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The Price of Heavy Industry

The City of Castlegar, after many years of benefiting from the Industrial Tax revenue from the Celgar Pulp Mill just upstream of the confluence of the Columbia and Kootenay Rivers, is facing a serious financial challenge. Celgar recently annouced that it was not going to pay taxes after the City responded to their request for a 50% tax cut.

The cost of doing business | The Castlegar Source

As everyone surely knows by now, Celgar has refused to pay its $3.6 million tax bill, and I’m not without sympathy for their position – certainly, it could be said that the city dropped the communication ball when it came to Celgar and its concerns, and the pulp industry is unquestionably under siege in the current flagging market.Having said that, I find Celgar’s action, and their arguments defending it, to be a form of economic guerrilla warfare with the city’s well-being held hostage.

The recently released online news source – The Castlegar Source has some great features including a diverse editorial section, this from Rob Leggett on the Celgar issue.

Don’t bite the hand that feeds you | The Castlegar Source

The City of Castlegar has completed large, costly projects, like the new City Hall, virtually debt-free, while asking Celgar to shoulder over 40 per cent of the city’s cumulative tax budget … while providing Celgar little in return…As an additional insult to the city’s apparent unwillingness to work constructively to ease Celgar’s unreasonable tax burden, is elgar’s understanding that a deal was made with one Castlegar taxpayer allowing it to pay millions less than the amount required by the published municipal tax rate. Yet mayor Lawrence Chernoff has said, “As far as we are concerned the taxes are reasonable…” If this is what Chernoff means by “reasonable”, it’s not hard to understand why Celgar is the only real key industry left in the Castlegar area.

Additionally, being affiliated with the Rossland Telegraph, Castlegar also gets the benefit of guest editorials, this from Andrew Zwicker of Rossland…

GUEST EDITORIAL: Creative solutions for rural industry | The Castlegar Source

I would suggest that having a major industry in any town puts a heavy burden on the environment in that area, which is a cost that rarely gets factored into the equation. The 70,000 litre spill of pollutants into the river and a number of environmental violations over the history of operation aren’t things that should be lived with or tolerated or even fined and let continue to happen.This is where Castlegar could get their win.

Give up the 50-per-cent tax break and, in return, impose tight new environmental policies on the operation of the business with fines according to the real cost of cleanup and the real cost of destroying the greatest natural resource in Castlegar; the lakes and rivers.

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The City’s Obligations

Not much has been said about the City’s obligation to pay those taxes that it collects for the other government levels and institutions such as schools and hospitals – the provincial government does not waive those taxes from the Municipality. Depending how long this goes on for, the City will have to make some tough choices – I’m sure the City’s reserves are not that deep!

Moving Forward

The City should, first and foremost, acknowledge that it has relied heavily on the tax base provided from the Pulp Mill to provide a large portion of the social benefits that the City has passed onto the citizens of Castlegar. From there, a smart choice would be to ween ourselves off the reliance on a tax base that may not have a long future.

Any other ideas?

Mike Thomas

Mike Thomas P.Eng. ENV SP, is the author of UrbanWorkbench.com and Director of Engineering at the City of Revelstoke in the Interior of British Columbia, Canada. If I post something here that you find helpful as you navigate the world of engineering, planning and building communities, that’s wonderful. But when push comes to shove: This is my personal blog. The views expressed on these pages are mine alone and not those of my employer.