GE restriction hobbles revenue potential for historic Rising Paper Mill

Housatonic — One of the town’s potentially great tax revenue sources was hobbled a decade ago by what appears to be General Electric Company’s (GE) strategy to reduce liability stemming from decades of pollution it discharged into the Housatonic River from its Pittsfield manufacturing plant.

When GE bought the Rising Paper dam from Neenah Paper Company in 2007, it worked a 20-year residential use restriction into the title that would prevent real estate developers from redeveloping the former Rising Paper Mill building with any kind of housing – just the kind of behemoth that gets snatched up for lofts, for instance.

GE has bought land up and down the river, a strategy state officials and environmentalists say is protection from liability over pollution and a massive cleanup that, at this point, will involve dredging. GE also owns a slice of land adjacent to the dam that it hopes to use as one of three Berkshire County dumpsites for PCB waste from the river cleanup. That use was recently thrown into question, however, since the land is zoned for residential use only.

For years GE polluted a large section of Pittsfield with carcinogenic PCBs (polychlorinated biphenyls) in the electrical transformer manufacturing process and allowed PCB waste to flow into the Housatonic River and downstream into Connecticut, causing devastating sediment contamination that has harmed the food chain all along the river and floodplains and is a continued threat to human health and to wildlife.

The Rising Mill building with the dam in the foreground last May at anti-PCB dump protest. Two protesters take a break from a march against GE’s plan to use land it owns adjacent to the dam for a PCB landfill during the Housatonic River cleanup. Photo: Heather Bellow

The law and the EPA are making GE clean it all up, and that battle is still underway. But while the areas around Pittsfield and the river to Fred Garner Park have been cleaned, the EPA is requiring a $613 million cleanup of the “rest of river,” and that’s where Rising Dam comes into play.

In 2008 Hazen Paper Company bought the building from Neenah for $785,000 on the heels of the market free fall, according to John Hazen, whose company has never had any dealings with GE but whose building is subject to the restriction, allowing only industrial use for 12 more years. Hazen said he had heard that Neenah was going to sell it to a New Jersey developer “to put in fancy condos, but the deal fell apart,” and that’s when he made the move.

Hazen Paper laminates paper and uses each end of the historic building for its manufacturing process. Hazen says he’s had it on the market for several years in an “exploratory” way, thinking he might sell it, then lease back the space he uses.

But the building hasn’t sold and Hazen says he’ll probably take it off the market since it wasn’t a “top priority” to sell and it’s “not economically viable,” though there was interest from potential buyers. He says he’s now exploring “possible better uses for the better part of building, which could evolve into distribution.”

But this residential restriction has packed a wallop.

The mill, according to town assessor Christopher Lamarre, is not at “the highest and best use” in terms of revenue for the town. With 12 more years on the restriction, Lamarre says the property will “limp along” with this lower valuation, which, for 2017, is $2,016,500, generating a roughly $29,000 tax bill.

GE’s restriction thwarted something else, as well.

“The restriction clearly inhibited our ability to sell, but we went into the process with eyes wide open, understanding it was an obstacle,” said John Williamson, whose Springfield-based company Williamson Commercial Property is the broker for Hazen.

“There was a tremendous amount of activity,” he added. “Interest from all over northeast, a lot out of New York City from potential developers who would love to convert that property into some sort of residential property.

“But when you take away its highest and best use, then you adversely affect its market value tremendously,” Williamson said.

Williamson also said there was some attempt to try to revalue the property to reflect that the property is “crippled” by the restriction. But the assessment went up $626,000 regardless for 2017. For three years before that, it had stayed at $1,390,500.

The mill was built around 1873, with foundation stones quarried from Monument Mountain. It is listed in the National Historic Register of Historic Places.

Hazen, who has 25 employees working there, said he bought the mill because it came with a “particular type of paper machine that laminates.”

When asked what he might do after the restriction time is up, he said it was too far into the future to say. But Hazen says it’s a building his company is “proud” of.

“It’s an important piece of property, a beautiful building,” he said, of what, in the mid-1800s, was the world’s largest paper factory. “We’re doing our best to maintain and preserve it.”