Selectmen & White Mountain Paper sign tax agreement

The metal-clad building at right was built in 2012 to house a new tissue machine at the venerable paper mill at Cascades in Gorham. CEO Price Howard says the new ownership has developed a long-range stabilization plan in an effort to once again make the site a vibrant part of the Androscoggin Valley. White Mountain Paper LLC is down for some repairs, but will be running after Labor Day. (FILE PHOTO)

GORHAM — The select board voted 3-0 on Monday, Aug. 30, to sign a multi-year tax settlement agreement with the White Mountain Paper Co., LLC.

“The long and the short of this agreement is that we have come to believe — and fully support — the reinvigoration of this site at Cascades — and that means as a paper mill,” said board chairman Mike Waddell.

“There are big plans for the future, which may or may not happen, but at least at a modest level, at the end of five years we wind up back with $9 million in assessed valuation with a fully functioning single-machine paper mill, with the potential for one or two more paper machines along with the possibility of adding converting capability.”

There are a lot of possibilities, he said, acknowledging, however, that the immediate financial benefits start off slowly.

The signed agreement, covering the years 2021-24, takes a two-pronged approach, said town manager Denise Vallee. The paper company’s assessed valuation and the dollar amount of the taxes charged will decrease over the next three years as both interior and exterior demolition take place. A recovery is being planned because White Mountain Paper expects to make significant investments in the mill property, she said. The base Payment in Lieu of Taxes in 2021 is set at $213,350; in 2022, at $175,000; and in both 2023 and 2024, at $125,000.

Each year, the mill will also make detailed reports to the town of the total investment it has made in new construction so that its assessed valuation will increase on April 1 of the following year.

White Mountain Paper will take advantage of the construction exemption that was adopted at town meeting a few years ago: 90 percent deduction for the first year; 75 percent for the second year; 50 percent for the third; 25 percent for the fourth; and 10 percent for the fifth.

“So that is built into this agreement as well,” Vallee said.

The exemption only applies to municipal and local school property taxes, however, and not to either county or statewide education taxes.

The recent purchase price of the mill, which included all the back taxes paid to the town by the previous owner, resulted in a $9 million assessment on the town’s tax card, Waddell said. “That will be reduced in 2023 to a value of $3.5 million, which reflects accommodation to the purchase price and the demolition that is about to take place,” Waddell said.

As salvage materials are sold and removed from the premises, the town will have a right to 3 percent of all proceeds paid that are above and beyond the base PILOT figures, he said. The company has committed to keeping tonnage slips from the buildings and fixed asset systems, such as piping/mechanical and electrical, as well as outdoor assets and to provide the salvage price paid to the company on an annual basis for each year of the PILOT agreement up to Dec. 31, 2024.

When asked to comment on reaching a tax settlement agreement, White Mountain Paper’s CEO Price Howard replied by email: “We are excited about the long-term commitment and partnership we have formed with the Town of Gorham — lots of hard work from the select board and town manager, and it is greatly appreciated.” Howard, is one of several partners in Gorham Acquisitions LLC, an investment vehicle of the Behrens Investment Group of New York City.

A lot of happened in the eight months since that investment group took over ownership of the bankrupt Gorham Paper and Tissue, previously owned by Lynn Tilton and her Patriarch Partners investment firm.

At the time of its bankruptcy filing in November 2020, Gorham Paper reported being deeply burdened by debt. The sale, which included all assets of Gorham Paper and Tissue and subsidiary White Mountain Tissue, was approved in the next month by Bankruptcy Court Judge Karen Owens.

The cash purchase price was listed as $8.75 million, and the new owner assumed responsibility for a $3.3 million loan owed to Bank of New Hampshire, according to the Jan. 4 issue of “N.H. Business Review.“ The paper company also owed nearly $250,000 to the Androscoggin Valley Regional Refuse Disposal District, $600,000 in property taxes to Gorham, and another $170,000 to the city of Berlin.

The company was renamed the White Mountain Paper Co. At the time, the mill produced 30,000 tons of “parent roll” tissue a year for the private-label market plus paper towels. It then had about 100 salaried and hourly employees on its roster. That number was almost cut in half, however, when the No. 9 towel machine, still fondly called Mr. Nibroc, was shut down for not complying with today’s worker safety standards.

It was back in 2011 that Lynn Tilton and Patriarch Partners purchased the mill with great fanfare, following a worrisome several-month shutdown by the previous owner, Fraser Paper.

The next year, Patriarch installed a new, $35 million previously unused tissue machine, shipped from Europe, to a new wing that was added to the venerable mill on the banks of the Androscoggin River. The valley’s high hopes were dashed when the three collateralized loan funds that Tilton had used to fund her purchases of distressed American mills and plants went bankrupt in 2018.

White Mountain Tissue, known locally as the Gorham Mill, has been in operation since 1852, when it opened as a sawmill. It expanded operations to include pulp and paper in 1888 and is one of the oldest remaining paper mills operating in North America.

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