Friday, January 12, 2007

Shaking the Sun Wave tree

The mayor and council of Prince Rupert are beginning to worry a bit about the intentions of the owners of the Watson Island location of the old Skeena pulp mill operations.

It was back in May of 2006 that the hope of a rebirth of the Watson Island Mill was floated once again a period of time when it was suggested that things were moving forward, all be it slowly on the long running story of Skeena.

However, as 2006 turned into 2007 and with little indication of a start up being shown on the Island, there are concerns that Sun Wave is dragging their feet too long when it comes to putting that location back into operation.

Having given a tax holiday to Sun Wave on their investment, council is looking for a little good faith that there is an actual operational plan in place to re-start the mill. To that end, they have already sent the company one letter reminding them that the 30 year tax deal hinges on the pulp mill being in operation by 2008. That deal exempts the company from taxes for the first five years, as long as the mill is in operation and has hired local workers.

In a front page article in Thursday’s Daily News, there seems to be a bit of deflection towards the long since departed Victor Kumar, the former city administrator who as the story is presented, “pitched the deal” to the city. An interpretation which while it may be technically correct, should not absolve the council of the day from their share of responsibility on the issue. The last time we noticed, the city administrator didn’t have a vote on council issues. It seems we've come a long way from having China Paper on the hook, yet we can't seem to reel in that line.

The situation at Watson Island could become even more clouded considering the recent moves by Pope and Talbot of Nanaimo to secure a fibre supply from the Northwest, the traditional supply grounds of a mill in Prince Rupert. The Vancouver Island pulp company has been busy making plans to purchase a steady supply of chips from the Hazeltons, load them through the Skeena and then ship them by barge to their Nanaimo operation.

If the Nanaimo operator locks up that supply of chips, will there be enough supply left in the Northwest to make an operation at Skeena viable? That’s something that hasn’t been fully explained since the Pope and Talbot operation has been working the Northwest in quest of fibre. It’s said that Sun Wave has their own fibre arrangements in place as well a labour agreement (for whatever labour force may be left in town), which is all well and good, but rather meaningless if there is no active intent to actually operate the mill.

The City has it goes, “asked some pointed questions about the start-up and they have not received any response.” Some might suggest that those pointed questions might have been better asked as the deal was being put in place. The next step in the process could very well be another letter, this time “a strongly worded one” asking where they are on their development plan.

Hopefully the City can squeeze an answer or two out of the would-be mill operators, bringing some kind of closure one way or another to this most torturous of Podunkian soap operas.

The Daily news featured the latest developments (or lack of them) on the front page of Thursday’s paper.

Councillors asking tough questions after apparent lack of action on restart
By Leanne Ritchie
The Daily News
Thursday, January 11, 2007
Pages one and three

After giving Sun Wave Forest Products a free ride on taxes, city council wants to know if the company ever plans to start up the pulp mill.

“There were concessions that council made very specifically to Sun Wave for the restarting of the pulp mill,” said Prince Rupert Mayor Herb Pond.

“Everything we did was contingent on a restarted pulp mill with a single objective of creating employment sooner rather than later in our community. Just like many members of the community, council has become concerned about the lack of any real signs that show that, leading to the restarting of the mill.”

Council has already sent the company one letter reminding it that the tax deal is contingent on an operating pulp mill by 2008.

“It’s just a matter of grave concern to council and something that needs to be kept a close watch on.”

The city signed a 30 year tax agreement with Sun Wave Forest Products in 2005. The agreement exempts the company from taxes for the first five years, provided the mill is in “continuous operation,” and employs local people.

While Sun Wave won’t pay taxes between 2005 and 2010, the city and company are supposed to have an economic development agreement under which they will have to sit down together before Oct. 31 each year to discuss the company’s progress and the company and city will come up with a n agreement on how the company “will enhance city amenities.”

This has not yet happened.

For the remaining 20 years, the tax contributions turn into tax dollars plus additional dollars based on the Consumer Price Index fluctuations, production levels and the price of pulp.

Former city administrator Victor Kumar pitched the deal by stating that Sun Wave was making a $100 million plus investment in order to get the pulp mill up and running and in order to recover its investment, it could not afford to pay the million dollar tax bill during the early years.

At least one other major company in town, Prince Rupert Grain opposed the deal.

Coun. Tony Briglio said council of late has begun to ask some pointed questions about the start-up and they have not received any responses.

“I think a strongly-worded letter ought to be forwarded on to the Sun Wave Group asking them where are they at, because there has been no significant move that would really give anyone hope to believe that this thing is going to get started in the 2007 year,” he said.

Pond added the concessions that council gave to Sun Wave gives council every right to be involved.

“Quite frankly, council would have no role out there if that owner was paying normal taxes under normal rates,” he said. Once finally adopted. It also has to be approved by the provincial cabinet.

Sun Wave completed its purchase of the Watson Island pulp mill last June but since then no visible steps have been taken toward a start-up, despite the fact the company has fibre agreements and labour agreements already in place.

(photo above from the Prince Rupert Library website)

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