And in the end, well, let's say that nobody was terribly surprised

Judging by the lack of activity at Watson Island, the front page story in Friday’s Daily News probably came as a surprise to… well, no one actually.

With their latest correspondence finally answered, City council has pretty well come to the conclusion that there probably won’t be a re-opening ceremony any time soon.

The Chinese owners of the moribund pulp mill at Watson Island didn’t particularly seem to be in any hurry to re-open the mill, and in fact aren’t even in the mood to chat about the issue with the city.

Sun Wave Forest Products gave what is described as a “lukewarm” response to recent initiatives of the city to determine their plan of action for the mill.

The official response from Sun Wave officials was described as that of a need to “discuss it”!

This sounds a lot like the kind of thing your Mom or Dad would say before they lowered the boom and said you couldn’t drive the family car anymore, or give in to some other such outlandish request.

The latest developments over at Watson Island add to the growing legend of the mill, which has featured one twist or turn after another over the last number of years.

It certainly quashes the line of thought being generated as recently as two days ago, one national news article reported in their story on the declining census numbers that there was an "outside chance" that the mill may soon be back on line, suddenly outside chance apparently has become "fat chance", makes you wonder whatever happend to this "almost a guarantee"!.

The Daily News featured the latest developments on this long running saga in Friday's paper.


‘CITY NO LONGER COUNTING ON PULP MILL REOPENING’
By Leanne Ritchie
The Daily News
Friday, March 16, 2007

Pages one and two

The city got a lukewarm response from Sun Wave Forest Products about its plans for the pulp mill.

After sending several letters to the most recent owners of the Watson Island Pulp Mill, Prince Rupert Mayor Herb Pond confirmed the city has received a response. It came last week.
“We’ve been asking for a start-up plan or evidence of a start-up plan,” said Pond.

What the city got in response was a message that the company would have to “discuss it”.
The city has been pushing to find out what is happening at the mill site.

It has an agreement with Sun Wave to forgive the company’s property taxes for its five years of ownership, if the pulp mill starts operating by the end of this year.

“We felt like we were speaking into a vacuum, so it was really good to have correspondence from Sun Wave and of course a visit from their site manager. Negotiations are in process,” said Pond.
In particular, the city has been asking about the “contribution in lieu of taxes,” which the company was supposed to make each year during its first five years.

Sun Wave should be making its first “contribution in lieu of taxes” this year, given they purchased the property back in the middle of 2006.

The unique tax agreement was crafted by former city administrator Victor Kumar and signed by council, despite protests from other major industrial taxpayers.

If the pulp mill doesn’t start up in time, Pond says the city believes it will be able to recuperate the full taxes from Sun Wave owed from the middle of 2006 to the end of 2007.

“We believe and certainly have implemented the legal mechanisms that they owe us those taxes,” said Pond. “We will collect taxes and charges against the land for the full amounts owing.”

Taxes on the pulp mill are worth about $2 million a year. If Sun Wave doesn’t start the mill — a $100 million undertaking that needs about six months of preparation before pulp rolls off the line — Sun Wave would owe the city about $3 million.

When asked if he believes the pulp mill will restart, Pond replied that the city is no longer including the pulp mill in its economic forecasts.

“Hope springs eternal. But in terms of any form of planning the city is doing, predictions in terms of what economic development is doing or planning around housing, the restart is discounted. Having said that, obviously we will keep the door open and do all we can ...” said Pond.

Not paying taxes on the pulp mill has become a tradition for former owners, starting with Skeena Cellulose and then the provincial government right up until 2002 when it was sold to NWBC Pulp and Timber.

The city is $10 million in debt due largely to the fact that for several years it continued to spend taxes it was not getting from the beleaguered forestry operation. The city thought the province would pay the municipality those taxes.

In 2002, the provincial Liberals were elected and vowed the sell the company. NWBC Pulp and Timber (known locally as New Skeena Forest Products) convinced Northwest municipalities to sign a tax deferral agreement when it purchased the operations. Under the agreement, the tax payments would start small but begin ballooning as the company began to make money.
After two years of efforts to find $80 million in start-up funding for the pulp mill, including asking the city of Prince Rupert to put up $20 million, New Skeena Forest Products declared bankruptcy in 2005.

Overall, the city has lost close to $20 million in lost taxes because the three former owners have not paid taxes.

All the city has gotten for the $20 million was $300,000 out of the bankruptcy of New Skeena Forest Products.

“The court washed those taxes away,” said Pond.

And the result was that the city was pushed to the edge of bankruptcy in 2005/2006 and told by provincial authorities to cease spending money on capital expenditures until it got its finances in line.

Yet, city council chose to sign a new tax deferral agreement with Sun Wave because, at the time, it was the only company looking to buy the pulp mill assets. It was work with Sun Wave or face the pulp mill’s liquidation, said Pond.

“Certainly, people have always speculated about the intention (of Sun Wave) and you can spend endless hours speculating,” said Pond.

“At the time we negotiated our arrangement with Sun Wave, they were the only partner in the whole area that was taking about any potential offer of any sort. ”

According to Sun Wave, there are currently 17 people employed at the site, seven are members of the Pulp Paper and Woodworkers of Canada Local 4 and are working for Sun Wave. Ten people are employed by Pope and Talbot, a forestry company shipping pulp chips through the property, three of those are from Prince Rupert, two from the Lower Mainland, and the rest from the Northwest.