Hoping for the best but planning for the worst is the tactic of North Cowichan council and Crofton mill’s union as Catalyst faces global-debt and market-loss crises.
The B.C-based pulp-and-paper giant employs some 500 in Crofton.
It also paid North Cowichan about $5.4 million in property taxes this year.
But taxes and timecards may be in trouble after Catalyst brass said in Thursday’s press release it was deferring US $21 million in outstanding interest payments, amid major restructuring.
Officials were unavailable for comment by press time yesterday.
As of Dec. 15, Catalyst had 30 days to pay its interest bill under a 2016 note indenture before triggering a default. That’d be bad news for Mayor Jon Lefebure, and 413 members in Local 2 of Crofton’s mill’s Pulp, Paper, and Woodworkers of Canada.
Crofton’s closure would spell lost jobs for the PPWC — and Crofton’s CEP union employing about 100. And North Cow’s home- and business owners’ property taxes could rise to cover the levy shortfall, explained Lefebure.
“Inevitably, any loss of heavy-industry tax income does fall on residential properties.
“Catalyst currently pays about 30 cents on every (tax) dollar we collect.”
Catalyst still owes North Cow taxpayers $437,739 in 2011 late-tax penalties, but is current in paying its property-tax bills, municipal treasurer Mark Frame said.
Still, Lefebure’s worried.
“Crofton’s closure could have a large effect.
“But of all the mills Catalyst has, Crofton is the one currently able to make a profit, so it’s the most likely one to survive (bankruptcy).”
Given shaky markets, Catalyst’s tax-cut requests — and its recent local tax revolt — council slowly shifted tax burdens from heavy industry to residential property owners.
Five years ago, North Cow’s major-industry tax revenue — including Catalyst’s tab — was 49 per cent of taxes collected, now it’s 31 per cent, Frame explained.
That difference was largely hefted by homeowners who now pay about half of the municipality’s tax revenues.
More home-tax hikes could happen.
“In our next budget,” said Lefebure, “we’ll consider if we need to move more tax load away from heavy industry.”
Meanwhile, PPWC’s Paul Zarry said Local 2 workers vote next month about staying in the union’s joint caucus.
“If not, we’re on our own to negotiate a deal with Catalyst.”
That “life-changing” vote happens as Catalyst’s contracts with B.C.’s PPWC locals are set to expire April 30. Zarry indicated Crofton workers must think first about saving their $32-million annual payroll.
“The company’s on the brink of making decisions about solvency.”
Catalyst’s books were independently audited and “they’re in order, but they have no money,” Zarry noted.
If Crofton goes broke, the PPWC may mull buying the mill as a cooperative, he said, stressing it’s critical the mill’s fibre supply be safeguarded.