B.C. Jobs Minister Pat Bell says he is trying to get a project back on the rails that would see the city of Powell River fix its deficient sewage-treatment system while helping to keep its major industrial taxpayer, financially troubled Catalyst Paper, afloat.
The city and the mill's owners reached a deal billed as "win-win" last year. The city, which is failing to comply with provincial environmental standards for its sewage outfall, would hook up to the paper mill's treatment system. It would provide a low-cost solution for the city, and a steady income to the mill's owners.
The plan netted Powell River a national innovation award from the Canadian Association of Municipal Administrators last summer for "thinking outside the box in matters of economic survival."
But the deal fell apart last December when the proposed project was turned down for a $7-million grant from a provincial innovation fund. The fund, paid for by gas taxes, is designed to help improve air and water quality.
Catalyst, under creditor protection, has 1,600 employees in the province and says it injected $2-billion into the B.C. economy last year. In Powell River alone, it created $360-million in economic activity in 2011.
A March 6 letter from CEO Kevin Clarke to federal and provincial leaders called for help to get the project back on track, and to address industrial tax loads in B.C. While pulp and paper manufacturers have struggled across North America, he wrote, the fundamentals in B.C. aren't working and need to be fixed.
In the wake of that appeal, Mr. Bell said both levels of government are now actively looking at the company's concerns.
"There is good contact there and I think we are starting to work together on it," he said in an interview.
Mr. Bell said he is keen to find a way to revive the wastewater treatment project. "We are trying to help facilitate it – that one we are paying a lot of attention to. I think there is lots of opportunity there."
Heath Slee, president of the Union of B.C. Municipalities, would not say why the project was rejected. The fund is managed by the UBCM but decisions are made by a panel representing all three levels of government. "There are far more applications than there is funding available," he said. The reasons for rejection are confidential, he added, but the city was invited to address what was lacking in order to submit a bid for the coming year.
Powell River Mayor Dave Formosa suspects Catalyst is paying the price for leading an industrial-tax revolt against municipal taxes that has alienated local government leaders.
While Powell River has slashed its industrial-tax rates to keep the mill in business, other municipalities fought the company. Campbell River lost its Catalyst mill as a result.
Mr. Formosa said the $7-million grant was critical to moving ahead with the plan, which will now face a referendum with greater community resistance. "Given the restraint we are facing, if we got that grant, it would be a pretty good incentive for the public to look seriously at co-treatment."
The city is in non-compliance for sewage treatment. Mr. Formosa estimates the cost of a new plant at $25-million. Connecting to the mill's treatment plant would require little investment but the city would pay ongoing service costs of roughly $500,000 per year.
Catalyst vice-president Lyn Brown said the company is still willing to proceed but the transition money to connect to the mill's treatment plant will have to come from another source.
"It's still an idea on the books but the funding is something the city will need to address," she said. "It was a creative way forward to make good use of established infrastructure in a cost-effective way in a period of restraint."
Powell River was one of four communities where Catalyst stopped paying property taxes to protest against the share of the municipal burden it carried. Powell River, in response, has whittled down the company's annual tax bill from $5.2-million, seven years ago, down to $2.2-million this year. Another community, North Cowichan, battled the company all the way to the Supreme Court of Canada but is now asking for a provincial tax review and federal assistance to help keep its mill running. The provincial government promised two years ago to address the industrial-tax-rate conflict, but the issue has been handed off between a half-dozen cabinet ministers without resolution. It currently sits with Finance Minister Kevin Falcon, who has appointed another committee to report back to him by the end of the summer.