Opinion

Letter from Powell River, Catalyst Town

The mill got its tax cut. Now it wants more public funds to handle the town's sewage.

By Murray Dobbin, 13 Jul 2011, TheTyee.ca

Powell River landscape

Powell River with Catalyst paper mill in foreground.

Text size:

Rate this:

Login/Register

Related

It was interesting to receive my copy of Corporate Knights magazine in the mail recently. The magazine focuses on corporate social responsibility. It had its annual "50 Best Corporations" featured and number 13 on the list was Catalyst Paper. Where I live, in Powell River, people might be surprised to see this corporation (owned by a New York hedge fund) on the list.

Last year, as Tyee readers may remember, Catalyst approached the city councils of four communities in which it had mills and presented cheques for a fraction of their municipal tax bills. The message: take it or leave it, this is what we think the services we use are worth. The attached threat: if we don't get our way, we will simply close.

Catalyst then proceeded to take the mill communities to court, alleging their tax rates were so unfair to industry that they should be ruled illegal. Catalyst lost the case but has appealed to the Supreme Court of Canada. But even before the company launched its court case, the city council in Powell River panicked. They reduced Catalyst's taxes dramatically by 40 per cent from 2009 to 2010, to $2.25 million.

Now Powell River is proposing to pay Catalyst half a million dollars a year to treat the city's sewage as part of a plan "to reduce the property tax rate for major industry." Because Catalyst would have to spend next to nothing to treat the city's small volume of sewage, the end result is the equivalent of a $500,000 tax cut. You might wonder, though, whether it is a good idea to hand over an essential municipal service to a company that has a huge debt and has threatened to shut down.

City council apparently did not take the time to calculate just how much difference a tax cut would make to Catalyst's bottom line. Municipal taxes account for just 0.6 of one per cent of their mills' total costs, not enough to have any real impact on their viability.

Gambling on Catalyst's future

As part of the sewage privatization scheme, Powell River intends to get rid of the municipality's own treatment plants. But what exactly will the city do with its sewage if the mill closes? Hit by the closure of such a major industry, where it will find the money to build its own treatment plant? The former city engineer aptly called the sewage privatization plan a multi-million dollar gamble on the future of Catalyst.

When the proposal was announced -- by Catalyst, not the city -- it took everyone by surprise. City councilors moved quickly to sell the deal to residents on the basis that the provincial government said all of the capital costs could be covered by a provincial grant. Connecting Powell River's sewage system to the mill and other capital costs related to the privatization proposal were estimated to be over $7 million. Councilors claimed the grant was "the driver" of the privatization plan, and no money was available for a new public treatment plant.

With encouragement from the provincial government, the city applied to the Innovations Fund, a gas tax fund designed to reward environmentally innovative projects. The fund is administered by the Union of BC Municipalities. Judging by previous projects that got grants, municipalities have made genuine efforts to meet the "innovative" environmental criteria in the fund's application process.

Powell River -- population 14,000 -- is asking for a sizeable chunk of the $50 million total in the Innovations Fund. One hundred and fifty B.C. municipalities have applied for grants in this round of funding. Powell River's $7.3 million request represents nearly 15 per cent of the total monies available. How other municipalities would feel if Powell River received a large grant for what is, in effect, a corporate tax break, is unclear.

Sewage and standards

But Powell River councilors have repeatedly expressed confidence that they were going to get funding for the scheme, so maybe they know something the public doesn't. Is the pro-P3 provincial government pushing this deal behind the scenes? They already provided $150,000 to the city to "study" the joint treatment deal. Powell River's application has proceeded to the final stage of consideration, despite some fairly spectacular weaknesses.

The city's sewage advisory committee -- mandated by the ministry of environment -- voted ten to one against privatizing the city sewage system. (Catalyst's representative on the committee was the sole vote in favour.) The only study that has been done on combining the mill's effluent with Powell River sewage produced a result that would violate ministry of environment effluent requirements. The prospect of prolonged discharge of raw sewage into the ocean is very real and potential threats to the health of mill workers from exposure to city sewage have not been investigated.

Whether the city's existing treatment plant could actually have its problems resolved has not been studied. Powell River's main treatment plant does have overflow problems, but it treats sewage to a tertiary standard that would be the envy of most municipalities. The city's proposal would take Powell River backwards to a secondary standard.

