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Catalyst Paper reaches deal on taxes with City of Powell River


April 13, 2010
By Pulp & Paper Canada

Catalyst Paper and the City of Powell River have inked an agreement in principle to achieve the twin objective…

Catalyst Paper and the City of Powell River have inked an agreement in principle to achieve the twin objectives of reducing the Class 4 property tax rate paid by the company’s Powell River mill while assisting the city in reducing significantly its capital expenditures for future municipal service infrastructure.
The deal will see Catalyst’s annual property taxes capped at $2.25 million, and Catalyst providing waste treatment services for the municipality.
The city has agreed that the company’s annual property taxes payable to the city will not exceed $2.25 million for five years. In addition, the city and Catalyst agreed to jointly pursue environmental permit amendments and related arrangements that would enable a 20-year service agreement valued at $750,000 annually in the first five years, under which Catalyst will treat the city’s liquid waste using the mill’s effluent system and burn the city’s bio-solids in the mill’s waste wood boiler.
The agreement follows months of disputes between Catalyst Paper and the B.C. municipalities in which it operates. Catalyst withheld its municipal taxes in 2009, and challenged the property tax rates of four municipalities in court. The B.C. Supreme Court ruled in all four cases in favour of the cities. Port Alberni later launched legal action against Catalyst to collect the unpaid taxes plus interest.
Both Powell River and Catalyst are calling the new agreement a positive outcome for both parties.
“We saw that we both had a cost problem associated with municipal services. And we came to a shared conclusion that, going forward, the city’s circumstances could be addressed more cost-efficiently by making our mill infrastructure available for municipal use,” said Richard Garneau, Catalyst president and CEO. “Cooperation and flexibility helped us take a big step toward the $1.5 million property tax goal, and together the city and Catalyst were able to find a solution that’s right for Powell River.”
The agreement will see Catalyst drop its legal appeal of the City’s 2009 municipal tax levy and pay into trust $2.5 million in outstanding 2009 municipal property taxes including penalties and interest, pending the City’s completion of arrangements for implementing its 2010 business plan with the provincial government.

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