MILLINOCKET – The New York-based company that is constructing a paper-additive plant at Great Northern’s Millinocket mill site is asking the town for a tax break.

The Town Council is expected to discuss the proposal during a June meeting.

Officials representing Specialty Minerals Inc. on Thursday presented the Town Council with a proposal for a tax increment financing program for its new precipitated calcium carbonate plant, which will cost $10 million to $12 million.

Robert S. Dorr, the company’s Millinocket plant manager, said the plant is a two-story, 16,500-square-foot building. The plant now under construction is scheduled to begin production by Aug. 1. It will employ six full-time and one part-time assistant.

“This will help ensure our success and will help ensure Great Northern’s success,” said Dorr. He said the company had no intention of placing a burden on the community.

Dorr said precipitated calcium carbonate is a nonhazardous material used as an additive to improve paper quality – such as brightness – and printing characteristics. The new plant will use carbon dioxide from Great Northern’s boilers to make PCC. The process will reduce the paper company’s air emissions by more than 20,000 tons a year. Dorr said the PCC was a critical ingredient to help Great Northern develop new grades of specialty papers.

Ed Laverty, a consultant for PA Strategies representing Specialty Minerals Inc., explained the company’s TIF proposal.

In a TIF program all or a portion of the new tax revenues from an investment are returned to the company for a certain period of time.

Laverty said Specialty Minerals was proposing that all its investment in the new plant – estimated to be between $10 million and $12 million, be included in a 15-year TIF program. He said the company is proposing that new tax revenues from the project be shared 50-50 by the town and company for the first 10 years.

The town would receive 100 percent of the tax revenues from year 11 through year 15 of the program.

Based on preliminary figures, Laverty estimates the total amount of future tax revenues would be $1,723,477 during the 15-year TIF program. He said the 50-50 split between the town and company would translate into the town receiving $1,111,034 in tax revenues and the company retaining $612,443 in tax revenues. The reason for the difference is because the town and company would be splitting the new tax revenues 50-50 for only the first 10 years of the 15-year program. In the last five years of the TIF program, the town would receive 100 percent of the tax revenues.

Laverty said the state’s TIF law requires that new tax revenues the town would receive be placed in a dedicated account, such as an economic development fund. He said those funds could be used to enhance economic development, or for infrastructure improvements such as maintenance and road improvements, or to pay for costs associated with administering the TIF. He said the town could use the dedicated revenues for something other than development or infrastructure improvements, but it would lose the proportionate tax shelter.

The consultant said the TIF program would shelter all of the new value for the new plant, which in turn would protect the town from losing state subsidy for education, revenue sharing funds and having to pay higher Penobscot County assessments.

Laverty estimates those benefits to be $788,500 during the 15-year TIF program.

The TIF being proposed by Specialty Minerals, Inc. is the second one being proposed to the town.

Last July, the town approved an agreement in principle with Great Northern Paper Inc. to resolve a pending tax dispute.

Under the tentative agreement, which has yet to be made final, the company would drop its pending tax abatements of $4.7 million against the town.

In return, the town would grant Great Northern a 17-year TIF program covering all of the investments the company makes in the Millinocket paper mill during the next five years. The town would receive 15 percent of the tax revenues from the new investments and Great Northern would retain 85 percent of the tax revenues on its new investments for a 12-year period.

According to the agreement, the base value of the paper company would be $115 million or about $20 million less than the town’s current assessed value.

Since the council approved the tentative agreement last July, the town has received a new appraisal of the paper mill.

The new appraisal received by the town in January showed Millinocket had undervalued the paper company for two of the past three years. The new appraisal valued the paper mill at $141 million compared with the town’s assessment of $127 million in 1998: $146 million compared with the town’s $130 million in 1999: and $133 million compared with the town’s $135 million in 2000.

When asked whether the terms of the tentative agreement had changed as a result of the appraisal, Town Manager Gene Conlogue declined to comment on Friday.