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Mar. 2006

The Maine Leaseholders Association

Continuing a Discussion With Stu Kallgren, of the Maine Leaseholder’s Association

The Maine Leaseholder’s Association was organized in 1990 to address the concerns of leaseholders in the State of Maine. Stu Kallgren has served as its president since 1996.

  AMM: Stu, I understand you’ve met with the Judiciary Committee on LD1646, which we talked about last month. Can you tell me something about your meeting?

  STU: Quite a few leaseholders showed up for it. The bill was sponsored by Herbie Clark, who introduced it. He then introduced Jim Giffune, who had been invited to speak on it. In the end, the committee decided to table the bill. They wanted us to try to speak to the landowners again.

  AMM: Did you do that?

  STU: We did go down to Portland on Tuesday the 21st, and spoke with an attorney for Katahdin Timberlands.

  AMM: Was it productive?

  STU: I think it was more of a feeling out process myself. He asked what we didn’t like about the 15-year lease they had come up with. The attorney who came up with the 15-year lease was also there.

  AMM: And what is it that you don’t like about the fifteen-year lease?

  STU: Basically, the 15-year lease is nothing more than three 5-year leases put together. Katahdin Timberlands is trying to sell it as offering more protection for the leaseholder when it really doesn’t.

  AMM: Why?

  STU: If someone were to assume ownership of the property, they could still terminate the lease at any time. Also, with the 15-year lease, every five years the lease can be modified. Anything can change - the rates, the terms, even the complete wording of the lease. It’s basically a 5-year lease in three different parts.

  AMM: And the main problem with that is?

  STU: Security. There’s no security there whatsoever.

  AMM: Are there any other problems associated with the Katahdin Timberlands leases?

  STU: Well, the Katahdin Timberlands leases are not the only group of leaseholders that we represent. We represent all of the leaseholders in the state of Maine. We’re not going to make a deal for one group that leaves the others out.

  AMM: This has been something that the Maine Leaseholder’s Association has been working on for a long time. What’s the bottom line?

  STU: The bottom line is that the Legislature has to do something about the situation. That’s the bottom line. Instead, they want to sit back, do nothing, and hope that something will come out of our negotiations with the landowners.

  AMM: Isn’t it reasonable to ask you to try to work things out for yourselves first?

  STU: The problem is that that isn’t going to happen unless there’s a hammer over their head.

  AMM: Go on.

  STU: The best case scenario. The Judiciary Committee asks the Governor to set up a commission to study leasing - seasonal, year-round, and commercial. The traditional leases here in northern Maine are seasonal and year-round.

  AMM: What is the outcome you’re looking for?

  STU: The outcome desired is one that protects the landowner’s rights, but which also protects the property that sits on the land. Everyone should have the same lease. Anyone who leases land should have the same wording in the lease.

  AMM: What is the advantage in that?

  STU: The leaseholder’s property is protected. We know what we have, and that we’re not going to be suddenly faced with exorbitant increases in the cost of our lease. The landowner won’t be able to extort more money from the leaseholder who is otherwise trapped, unable to move his property, yet unable to pay new and unreasonable costs.

  AMM: And who would regulate this?

  STU: The commission.

  AMM: Do you believe that this is feasible or likely?

  STU: Right now, the Legislature doesn’t know what to do. They don’t understand the issues. They need to learn the history of what we had before, before they can be expected to understand where we are today.

  AMM: Go on.

  STU: When the paper industry was still a viable industry in Maine, leasing wasn’t a primary source of income for the paper companies. Today, multinationals and wealthy individuals are buying huge chunks of land with no intention of using it for forestry or forest harvesting. The leases are paying the taxes on the land - on all of their land. These new landowners are using old state laws, putting their land in tree growth.

  AMM: In tree growth? Do you mean a special tax classification?

  STU: Yes, but tree growth wasn’t set up for that. Tree growth was set up for companies that are using the land to supply mills and, more importantly, to employ people. The new landowners are using tax breaks that were intended to keep people working, but they’re not doing this.

  AMM: I see. In the past, the paper companies were given a break on their taxes and, in return, these same companies were employing people and contributing to the economy.

  STU: Yes, and for many years that worked, and worked well.

  AMM: What went wrong?

  STU: As regulations, taxes, and the economy began to worsen, the paper companies put their capital investments elsewhere, outside of Maine. Our mills were not upgraded, and eventually became old mills. As other states and countries came on line with new machines and new technologies, Maine’s mills could no longer compete. Environmental groups started coming in, buying conservation easements and bringing lawsuits against those companies that were still trying to operate here. These conservation easements are going to dramatically affect the entire forest industry in Maine.

  AMM: Haven’t they already?

  STU: Yes. Twenty years ago, we had twenty paper machines operating here. But the most significant problem with these conservation easements are that they are in perpetuity.

  AMM: In perpetuity?

  STU: Yes, they never end. This leaves us with no hope for the future, and severely limits the options for those who come after us.

  AMM: Yes, I can see how that would be a problem, for us as well as for our children and grandchildren. Is there anything else?

  STU: Non-profit groups, such as the Nature Conservancy, the Appalachian Mountain Club, and the Wilderness Society, are buying huge chunks of land in Maine. How long is it going to be before they say, we’re non-profit organizations, we shouldn’t be paying taxes? Who is going to make up the difference then? We are.

  AMM: Bringing it back to LD1646, is there anything else you’d like to add?

  STU: This bill needs to move forward. People need to call their representatives, and call them again. We need to have a commission set up, and this commission needs to develop a program that protects all of the property owners in the state of Maine, not just the landowners.

  AMM: Thank you, Stu. I look forward to continuing our discussion on this and other issues next month.

All Maine Matters
Vol. 1, No. 3 March 2006

The Maine Leaseholders Association