The city was so determined to go ahead with the Catalyst privatization deal that it applied to the Innovations Fund before any of the above problems were addressed. They have still not been resolved. To make the application stronger, the city actually misled UBCM by claiming that the joint treatment deal had already been selected -- and that "extensive public consultations" had taken place. In fact, city councilors had not yet made any decision when city staff sent in the application and no public consultations had yet taken place.

Defining innovation

Councilors' most recent plan is to use the Innovations Fund to pay for the deal with the mill, and then 10 years down the road build a public sewage treatment plant when more funding from senior governments becomes available. Large components of the infrastructure that the Innovations Fund would pay for would simply be abandoned, essentially wasting up to $1.7 million in Innovations Fund money.  

Constructing and then abandoning infrastructure hardly qualifies as an environmental innovation.

But a permanent plant shutdown could happen even as the city sewer lines are being laid to the mill. The manager of the Powell River mill stated candidly at a recent stakeholders' meeting that in terms of the mill's viability, looking beyond the next four quarters is very difficult.

Another conflict between this privatization proposal and the environmental objectives of the Innovations Fund is that there are no reliable plans to deal with Powell River's sewage when the mill shuts down, either temporarily for maintenance or accidents, or permanently because of bankruptcy. The possibility that raw sewage may be dumped into the Malaspina Strait is still being considered. 

Powell River Councilors are promoting the deal with Catalyst by promising ratepayers they will get a cut in their sewer charges. But in reality, the City would have to quickly build up millions in a reserve fund in case the mill closed -- or else be left in a position where it had to dump raw sewage into the Strait.

'Trust has become a casualty'

It's not as though people in Powell River are not interested in the green alternatives the Innovations Fund was intended to promote. Public consultations were finally held in May and 150 people attended. Opposition to the Catalyst scheme was overwhelming and, to quote the independent facilitator's report, those attending expressed "…a strong desire that the City explore some of the more innovative solutions being used around the world to both reduce the footprint, impacts and costs of building this facility."

Yet when the city does build its public plant, there are no plans for resource recovery or other innovative approaches. It plans to use open ditches -- the most basic, old technology.

No amount of opposition to the privatization scheme seems to have any impact on city council's determination to provide Catalyst with another tax cut through this deal. The virtually unanimous vote against by the advisory committee, the overwhelming opposition in the public consultations and a 1,000 name petition, have all been ignored. The facilitator's report on the public consultations described the effect: "Trust has become a casualty of this process as it has unfolded. The perception of a ;done deal' has reinforced the feeling of a lack of honesty, transparency and accountability..."

The Catalyst deal will succeed or fail based on whether or not it gets the Innovations Fund grant. The decision is due sometime in September. [Tyee]

Murray Dobbin files the occasional feature for The Tyee in addition to his 'State of the Nation' column that runs every second Monday here.

14 Comments:

Login or register to post comments

  • Jeffrey J.

    45 weeks ago

    Dismantling Democracy

    Thank you Mr. Dobbin for another excellent essay on the step by step process of dismantling democracy. This is how a country cedes the public good to private interests.

    There is nothing good that can come of these trends. Very, very worrisome.

    Does anyone REALLY believe that private hedge funds will expend their resources for the benefit of the citizens of Powell River? Never in a million years.

    Great article.

  • alive

    45 weeks ago

    Corporate Welfare scheme

    Last time I was in PR, homeowners near the plant had signs on their properties denouncing Catalyst for "poisoning" the area.

    So, who exactly is promoting this new scheme? and do they represent the actual citizens?

  • freebear

    45 weeks ago

    Where are the 'balls' and 'ovaries' on Mayors and Councils?

    I guess we should pay corporations to come to town eh!

  • lynn

    45 weeks ago

    Good work, Murray Dobbin, and excellent article.....

    detailing the most recent of a long series of betrayals against the citizenry of Powell River by those elected to represent the public interest.

    freebear asks: "Where are the 'balls' and 'ovaries' on Mayors and Councils?"

    On the shelf and price-tagged.

    alive asks: "So, who exactly is promoting this new scheme?"

    Look up Catalyst Paper's Board of Directors - and follow the linkages. It's kinda like a game of Snakes and Ladders. Then look up the Board of Directors for Norske....which preceded Catalyst Paper. Again, more familiar names with all too familiar provincial political connections.

    alive asks "and do they represent the actual citizens?"

    According to the actual evidence: Nope.

    There is a history here.....:

    A few years ago the citizens Of Powell River won a great victory for free speech with the help of and thanks to John Dixon and the BC Civil Liberties Association. The court decided, in the case of Dixon v. Powell River (City), 2009 BCSC 406, that a city may not sue for libel or slander and that the City of Powell River acted unlawfully when it threatened to sue its citizens for speaking freely about city affairs.

