City may stop wastewater from Eastern Mill’s 9-month payment hiatus has Brewer officials frustrated

BREWER – Debts from improvements to the wastewater treatment facility in the 1990s and past due utility bills could force the city of Brewer to turn off Eastern Fine Paper’s access to the treatment plant, said Brewer Finance Director Karen McVey.

“If the city does not begin to receive regular payments again soon, it will be forced to evaluate whether it can continue to provide wastewater treatment services to your company,” McVey said in a letter to Eastern dated Jan. 9.

The city requested that Eastern, Brewer’s second-largest employer, submit a payment plan for the $1.2 million past due to Brewer by Jan. 16, which the company failed to do, according to McVey. She said Eastern has $842,851 in unpaid utility bills and the amount increases daily. The company also owes $125,380 in pre-bankruptcy debt service and $213,622 in pre-bankruptcy sewer payments that remain unpaid.

“We have not received a payment in nine months,” City Manager Steve Bost said. “It’s reached the point that we don’t feel that any effort has been made to the city to mitigate this mounting debt.”

Eastern Fine’s parent company, Eastern Pulp and Paper Corp. of Amherst, Mass., filed for bankruptcy in September 2000 and has spent years trying to develop a reorganization plan to leave Chapter 11 but has been unable to do so.

On Jan. 16, Eastern Pulp closed down the Brewer mill and Lincoln Pulp and Paper, displacing 750 workers. The company is trying to obtain funds to reopen the mills.

“They represent approximately 5 percent of our tax base and almost 50 percent of the revenues necessary to run our wastewater treatment facility,” said Bost.

The No. 1 paper machine – the last running paper machine in Brewer – stopped producing on Jan. 3. The shutdown of the company’s No. 2 paper machine in 2002 resulted in a loss of revenue at the treatment facility to the tune of $262,500, or about 50 percent of the yearly bill. The 2002 shutdown also caused the elimination of four jobs in the city’s water pollution control facility.

In addition to accounting for more than half of the city’s wastewater treatment revenues, “Eastern also has a standing agreement with the city to pay a significant portion of the debt service for the plant and system upgrades that were necessitated back in the early 1990s due to a consent decree with Maine Department of Environmental Protection and the U.S. Environmental Protection Agency,” said Andrew “Drew” Sachs, Brewer’s economic development director.

The debt service for Eastern totals more than $1.5 million. This debt is scheduled to be paid by 2017 and could be defaulted if Eastern closes, said Bost.

“This has placed us at the edge of what may be an unavoidable crisis that could come to a head in the short term,” he said.

Bost said he would work to reduce the potential burden on taxpayers.

“If the facility closes, we’ll work with the DEP to extend that time period so that costs can be extended over a larger period of time,” said Bost.

Brewer has hired attorney Curt Kimball to represent the city’s interests during Eastern’s bankruptcy hearings.

“Unfortunately, when the contract was written 10 or 15 years ago, there were no [late] penalties included,” said McVey. “So there is no incentive for them to pay on time.”

Since the city is owed nearly $3 million, Sachs and Bost questioned why the city was not invited to a closed-door meeting on Tuesday in Augusta between representatives from Gov. John Baldacci’s office, debtors and Eastern.

“We’re frustrated with the process,” said Bost.

Several Maine lawmakers have expressed concern over the issue. Sen. Olympia Snowe was in Brewer earlier this week and U.S. Rep. Michael Michaud will be at the Brewer Auditorium today between 3 p.m. and 5 p.m. to meet with displaced workers.