Frequently Asked Questions about Our Katahdin’s acquisition of the former Great Northern Paper assets in Millinocket.
1. What is this transaction?
Our Katahdin, a 501(c)(3) non-profit organization based in the Katahdin region, has acquired the former Great Northern Paper assets in Millinocket, including all property, designations, and liabilities held by GNP West, GNP Holding II, and the New England Center for Business Development. Transfer of stewardship of the properties was finalized on January 11, 2017, for the price of $1.
Holdings include the 1,400 acre former mill site, land adjacent to the Millinocket Municipal airport, a 157 acre parcel of land at Ferguson Pond and several additional parcels in Millinocket. The acquisition includes a Regional EB -5 Center, which is a valuable federal designation that enables foreign investors to invest in projects in the United States.
Discussions about the mill site began between the GNP entities and Our Katahdin in the summer of 2016.
2. Who is Our Katahdin?
Founded in December 2014, Our Katahdin is a 501(c)(3) nonprofit organization focused on community and economic development in the Katahdin region. It has partnered with local community leaders to crowdfund and implement 21 projects in the Katahdin region since December 2014. It also purchased the historic downtown property at 230 Penobscot Avenue (a.k.a. “Miller’s Building”) in September 2016 and has applied for 3 federal and state grants to aid in its revitalization. Its Board members are sons and daughters of the Katahdin region and include: Nancy DeWitt, Mike Faloon, Tony Foster, Michael Osborne, Sean DeWitt and Michael Seile Jr
3. Why is this transaction important?
The largest newsprint paper mill in the world was constructed on the Millinocket mill site with good reason. The Katahdin is region is home to unsurpassed industrial, natural and human assets. The region has ready access to roads, rail, water, vast sustainable working forests, affordable renewable hydropower and a hardworking industrial work force. Unfortunately these assets have not been able to be put to use in recent years. This transaction puts a 1,400-acre industrial asset in the hands of the people of the Katahdin region.
4. What are the assets and liabilities involved in the transaction?
The assets include the 1,400-acre former mill site, land adjacent to the Millinocket Municipal airport, a 157-acre parcel of land at Ferguson Pond and several additional parcels in Millinocket. The acquisition also includes a Regional EB-5 Center, which is a valuable federal designation that enables foreign investors to invest in projects in the United States.
The acquisition comes with approximately $1.4 million in tax liability to the IRS and $164,000 in back real estate taxes as well as additional back taxes on business equipment owed to the Town of Millinocket.
5. Why this acquisition instead of foreclosure on the mill site due to unpaid back taxes?
Foreclosure by the Town would have given the Town the option to own the mill site. The acquisition by Our Katahdin involves the mill site, all other former Great Northern Paper assets in Millinocket (including the land adjacent to the airport needed for its expansion) as well as the EB-5 Regional Center. Foreclosure would have also forced the Town to inherit the lien from the Internal Revenue Service that exists on the property. The acquisition means Our Katahdin will work to resolve this lien as soon as possible to render the site unencumbered. The acquisition also avoids the long legal and administrative process associated with foreclosure, bankruptcy and liquidation.
This transaction also includes the transfer of an EB-5 Regional Center to Our Katahdin. If foreclosure happened on the mill site, the EB-5 Regional Center would not have been part of this foreclosure given that it is a separate company that does not own land. Therefore, this unique, valuable opportunity to promote investment in the mill site and in the Katahdin region would have been lost permanently.
In addition, this transaction preserves existing environmental liability protections for the site through the State of Maine DEP’s Voluntary Response Action Program (VRAP) program. If foreclosure had taken place, the current VRAP would have been negated and new agreements would have needed to be established at a cost to the town and resulting in further delay and cost in re-development.
Most importantly, the acquisition allows Our Katahdin and the Town of Millinocket to partner together to harness their mutual strengths, relationships, experiences and capabilities, rather than leaving the responsibility of site redevelopment process solely to the municipality.
6. What is an EB-5 Regional Center?
An EB-5 Regional Center is an organization designated by United States Citizenship and Immigration Services (USCIS) that creates local jobs through foreign investment. An EB-5 regional center deploys local investment from foreign investors who in turn receive an EB-5 investment visa to the United States.
EB-5 Regional Centers facilitate direct investment in projects that meet the job creation and economic development goals of designated geographic areas in coordination with regional economic development agencies.
7. Isn’t Our Katahdin focused on community development projects?
Our Katahdin believes in small wins. Since its launch in December 2014, Our Katahdin has focused primarily on community development through its “platform” approach. This approach involves engagement with the people of the Katahdin region to define its way forward. Our Katahdin will employ these same principles of (1) local engagement and (2) small wins in the redevelopment of the Millinocket mill site. While redevelopment will not happen overnight, effort can be made now to start the process, and Our Katahdin stands ready to work with any and all partners to make this a reality.
That said, Our Katahdin also has every intention of continuing to ramp up its efforts in community revitalization as well, which are equally as important as economic development. We believe in the future of the Katahdin region.
8. What is Our Katahdin’s vision for the former Great Northern Paper mill site in Millinocket?
Our Katahdin believes the former Great Northern Paper mill site can be redeveloped to become a world-class bio-industrial park. The fast growing bio-economy focuses at the intersection of new technologies and abundant renewable natural resources, including forests, hydropower, agriculture and aquaculture. We envision the park will be home to a number of small-to-medium enterprises over time, each employing approximately 10-100 skilled workers, as well as a cohort of budding entrepreneurs working to commercialize new technologies. Our Katahdin will prioritize the strengthening of links with universities (e.g. University of Maine, Maine Maritime Academy, etc.) to bring cutting edge R&D back to the site, and to help promote commercialization of higher value uses of products from forests, agriculture and/or aquaculture.
Our Katahdin will engage in long-term leases with companies that are interested to locate on the site, acting in a stewardship role of the bio-industrial park. As a nonprofit organization, Our Katahdin will reinvest profits back into the further redevelopment of the mill site itself, as well as in community development in the Katahdin region.
9. Where will the money come from to realize this vision?
The Board Members of Our Katahdin have deep and diverse experience in mobilizing large sums of both philanthropic and investment capital and they will put to use to redevelop the former mill site. The current goal is to mobilize philanthropic and equity funding in the early stages, graduating to debt financing over time. Our Katahdin plans to utilize their community investment arm, Our Katahdin Investments which is also a 501(c)(3) nonprofit organization, to provide opportunities for citizens to invest in the redevelopment of the mill site.
10. What about back taxes?
Our Katahdin is in discussion with the Town of Millinocket to negotiate terms that ensure the taxpayers of the town benefit from this transaction.
11. How does Our Katahdin and its Board Members benefit from this transaction?
Our Katahdin is a 501(c)(3) nonprofit organization. Each of the Board Members of Our Katahdin is a volunteer that receives no salary. This transaction does not entitle any of the Board Members of Our Katahdin to any financial gain, nor does this transaction give ownership of any parcel of land to any individual associated with Our Katahdin. The acquired companies will be held by Our Katahdin the nonprofit organization itself, which has no owners, only Board Members who are helping to support the community and economic development of the Katahdin region.
12. How do I get involved?
Our Katahdin welcomes community input and will schedule several public meetings to provide opportunities for the public to express their ideas, thoughts, concerns and hopes for redeveloping the site. We can be reached by filling out our contact form at www.ourkatahdin/contact, by emailing us at [email protected] or by phone, (207)-618-9187.