    Yup, your eyes are not deceiving you, the city of Powell River actually threatened to sue three brave people who chose to speak up on a controversial development matter.... merely voicing their democratic right to do so.

    And so, apparently, the battle goes on......

    This is an important article because no doubt this is happening in many towns and cities throughout BC.

    Powell River, like so many resource towns, with ocean, rivers, forests at their door has no doubt been thoroughly scouted out by international interests - with a little help, of course, from their corporate friends in all levels of government. The consequence: Our rivers and inlets soon mutate into inaccessible ROR's, our forests are stripped barren, and our cities become governed by neither integrity or logic itself.

    The forces of privatization remain unrelenting - 'stand on guard', indeed.

  • the real ODB

    45 weeks ago

    the revolution will not be televised...

    ..but hopefully it will be soon!

  • the real ODB

    45 weeks ago

    the revolution will not be televised...

    ..but hopefully it will be soon!

  • Marysue52

    45 weeks ago

    Powell River not the only town corporately screwed

    The REAL reasons towns like Port Alice, Powell River and likely Campbell River get screwed out of their rightful corporate taxes are because of bought politicians, free-for-all trade deals like TILMA, and an insentient, brainwashed population which falls for every damn piece of corporate drivel in the mainstream media (TV, radio and press). You wouldn't believe how many Globe and Mail readers fell for that slick Big Oil propaganda pull-out on global warming which more or less said that it was merely a 'cyclical event'. I am afraid that our friends, family,neighbours and even we ourselves are complete idiots and need the Dummies' Guide to Corporate Skullduggery and Politics. We have allowed psychopaths into positions of absolute power. The new feudalism. We're all pretty much serfs now, when you think of how little power we have over our lives, livelihood and costs thereof.

  • badkaren

    45 weeks ago

    A councillor for Powell

    A councillor for Powell River has sent the following information via email supporting the joint treatment proposal:

    "We are going to see the likes of a 1.5% increase for the 152,000 payment per yr. for the Wharf at Westview…( the land between the two marina’s and fishing pier) a 5.3% increase for the South Harbour … its yearly pmt $400,000 or a 5.3% tax increase, the new water system for a $260,000 per yr. pmt or a 13.4% water fee increase or equivalent to a 3.5% tax increase, the Track for a $68,000 yearly pmt or a .o8% tax increase.
    Now these figures are all net of the grants already deducted…what I am telling you about is after grants what is still owing ... Even the average business will pay approx. $2,000 to $2,300 more next year. The average home that pays $2,500 per year will pay an additional approx. $300. Per house hold next year and this is not including the sewer as of yet and a Fire-hall is needed the Library is also wanted but can we afford it given the above???"

    What is not mentioned in the Councillor's email is that Council applied for many grants but was under absolutely no obligation to accept any of them. Aside from the water system, these projects were totally not essential and even the water system is debatable.

    Despite the fact that they have made significant reductions for the major taxpayer, they have not made any cuts. If anything, City Hall has increased spending. They accepted the grants which all required matching funding and, because everything was so rushed, wound up making many very costly mistakes not the least of which was endangering Blue Heron habitat in the case of the track.

    Now that these unnecessary projects have been pushed through, and with extra costs, they cry that there is no money left for essential things like sewage treatment and a new firehall.

    Why is everything an emergency? Lay off the gas and take your time. Sewage treatment needs serious and careful consideration to ensure the public trust is maintained. Sure seems to me like this council is trying to push it through before the fall election and hamstring the next council.

  • alive

    45 weeks ago

    corporate greed!

    I have now lived in two towns that were hit by corporate greed, where mills were closed down ( and set up again, elsewhere).

    In each case the elected officials scrambled to keep the town operating as usual, and resorted to accepting any and every opportunity that at least pretended to create a few jobs.

    As a result many new projects have come about and often turned out to be ill-conceived if not totally useless!

    My guess is that the councillors are more concerned with appearing to be doing something, than about what makes sense.

    That could ultimately be caused by their own concern about getting re-elected? thinking that a lot of press is better than no press?

    The end result is that people forget why the town is suffering and the scam-artist get away with not even cleaning up the sites they left behind.

  • lynn

    45 weeks ago

    Just the appearance of democracy

    Even on the local political level, the connections with big power politics and big corporations are both insidious and deep.

