Jack Knox: An unpaid tax bill brings big headaches for Port Alice

Way up on the north end of Vancouver Island, the Village of Port Alice just announced it can’t afford to open its hockey arena this winter.

That’s because the Neucel Specialty Cellulose mill, which usually provides 70 per cent of the tiny municipality’s property tax revenue, didn’t pay its bill this year.

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The Chinese-owned mill has been dormant since 2015. The shutdown, which idled 400 employees, was only supposed to last a few months but 3 1/2 years later the machines are still silent.

So now the village is scrambling to cover the gaping hole in its budget, shutting the rink, shaving hours at the adjacent community centre and not hiring a new municipal administrator.

Which should serve as a reminder to city-dwellers that not all of B.C.’s problems can be solved with Uber and niche taxes designed to cool an overheated urban real estate market. Out in the Land Beyond Starbucks, it’s still a struggle.

“What we really need for the north end of the Island is an employer that employs hundreds of people,” says Port Alice Mayor Jan Allen.

It has, in fact, been decades since the north Island’s resource-based communities have been flush. Port Hardy never really recovered from the loss of its Island Copper mine, which once employed 900 people, in 1995. The collapse of commercial fishing hit Alert Bay, Sointula and Port McNeill. Logging continues, but the whole Island is now dotted with mill towns that no longer have mills: Tahsis, Gold River, Campbell River. … Tourism is nice in the summer, but that doesn’t pay the bills in the rainy months.

So, yes, losing those 400 Neucel jobs has been a tough, tough blow for the whole area, including Port Hardy and Port McNeill, both just a 45-minute drive away. As for Neucel, it says it’s looking for a way to reopen the mill, but cautions against raising hopes.

Port Alice still has quite a few people who make a living in the bush, plus a surprising number of others who work from home, but in general the numbers are grim.

The assessed value of the average house was $141,000 this year, compared to $175,300 in 2014. The 2016 census listed the population at 664 — half of what it was 20 years ago — and the mayor figures it has slipped more since then.

Just 40 kids attend the K-7 school, which once had 270 students in kindergarten through Grade 10. The steak house has closed. Ditto for the deli. The hotel has been silent for four years. Windows in the strip mall have gone dark. The liquor store is down to five days a week. The bank is down to two.

People with too little money and too much spare time are at each other’s throats, Allen says. Some are renting out their houses cheaply to people whom others aren’t keen on having for neighbours. Some houses barely see people at all: Many have been snapped up by part-time residents, Americans and Albertans who only show up in salmon-fishing season. One place is owned by a couple from England who use it just two weeks a year.

Now, note that this isn’t the first time the cellulose mill, founded exactly 100 years ago, has shut down. After the owners of the day bolted in 2004, leaving an impressive pile of unpaid debts behind them, times got so tough that Vancouver Island Lions Clubs held a relief drive, collecting and shipping food and gifts to Port Alice in time for Christmas. Yes, the village had to close the arena then, too.

After new owners came in and the mill reopened in 2006, the people of Port Alice repaid the kindness. They raised $50,000 for that year’s Tour de Rock (largely through a slap-up seafood dinner and an auction that included a basket of sex toys), which worked out to $61 for every man, woman and child in town.

Allen isn’t sure whether there’ll be another resurrection for the Neucel mill, which was purchased by its current owner, the Canadian arm of China’s Fulida group of companies, in 2011. Fulida ran into a perfect storm almost immediately: prices for Neucel’s sulfite pulp fell as kraft mills converted to make the same product; oil and chemical costs shot up; the loonie flirted with par, bad news for a company that sells its product in U.S. dollars but pays its bills in Canadian.

Neucel ate heavy losses before curtailing operations in 2015, but continued to pay its property taxes until this year, when it failed to come up with the $959,000 — that’s $758,000 for the municipality and another $201,000 that the village paid to other government entities, such as the school board, on the mill’s behalf.

Jim Herculson, Neucel’s vice president of finance, says it came down to a choice between paying the property taxes on time or devoting the company’s limited funds to looking for a way to reactivate the mill. It chose the latter, bringing in a new president and hiring engineers and planners to delve into a options to see if they’re workable. The company hopes to have an answer in a couple of months; if all goes well, pulp would be produced in the first half of 2019.

No guarantees, though. “We don’t want to create any false expectations,” Herculson says. The biggest impediment is the lack of a secure fibre supply. The mill — and other mills — used to enjoy the certainty of being tied to a tree farm licence, but those days are gone. Fulida, which is looking for outside investors, is also looking for long-term stability.

Herculson defends the decision to put off the tax bill. “I think the village has to recognize that what we’re doing to keep the mill going is in both of our interests.”

That still leaves plenty of headaches for Mayor Allen, who has asked to meet with the premier and a couple of cabinet ministers to talk about things other than Uber and overheated real estate.

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