B&A estate to settle unpaid taxes 19 towns will receive 100% owed by railroad

BANGOR – Nineteen cities and towns that were owed taxes on property formerly used by the Bangor and Aroostook System should have an agreement to be paid in their hands today, said a representative of the B&A estate Tuesday.

B&A owed approximately $550,000 in taxes to the towns before the company sold its assets to Rail World Inc., a Chicago-based consortium, in early January. The towns expect to receive 100 percent of the money owed them, according to officials involved in the negotiations.

B&A trustee James Howard’s lawyer, Roger Clement, who is handling the rail system’s bankruptcy, said the settlement is “kind of a nonissue.”

“We have reached an agreement with a large number of towns to get their taxes paid,” he said. “We’ve reached a settlement agreement with virtually all the affected towns in the state of Maine. We’ve had a dispute and we’ve settled this dispute. We still need to get the bankruptcy court to approve it.”

The hearing is set for today at U.S. Bankruptcy Court in Portland. Clement said, “It’s basically unheard of” that a bankruptcy court would not approve a consensual agreement.

The dispute Clement refers to deals with bankruptcy trustee James Howard trying to charge the towns a 35 percent levy.

“As part of that process, the trustee charged the town for its effort for the sale of its assets on the theory that its sale benefited the town,” said one of the attorneys representing the towns, who asked not to be identified. “After the trustee submitted the proposal, a number of these communities, mostly from Aroostook County, came to us. We ended up representing 19 towns.”

To help settle the dispute, Kurt Adams, who is the attorney for Gov. John Baldacci, stepped in and negotiated a settlement all parties could accept.

“We will get an amount equal to 100 percent of the taxes due to us …” said Glenburn Town Manager Carl Betterly. “This is what I would refer to as a slam dunk.”

Glenburn is owed around $4,000 of the $550,000 in unpaid taxes for all the towns involved in the case.

The towns that will receive payments are: Bangor, Hampden, Glenburn, Milo, Brownville, Medway, Patten, Presque Isle, Houlton, Portage Lake, Easton, Mapleton, Chapman, Caribou, Van Buren, Eagle Lake, Millinocket, East Millinocket and Hermon.

A federal bankruptcy judge in October 2002 approved a deal that allowed B&A to sell its assets – more than 835 miles of track, facilities and real estate – but not its name or operations to Rail World Inc. for $50 million. Rail World changed the system’s name to Montreal, Maine and Atlantic Railway. The final sale was signed Jan. 9.