Missoula County commissioners on Thursday approved a settlement agreement with a Washington-based company to collect years of unpaid taxes at a shuttered industrial site in Frenchtown, a move that could end years of litigation and help buoy the town's taxing jurisdictions.

While the agreement must be approved by the court, the settlement reached between the county and Wakefield Kennedy will see the Washington lender pay roughly $967,600 in delinquent taxes on several parcels of property associated with the former Smurfit-Stone Container Corp. pulp and paper mill.

The property is currently owned by M2Green.

“Wakefield Kennedy does not own the property, but states that it seeks to protect its security interest as a lender and has negotiated for the past several months with our office to resolve this litigation,” said Anna Conley, the senior civil deputy with the Missoula County Attorney's Office.

M2Green, based in Illinois, purchased 15 parcels of property at the former mill, though it has since sold six of them. The company remains delinquent in taxes owed on the nine remaining parcels, though only eight of those parcels are included in the settlement agreement.

Of those eight parcels, Conley said M2Green owes more than $1.09 million in taxes, penalties and interest. It has not paid those taxes in years.

“Wakefield Kennedy has agreed to pay all the principal of $843,553 and half the penalty and interest on those eight parcels,” said Conley. “This is approximately 89 percent of the total principal, penalty and interest owed on those eight parcels.”

Under the agreement, Wakefield Kennedy will pay the sum in three installments, starting with the proceeds resulting from M2Green's auction of equipment and fixtures at the mill, which netted around $522,000.

Conley said the sum has already been passed to the county and is being held for disbursement.

“This has currently not yet been distributed to the taxing jurisdictions,” said Conley. “It's being held in a separate account of the county, pending the final post-auction accounting of expenses from the auction company, which we expect in the next few weeks.”

In addition to that sum, Wakefield Kennedy will have five days from the court's approval of the settlement to pay the second installment of $321,500. The remaining balance of $124,000 must be paid on or before next March.

Conley said the deal also calls for Wakefield Kennedy to foreclose on several of the parcels included in the agreement. Missoula County reserves the right to pursue M2Green for unpaid taxes regarding the one remaining parcel not covered by the settlement.

The parcel was not included in the agreement due to potential cleanup issues stemming from years of paper making. The entire site is currently undergoing testing by the U.S. Environmental Protection Agency for potential contamination and cleanup.

M2Green remains a potential responsible party if cleanup is warranted, thought it's the county's long-term hope to get the property back in use. Until then, the settlement agreement was widely praised, closing years of negotiations and delinquent taxes.

“This is the way government is supposed to work,” said Rep. Kimberly Dudik, D-Frenchtown. “We should all feel good about this agreement.”

Frenchtown Schools Superintendent Randy Cline said the taxes received in the deal will help rebuild the district's depleted reserves. (Martin Kidston/Missoula Current)
Frenchtown Schools Superintendent Randy Cline said the taxes received in the deal will help rebuild the district's depleted reserves. (Martin Kidston/Missoula Current)

Frenchtown School Superintended Randy Cline said the district's financial struggles were mounting under years of M2Green's unpaid taxes. The school district used up its reserves and was facing a default on its bonds and having to raise taxes.

It now stands to receive more than $300,000 in back taxes, which it will use to replace its empty reserves. Other taxing jurisdictions in Frenchtown will also be repaid.

“Frenchtown's experience with M2Green has been very negative – nothing but broken promises, lack of redevelopment of the mill site and delinquent tax payments,” said Cline. “Every time we thought we saw a light at the end of the tunnel with M2Green, it ended up being an oncoming train.”

Cline added, “This money will be used to fund our reserves, which had been depleted by many years of M2Green not paying it's taxes. We believe this is terrific news. Hopefully Wakefield Kennedy brings a brighter future for the property.”