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1st Urban Fiber owes millions

August 08, 1997

By JULIE E. GREENE

Staff Writer

The closing of 1st Urban Fiber's paper recycling plant will impact not only the wallets of the 53 employees fired on Thursday, but also the purse strings of local and state governments.

The City of Hagerstown is still owed $1,892,155 for a $2.2 million substation the city built for the plant, said Ray Foltz, the city's accounting department supervisor.

The city also was guaranteed a minimum of $70,000 a year from 1st Urban as part of a 20-year power contract between 1st Urban and City Light, said City Light Manager Terry Weaver.

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That guarantee was built into the contract to protect the city in case of the worst-case scenario, said former Mayor Steven T. Sager.

Whether either of those agreements will hold now that the bondholders have taken over the plant from 1st Urban Chairman Carl C. Landegger has yet to be determined, said City Administrator Bruce Zimmerman.

The city won't be stuck paying for the power 1st Urban was expected to use because it only pays Allegheny Power for the power used, Weaver said.

1st Urban still has to pay real estate taxes this fiscal year.

The company owes the county $129,776 and owes the city $84,000 in real estate taxes alone, financial officials said.

The personal property tax the company would pay the county and city for its equipment has not been calculated yet, officials said.

The fair market value of the roughly 25 acres and the buildings on the property owned by the Hagerstown Fiber Limited Partnership is $12,874,775, according to Washington County Treasurer Todd Hershey. That property includes the plant at the corner of Eastern and Memorial boulevards.

While the state issued $159.8 million in tax-exempt bonds that were sold to private investors for the plant, the state doesn't have any financial exposure from that, said Andrew Spitzler, spokesman for the Maryland Department of Business and Economic Development.

The state will lose revenue from the company's annual discharge permit to Antietam Creek, said David Fluke with the Maryland Department of the Environment.

In fiscal year 1996 the fee was $5,000, while this past fiscal year the fee was $4,000, Fluke said. The plant was shut down from April to June during the last fiscal year.

Sager said the only real risk to the city is the host fee that 1st Urban was supposed to pay the city for the right to build here.

City officials weren't expecting to receive the host fee, anticipated at about $300,000 a year, for at least a few years while the company was starting up, said City Finance Director Al Martin.

City Council members had no plans to spend that money until it arrived.

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