    The really valuable resources are not found in cities.

    Greed and power are now going for the last drop of water, the last Douglas Fir, the last nickel in our pocket....so it should not be surprising that 'They' have intentionally ensured that they have their representatives in place....

    It is how our rivers, our power, our rights as citizens and millions/billions of dollars in tax monies have been stolen away from us.... all in the light of day.

  • pwlg

    45 weeks ago

    We're number 13!

    It's interesting that Catalyst was ranked 13th in a field of 60 corporations for its social responsibility which includes its environmental, social and governance practices.

    The Corporate Knights survey looks at 12 criteria and four of these criteria are based on environmental practices.

    The Knights indicated in their survey that only 10 of the 60 corporations on their list disclosed detailed data on their environmental practices.

    Energy, carbon, waste and water are the four indicators relevant to environmental practices yet fewer than 25% of the corporations provided details on their waste and water practices.

    In Catalyst's example, most of their claims for lowering carbon emissions, reducing energy and using less water and producing less waste has come about by mill closures or partial mill closures.

    In terms of its social responsibility, it has laid off thousands of workers in the process.

    To show how precarious Catalyst's position is in terms of it being a viable company look at its share price per unit. In January 2007 to buy a share in Catalyst it would have cost you a bit over $4.00. From there it began its tumble.

    Even before the Great Recession of 2008 Catalyst's share price was under $1.00 and by September 2010 its share price was under a thin dime (10 cents). As of today its share price is 15 cents. Catalyst has gone from one of BC's largest forest companies when it was BC Forest Products to a penny stock company.

    Catalyst appears to be partnering with other municipalities and even First Nation's communities on public infrastructure projects including the Robertson Creek dam in Port Alberni.

    Is Catalyst positioning itself as a P3 partner in public infrastructure projects, designing, building and operating the infrastructure like SNC Lavalin? Is Catalysts future wrapped up in its water licenses? I would imagine Catalyst is taking advantage of the federal governments alternative fuel tax credit game where pulp making facilities are given tax credits for using a fuel they have used since they began operating in the 60's (black liquor). Since the US granted its pulp mills tax credits or direct grants for using black liquor as a fuel Canada followed suit in order "to be competitive". Just another way to shift taxes for social programs from corporations to workers.

    Will the workers themselves take over some of the operations like what happened at Nanaimo's Harmac mill? Let's hope so.

  • rantnic

    45 weeks ago

    LEAD THEM INTO PREDITION

    Lets all join hands with a hedge fund company out of the New York Stock Exchange and commit ourselves as taxpayers to a relationship, one that has no real control over the future. Catalyst could well sell your investments to anyone who may or may not decide to charge a breaking fee to the citizens of Powell River

  • zalm

    45 weeks ago

    pwlg

    Very interesting thoughts here:
    "Is Catalyst positioning itself as a P3 partner in public infrastructure projects, designing, building and operating the infrastructure like SNC Lavalin? Is Catalysts future wrapped up in its water licenses?"

    A friend who worked for Catalyst as a middle manager indicated several times that he thought Catalyst was unlike many other traditional manufacturing operations in that they appeared to place greater value on running the business right for the long-term: depreciation was paid attention to, long-term financing was always in place, dividends paid more often than not (not bad for a forestry company in an industry with huge swings) and there was more than usual amount of training of the workforce and maintenance of the plant than is usually found.

    It was no surprise to him when Catalyst asked for the reductions. I never found out why. It could be that they're looking for a long-term dividend-paying enterprise like water and sewer as a counterweight to the cyclical forces of the forestry markets. It would be interesting to ask bcIMC why our pensions are so heavily invested in Catalyst.

    http://www.bcimc.com/publications/pdf/ResponsibleInvesting/ResponsibleInvestingHighlights-2011Q1.pdf

  • lynn

    44 weeks ago

    New name. Same old game.

    From a 2007 letter to the editor of The Powell River Peak:

    Does this pattern sound familiar?:

    Quote:

    "In August 2001, Norske Skog released $1.3 billion out of the company's accounts (the largest of its kind in Canadian history) and gave it to shareholders, then went into debt to become Catalyst.

    The company is now crying poverty to the city for tax reductions and to the ministry of environment for an exception to current safety guidelines so that they can create an unprecedented mountain of ash. This on top of a site that is known to contain special (read hazardous) waste.

    When will this nonsense stop?" End of quote.

    • The discussion for this story is closed. No more comments can be added.