Sludge Watch ==> Augusta Maine...City ponders what to do with delinquent paper mill

[maureen.reilly at sympatico.ca]

http://kennebecjournal.mainetoday.com/news/local/2702677.shtml

Tuesday, May 09, 2006

City ponders future of paper mill parcel


By GARY REMAL
Staff Writer


from the Morning Sentinel


AUGUSTA -- The owners of the former American Tissue paper mill owe the city 
more than $450,000 -- and with no signs of a rebirth, city officials are 
looking to the future of the prime riverfront property.

"The city needs to figure out what to do about that," City Manager William 
Bridgeo said.

The company also owes the Augusta Water and Sanitary District and the Maine 
Department of Environmental Protection a total of about $90,000 for treating 
water from a sludge dump off Church Hill Road for nine months after company 
officials stopped paying sewer bills, district General Manager Dale Glidden 
said.

City councilors discussed the property with lawyers behind closed doors last 
week.

The name of the corporation that owns the mothballed paper mill changed over 
the past year -- from American Tissue Mills of Maine LLC to Augusta Tissue 
LLC, City Clerk Barbara Wardwell said. City officials had no telephone 
number for the owners. An e-mail to John Gabayzadeh, listed by Wardwell as a 
co-owner with Premier Paper Products in New York, was not returned.

Bridgeo said the firm's growing tax bill and interest is prodding city 
councilors to consider new options.

The change in corporate name, however, does not change the city's lock on 
first claim to $454,763 owed in back taxes and interest as of March 31, 
Bridgeo said.

Bridgeo said the City Council negotiated agreements in the past giving up 
penalties and putting the company on a payment schedule to try to help the 
mill to reopen.

"We didn't want city taxes to be the difference between the mill making it 
or not," with a potential for 100 papermaking jobs at stake, Bridgeo said.

"Now it appears it's to the point where we have to decide what's in the best 
interests of all the taxpayers of Augusta," he said.

"But if we take the property over for taxes, we'd be assuming some 
liabilities."

He said the firm made a couple of payments after the deal but then stopped. 
"They haven't made a payment since last June," Bridgeo said.

"The whole process is about what to do with it and whether to do it as a 
city," he said. "Do you raze it to clear the site and start fresh?"

The city attorney has issued an opinion that the municipality would not be 
liable for past environmental pollution at the site, he said.

"But if you do take the property for taxes and there's significant 
environmental problems, how does that impact your ability to resell it or 
somehow use it?" Bridgeo said.

"So over the next few weeks, we're going to grapple with that and continue 
to talk in executive session about the possibilities."

Bridgeo warned that a city takeover of the property would be expensive and 
complicated.

Glidden said the company has some money in escrow -- and a bond put up with 
the Department of Environmental Protection -- to guarantee payment of the 
water-treatment costs.

State officials could dip into those funds to pay the bills. But Bridgeo 
said calling in the bond could make any financing plans the company might 
have to reopen the plant more difficult, since it would be seen as a sign to 
creditors of failing financial health.

The water and sanitary district still has an unpaid bill of more than 
$61,000 for a six-month period last year before Glidden shut off pumps 
serving the sludge dump, Glidden said.

After about a month, state environmental officials decided that failing to 
treat contaminated water from the sludge dump was an environmental hazard 
and they agreed to pick up the cost of treating it.

Glidden said the cost to the state for the past three months has reached 
about $30,000.

Gary Remal -- 623-3811, Ext. 518

gremal at centralmaine.com