Wednesday, December 02, 2009

A moneypit with many surprises?

As she walked down the front steps of City Hall Monday evening, City Councillor Anna Ashley said she sure hopes the City can sell the pulp mill.

“Our city cannot afford in the long run to keep paying money each month to cover the costs,” --
Councillor Anna Ashley expressing a hope that the city can find a buyer for the Watson Island pulp mill, from the November 27 edition of the Daily News

Considering the ongoing surprises coming from Watson Island and its surrounding infrastructure items, perhaps rather than hopes and wishes, maybe a mass of intention at Annunciation church might help with the cause and be more appropriate!

The city is finding that being the owner, (would be seller) of a moribund pulp mill with a number of underlying maintenance issues is turning into an expensive proposition.

As outlined in that November 26th edition of the Daily News, the cost of keeping the water running and other necessary requirements of pulp mill ownership is proving to be daunting, originally the cost of keeping things up to speed was estimated to be at the 74,000 dollar a month rate, recently that cost has been increased to 100,000 a month or, 1.2 million dollars a year.

All for a property that will provide little in the way of revenue while it atrophies, waiting for someone to offer up the twelve million dollar asking price that the city has put on the property and buildings.

Now, as Monday's Daily News has outlined, there are problems to be watchful for when it comes to the dams that supply the water to the pipelines that run through the pulp mill site. While we wait for the Daily to update their website with George T. Baker's item from page two of Monday's paper (an update on the original Monica Lamb Yorski story), the thumbnail sketch is that the City has received a rather unwelcome surprise when it comes to extra responsibilities from pulp mill ownership.

A broken cast iron gate at the Rainbow Lake Dam is preventing the proper control of water levels there, a situation that could lead to a risk of flooding on the highway by Prudhomme Lake and a situation that the City is discussing as to solutions.

The worrisome thing beyond the cost, is the sudden surprise that the dams have provided, with the City originally not believing that they were responsible for that aspect of the mills operations.

Now with a letter from the Ministry of Environment advising otherwise, it seems that the City is now responsible for the monitoring of the dams and water lines.
Something that will no doubt increase the cost of operation, and should something unfortunate happen while under the City's control, then repairs will also we imagine fall to the City (and then the taxpayers) to take care of.
The due diligence of all of these pulp mill matters is raising a few concerns about just what exactly the City has become involved with as it tries to find a buyer for the industrial site on the city's outskirts.

Complicating matters for the City at the moment is the fact that Eurocan, a still operating mill and another mill in MacKenzie are now also on the real estate listings, with the province going so far as to help out with the tire kickers for those two properties. That could reduce the number of interested buyers that might take an interest in the Rupert property.

The City has had a rather unsuccessful record of late when it comes to real estate, the Atlin Uplands area one example of the city's dalliance in real estate which so far has only provided for a controversial parking lot that occasionally charges for parking, unless of course it doesn't.
Originally purchased in order to be developed with shops and tourist oriented services, there have been few developments since the City spent the money on preliminary work, other than the laying of black top and the introduction of pay parking meters that now sit unused

It's the kind of trend that should cause all to have a shudder of concern should the same kind of timetable come to pass in selling off Watson Island. If the city is on the hook for 1.2 million and takes longer than hoped to sell the property, the growing annual cost of ownership will no doubt play havoc with city budgets.

The unexpected or under accounted for costs of maintenance could prove to be a larger burden on the city than anticipated, and by osmosis will have an impact on the tax payers and residents of the city.

One can only hope that a buyer appears on the horizon soon, to take some of that burden of ownership away from the city's residents.

The latest twist in the Watson Island story has helped generate a letter to the editor this week in the Daily News, we suspect that it won't be the last contribution on the topic to the editorial pages of the city's newspapers.

Pulp mill maintenance costs …
Letter to the Editor
Daily News
Tuesday, December 2, 2009
Page 4

To the Editor,

I read with interest the November 26 article about the "large impact on the 2010 budget" that pulp mill maintenance costs will have. I have to say that I am less than confident to read that we are just now becoming "more aware" of these costs.

How is it that the City's financial folk didn't anticipate/investigate months ago? Were the figures not available? Were they not sought? Even at Tim Hortons, everyone saw this scenario as inevitable - why the lack of awareness?

I'm presuming that Sun Wave and the City of Prince Rupert have to adhere to the same environmental and safety regulations.

So if we didn't know what we were getting into financially (scary thought) why, in the interim, wouldn't we retain the skeleton crew of mill workers that had been "repairing, securing, monitoring, and safeguarding" the site for the past 5 years~

At a fixed rate of say $25 per hour, surely their wages have to be cheaper than call out costs to local contractors.

Like Anna Ashley and Calvin Thompson I'm worried.

Yes worried about the possibility of reduced services, but more worried about how our Chief Financial Officer is at this late date still "becoming more aware" of a huge financial liability - a millstone if you will, that may sink us.

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