the Androscoggin Mill, which is presumed to be familiar with all aspects of the environment in which the mill operates, positive and negative, we believe they constitute a reasonable basis to conclude that the mill summary appraisal provides no clear basis for modifying the values in the town appraisal,” the decision states.

“Thus, we accept the town appraisal as fairly and accurately setting forth the fair market value of the total mill property as of April 1, 2013. Because we so find, we necessarily conclude that the value of the subject property initially used in determining the taxes assessed against the subject property was too high, with the result that the taxpayer was overassessed … In order to correct this error, we have determined to abate a portion of the taxes assessed against the subject property,” the decision states.

After a review of the 2013 commitment data and tax rate calculation work paper, the town finds that the taxpayer would have paid gross taxes to the town of $10.36 million had the value of property been as set forth above initially and received a tax-increment financing payment of $2.18 million, for a net tax of $8.18 million. That amount exceeds the net taxes actually paid, about $9 million, by $829.258, the review states.

The company has two tax-increment financing agreements with the town.

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