Last spring, Catalyst forest products was facing financial problems and began playing hardball with its host B.C. communities. It hand-delivered partial payments of its municipal taxes to Powell River, Campbell River, Port Alberni and the District of North Cowichan.
Catalyst claimed it had calculated the value of the municipal services it actually used and that was all it was going to pay. Hammering its nasty point home, Catalyst took the four communities to court claiming that their tax rates were too high.
B.C. courts ruled against Catalyst bullying, but the Supreme Court of Canada has just granted Catalyst leave to appeal. Yet in 2010, Catalyst was paying only $2,250,000 in taxes in Powell River, less than half its 1999 bill. Yearly decreases have cut the company’s share of the overall tax bill by two-thirds while residents and businesses have seen theirs nearly double.
Yet studies demonstrate that taxes are a minor consideration in investment decisions, usually placing fifth or sixth down the list of factors such as the cost of transportation, energy, labour, land and borrowing. Property taxes account for a minuscule 1.15 per cent of Catalyst’s total B.C. operating costs, not enough to make an impact on its viability.
City councillors in Powell River, however, panicked at the implied threat to close. They are eagerly pursuing more ways of letting the company dispose of its responsibilities.
In doing so they have started a race to the bottom with the other communities. Powell River’s solution? An Agreement in Principle (AIP) that includes a plan to have Catalyst cotreat the city’s liquid waste in its treatment facility.
The deal is fraught with problems. If Catalyst goes bankrupt, the cotreatment deal could be jeopardized by court decisions regarding the disposal of its assets. Six months after the deal was signed, it’s still unclear what would happen if the mill closed permanently and was dismantled. Moreover, if the mill closes temporarily for more than a week, we would see raw city sewage being pumped into the ocean.
There are other problems. City council openly acknowledges the $750,000 fee it would pay for sewage services bears no relationship to Catalyst’s cost of treating the waste — it is simply the amount by which Catalyst wants its taxes further reduced.
In other words, the co-treatment deal looks like an indirect government subsidy to Catalyst. That violates the Community Charter and provincial law.
But Powell River is counting on up to $10 million from the province for the project. It is applying to the provincial Innovation Fund, one of the municipal grant programs funded by a portion of the tax on gasoline. This fund is supposed to reward environmental innovation but through co-treatment, the standards for the city’s effluent will in reality be lowered to the industry standard. The only novel aspect of the deal is that it privatizes Powell River’s sewage treatment — not exactly the “innovation” the fund was designed to encourage.
Catalyst would get virtually all the benefits from other aspects of this agreement. For example, Catalyst’s old administration building would be handed over to the city for a dollar. While that sounds like a good deal, it saves Catalyst potentially hundreds of thousands because the building is contaminated with asbestos, which Catalyst would otherwise have to remove.
But what has many Powell River residents upset is the secrecy surrounding the deal and the fatally flawed consultation process. The agreement was signed last April but there still has been not been a single public-consultation meeting held to discuss it. The only nominally public process is through an advisory committee required by the Ministry of Environment for municipal liquid-waste management plans. But the agreement was signed before the advisory committee ever saw it.
The membership of the advisory committee itself violates almost all the ministry guidelines that require representation from “local environmental and recycling groups; business, labour, ratepayer and consumer groups; school districts…. “
None of these groups is represented on Powell River’s committee. Yet city council claims this committee constitutes its public consultation, another violation of ministry guidelines, which call for robust and open public consultation on liquid-waste management plans.
Catalyst’s sweetheart deal with Powell River would require an injection of significant provincial dollars to make it work, and the provincial government is reportedly onside.
But should provincial taxpayers’ money be used for a deal that would lower environmental standards, privatize an essential public service, and accelerate a race to the bottom among B.C. municipalities?
Murray Dobbin is a blogger on The Vancouver Sun’s Community of Interest blog and lives in Powell River.