Wednesday, March 29, 2023

New Brunswick IS WHOLLY OWNED BY THE IRVING FAMILY COMPACT

Property tax assessment for Irving paper mill in Saint John among lowest in Canada

Closed paper mill in B.C. valued to be worth 5 times more than operating mill in N.B.

A brown building with a green Irving logo on the side
The Irving Paper mill in Saint John is New Brunswick's largest. Its assessed value has been lowered more than 58 per cent since 2012, reducing its annual tax bill to the city by $910,000. (Roger Cosman/CBC)

Service New Brunswick's recent decision to retract $3.5 million of a $3.7 million assessment increase it had given J.D. Irving Ltd.'s Saint John paper mill in 2021 for economic reasons is the third major valuation reduction the facility has gotten from the agency in the last decade.

The provincial body is not saying much about how it came to that decision, citing "assessment market analysis" it does annually, but the cumulative effect of reductions since 2012 has left the mill with one of the lower property tax valuations in the country for its size. 

That has eroded the amount of tax the mill pays to  Saint John  — from $1.58 million in 2012 to $670,000 this year — and Mayor Donna Reardon said there is little the city can do but hope Service New Brunswick has been valuing the property in a reasonable way.

"I don't know how they figure it out," said Reardon in an interview.

A woman standing outside by a car and a tree. She is wearing sunglasses, a pink scarf and a black jacket.
Saint John Mayor Donna Reardon would like more details from Service New Brunswick about why it has again lowered the assessed value of the Irving Paper mill. (CBC)

"It would be interesting to look across the country and see how assessments [on mills] are done."

Irving Paper is New Brunswick's largest forestry mill, with an annual production capacity of 410,000 tonnes of specialty paper. 

According to the company's current "sustainability report," production levels have been strong in recent years, with 388,974 tonnes of paper manufactured in 2021, just under 95 per cent of full output.

Still, for 2023 the mill is assessed for taxes to be worth $24.3 million, 41 per cent of what its taxable value was back in 2012. 

Last week the company said that ongoing devaluation is justified "given economic challenges in the paper industry, including consumers' growing reliance on screens over paper."

But not every province adjusts the assessment value of business properties based on market up and downs.

The front of the Service New Brunswick corporate services building.
Service New Brunswick recently retracted most of a $3.7 million assessment increase it gave the Irving paper mill in Saint John in 2021. It has been reluctant to explain what happened, in detail. (Karissa Donkin/CBC News)

In Powell River, B.C., the Catalyst paper mill also produces specialty paper and has an annual production capacity of 330,000 tonnes. It, too, has been facing significant problems but is valued for property taxes in 2023 to be worth $124.5 million.

In December 2021, the mill's owner, Paper Excellence, announced that "ongoing contraction of global paper markets and paper prices" had been causing the mill to lose money and was forcing a shutdown. 

The mill hasn't operated for more than a year because of that, but has still retained its assessed value and this year is scheduled to pay $3.3 million in property tax, mostly to Powell River.

In an email, BC Assessment's Tim Morrison said the agency "must strictly follow" rules set in regulation, and those don't include provisions for helping a mill financially through the assessment system by lowering its taxable value.

"We cannot consider doing anything outside of the regulations," said Morrison.

Similarly in Prince George, B.C., three pulp and paper mills owned by the forestry company Canfor are being assessed this year at values between $63 million and $98 million, even though two have recently announced production cuts caused by wood shortages.

"This has had a material impact on the availability of residual fibre for our pulp facilities and we need to right-size our operating platform," said Canfor president Kevin Edgson, in January, about a decision to end pulp production at the Prince George Pulp and Paper Mill.

That is different than how mill valuations have been working in New Brunswick.

In 2019, Service New Brunswick explained to MLAs that sweeping assessment reductions it made for all pulp and paper mills in the province in 2013 were based mostly on external market issues facing the industry.

A paper mill with blue water to the left of it. There are trees branches covered in green leaves in the foreground.
The Catalyst Paper Mill in Powell River, B.C., is assessed for taxes by BC Assessment to be worth $124.5 million, even though it has not operated for a year. The amount is five times what Service New Brunswick values the Irving Paper mill in Saint John. (Submitted by Eldon Haggarty)

Several mills in Ontario legally fought for and won assessment discounts from the Municipal Property Assessment Corporation that Service New Brunswick said it was obliged to duplicate.

"If we are to ignore the court-precedented decisions that are being made throughout Canada, then we are going to look foolish," said then-executive director of assessment for Service New Brunswick, Stephen Ward.   

"We had to take a stand. We had to revalue these properties."

One of those Ontario facilities was the pulp and paper mill in Thunder Bay. It had its assessment cut from $72.2 million to $32.6 million following lengthy hearings in 2014 that focused on a variety of economic problems facing the mill.   

An aerial view of a multi-building paper plant.
The Domtar plant in Windsor, Que., is assessed for taxes by the regional municipality of Le Val-Saint-François to be worth $96 million. The amount is $93 per tonne of the facility's annual capacity. Irving Paper in Saint John is assessed at $59 per tonne of its annual capacity. (Radio-Canada)

However, this year the Thunder Bay mill's assessed value has rebounded to $40.5 million.

In New Brunswick two of the six mills that had assessment cuts in 2013 have since returned to their 2012 valuations, but four have not. 

In Irving Paper's case, it had a second assessment reduction after 2016. Its current valuation, at $24.3 million, is the equivalent of $59 per tonne of its annual capacity and is now the lowest among New Brunswick mills.

On a per tonne basis, it is also at the low end of taxable values given to pulp and paper mills in other provinces, including British Columbia, Quebec, Manitoba, Alberta and Newfoundland and Labrador.

Reardon said if that lower valuation is justified, a fuller explanation from Service New Brunswick about why it recently cut the mill's 2021 assessment increase by $3.5 million would be helpful.

"We need more transparency," she said.

ABOUT THE AUTHOR

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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