Tuesday, January 22, 2008

“Let me tell you how it will be”

With the official deadline for operations now long passed, Sun Wave Forest Products has been put on notice that the City of Prince Rupert is coming to look for their money.

City Council passed a motion at a closed meeting last week terminating a partnership agreement with Sun Wave, as the Forest Products company was no longer in compliance with the agreement.

The city manager has been directed to collect outstanding taxes, fees and charges owed to the city and to take any actions necessary to including legal proceedings to accomplish the task.

The company had been granted a five year break on taxes, with the city granting them tax free status for the first five years of production, providing they commenced operations of the Watson Island Pulp Mill by January 1 of 2008.

With the calendar now heading towards the final week of January and no pulp on the horizon from the Island, the time to send in the tax collectors has come.

The city of Prince Rupert move comes two weeks after the District of Port Edward rescinded a tax agreement that they also had in place with Sun Wave, bringing to an end the arrangements that Port Ed like Prince Rupert put in place in hopes of seeing the one time economic engine of the region come back to life.

The Daily news examined the controversial tax breaks and what the city’s plans are now to recoup their losses from the Chinese company which purchased the mill back in the summer of 2006.

The much discussed and controversial issue was featured as the front page story in Tuesday’s paper.

By Leanne Ritchie
The Daily News
Tuesday, January 22, 2008
Pages one and three

Sun Wave Forest Products has lost its free ride on taxes from the city of Prince Rupert.

The company, that currently owns the Watson Island Pulp Mill, officially missed its deadline to reopen the mill on Jan. 1, 2008 and the city will now be going after the taxes it is owed.

City council discussed the issue in camera last meek and then made a very short statement when they released the motion during the regular council meeting.

"There was a motion passed at the closed meeting that the partnering agreement with Sun Wave Forest Products Ltd. be terminated on Feb. 5, 2008, provided Sun Wave Forest Products is not in compliance with the partnering agreement," said Acting Mayor Tony Briglio.

“And that the city manager be directed to collected outstanding taxes, fees and charges owed to the city of Prince Rupert and be authorized to take any actions necessary, including legal action, to collect.”

No one on council had any appetite to elaborate on the motion for the benefit of the public.

”It’s pretty straight-forward. Do any council members wish to add to that for any points of clarification> asked Briglio, who was replied to with silence from other council members.

“It’s pretty self-explanatory. We are moving to collect what is owed to us.”

The motion brings to and end a controversial agreement that gave the company tax-free status for five years, provided it opened the Watson Island facility for the purpose of producing pulp and was employing local people.

However, under the agreement, Sun Wave was expected to make some sort of contribution to the city in those first five years. According to the city, it agreed to make a contribution of $100,000 in 2007.

After the first five years, Sun Wave would then have paid taxes based on a complicated formula that took into account the price of pulp, production levels and the Consumer Price Index.

The tax agreement was opposed by one of the city’s other major employers, Prince Rupert Grain.

Sun Wave Forest Products purchased the Watson Island Pulp Mill during a fire sale in the summer of 2006.

The change of ownership followed the bankruptcy of New Skeena Forest Products.
Sun Wave is owned by the China Paper Group, a corporation of which 80 per cent is owned by the China Central Government, and which operates close to a dozen pulp and paper mills in China.

The mill, which has not operated since 2001, used to employ in excess of 500 people during its tumultuous periods of operation.

Port Edward, which also had a tax agreement with Sun Wave, also rescinded the tax agreement with the company at a meeting earlier this month.

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