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Mayor offers mill tax holiday to stay open

September 9, 2016

By: Winnipeg Free Press

While Tolko Industries has not rejected The Pas Mayor Jim Scott’s offer of a municipal and school tax holiday, the company wants to know if any potential buyer would get the same deal.

“I’m not sure how to read that,” Scott said Thursday afternoon. “That’s not what we were after.”

Scott said he made the offer of a three-year holiday from municipal and school taxes to try to persuade Tolko to keep operating the mill and retain its 300-plus jobs for three years beyond the scheduled December closing while the town searches for another entity to take it over.

“While they didn’t reject it, (they said) if they found someone to buy it, could they make that same offer to a new buyer?” Scott said.

The company did not respond to an interview request Thursday.

Scott said it makes no sense to offer such a deal to someone taking over the plant. The community wants to make it financially possible for Tolko to keep going another three years and then have someone new in place ready to go.

“We don’t have a moment to waste,” Scott said. “Tolko is leaving — there’s no doubt in anyone’s mind. We don’t want the mill to shut down and have to restart.”

Scott said Growth, Enterprise and Trade Minister Cliff Cullen will be in The Pas Monday: “We want to sit down and tell him our story.”

The mayor said Cullen will be accompanied by deputy minister Jamie Wilson, the former education director at neighbouring Opaskwayak Cree Nation.

Jodie Madden, the town’s chief financial officer, said Thursday Tolko pays the town $411,836 a year in taxes, about seven per cent of the town’s revenue.

Kelsey School Division gets $238,359 a year from Tolko in school taxes — about 5.3 per cent of the division’s property tax revenue each year.

Some people are surprised Tolko isn’t paying more, said Madden — some of Tolko’s 10 properties have aged so much or not been used in so long, such as the sawmill, that the assessed value of much of its property has dropped significantly.

Scott pointed out Tolko’s closed-down sawmill property has gone from being a valuable and active property seven years ago to derelict status — meaning it now pays almost no taxes. That’s what will happen to the paper mill property’s assessed value if Tolko shuts it down, he said.

Town assessment records show Tolko has 10 properties, eight of which have a property value of $6,200 to $19,200.

A ninth is valued at $1,402,300, but it is the final property on which the paper mill operates that is valued at $18,293,400. If its value goes, so does its taxes.

Tolko constitutes one-third of the commercial tax base of financially hurting Kelsey School Division and even more of the business base within the town limits.

The division said Thursday it was blindsided when Scott offered to give the Tolko mill a three-year holiday from local taxes.

The school division insists the town council has no legal authority to forgive school taxes.

“I didn’t know anything about it,” Kelsey superintendent Julia McKay said. “It would have been nice if they had talked to us first, but they didn’t.”

Scott said he’s been asking Kelsey for a meeting, but trustees can’t accommodate him until next week. The mayor acknowledged he did not tell the school division he was offering a tax holiday, but argued, “They’re just slow on the draw. It’s been out there a couple of days.”

McKay said the town collects education property taxes on behalf of the school division but has no legal right to waive school taxes for any property owner: “They can’t do that to us,” she said.

McKay said Kelsey trustees will hold their first board meeting Monday night since the news broke that the mill will shut down its local operations.

“We’re hoping to set up a meeting with the town next week,” said McKay.

The most recent provincial FRAME (Financial Reporting and Accounting in Manitoba Education) report shows Kelsey has the province’s highest mill rate — tied with nearby Flin Flon — and only the geographically large Frontier School Division has a lower assessment base per student.

Kelsey’s property assessment per student — a reflection of property values and the taxes they generate — is barely one-third of the provincial average. There are divisions with four and even five times as much property assessment available per student.

Kelsey has never been flush with cash, but its assessment base and its enrolment have been steadily eroding. Meanwhile, its teachers are the fourth-highest-paid in Manitoba.

Scott said if the mill closes and unemployed workers leave the community, Kelsey could lose 150 students or more. The province paid the division $9,989 per student in direct support in the 2015-16 school year.

“We’re asking them to cough up $250,000 a year to keep those kids here — that’s a much better deal,” Scott said.

An aide to Education Minister Ian Wishart said Thursday the school division has not asked the province for help.

Commercial assessment makes up less than 30 per cent of the assessment base in The Pas — although it should be noted business owners are taxed at 65 per cent of their property’s assessed value and homeowners at 45 per cent of value.

A mill rate is determined by deciding how much a council or school board needs to raise from taxes and dividing that number by the assessment base.

If Tolko closes and its property value plummets, every other property owner in the community would be forced to pick up a bigger chunk of the tax burden.

By: Winnipeg Free Press

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