Service For economic reasons, New Brunswick recently decided to take back $3.5 million of a $3.7 million assessment increase it had given to J.D. Irving Ltd.’s Saint John paper mill in 2021. This is the third major reduction in the facility’s value from the agency in the last ten years.
The provincial body isn’t saying much about how it came to that decision, other than to say that it does a “assessment market analysis” every year. However, the mill has one of the lowest property tax valuations in the country for its size because of cuts made since 2012.
This has caused the tax the mill pays to Saint John to go down, from $1.58 million in 2012 to $670,000 this year. Mayor Donna Reardon said the city can’t do much except hope that Service New Brunswick has been valuing the property in a fair way.
In an interview, Reardon said, “I don’t know how they figure it out.”
“It would be interesting to look at mills all over the country and see how they are evaluated.”
Irving Paper is the biggest paper mill in New Brunswick. Each year, it can make up to 410,000 tonnes of specialty paper.
According to the company’s latest “sustainability report,” production has been high in recent years. In 2021, 388,974 tonnes of paper will be made, which is just under 95% of full capacity.
Still, the mill is worth $24.3 million for tax purposes in 2023, which is 41% less than what it was worth in 2012.
Last week, the company said that the ongoing devaluation is fair “given the economic problems in the paper industry, such as the fact that people are using screens more than paper.”
But not every province changes how much a business property is worth based on how the market goes up and down.
The Catalyst paper mill in Powell River, British Columbia, can make 330,000 tonnes of paper per year. It also makes specialty paper. It, too, has been having a lot of problems, but property taxes in 2023 are estimated to be worth $124.5 million.
In December 2021, the mill’s owner, Paper Excellence, said that “ongoing contraction of global paper markets and paper prices” had caused the mill to lose money and force it to close.
Because of this, the mill hasn’t been running for more than a year, but its assessed value has stayed the same. This year, it will pay $3.3 million in property taxes, mostly to Powell River.
Tim Morrison of BC Assessment said in an email that the agency “must strictly follow” the rules set by regulation, which don’t include a way for the assessment system to help a mill financially by lowering its taxable value.
“We can’t think about doing anything that goes against the rules,” said Morrison.
In Prince George, B.C., three pulp and paper mills owned by the forestry company Canfor are being valued this year at between $63 million and $98 million, even though two of them have recently said they will cut production because there isn’t enough wood.
In January, Canfor president Kevin Edgson said that the decision to stop making pulp at the Prince George Pulp and Paper Mill had a big effect on the amount of waste fiber that could be used in Canfor’s pulp plants. “We need to right-size our operating platform,” Edgson said.
That’s not how mill values have been calculated in New Brunswick.
In 2019, Service New Brunswick told MLAs that the big tax cuts it gave to all pulp and paper mills in the province in 2013 were mostly due to problems with the industry’s markets outside of New Brunswick.
Several mills in Ontario went to court and won tax breaks from the Municipal Property Assessment Corporation, which Service New Brunswick said it had to do the same for.
Stephen Ward, who was the executive director of assessment for Service New Brunswick at the time, said, “If we don’t pay attention to the decisions that have been made in Canadian courts before, we’ll look like fools.”
“We had to speak up. We had to give these properties a new value.”
One of these facilities was the Thunder Bay pulp and paper mill. Its tax assessment went down from $72.2 million to $32.6 million after long hearings in 2014 about the mill’s many financial problems.
But the Thunder Bay mill’s assessed value has gone back up to $40.5 million this year.
In New Brunswick, only two of the six mills that had their assessments cut in 2013 have gone back to their 2012 values.
After 2016, Irving Paper got a second reduction in its tax bill. At its current value of $24.3 million, which is equal to $59 per tonne of its annual capacity, it is the least expensive mill in New Brunswick.
It is also at the low end of the taxable values given to pulp and paper mills in British Columbia, Quebec, Manitoba, Alberta, and Newfoundland and Labrador per tonne.
Reardon said that if this lower valuation is fair, Service New Brunswick should give a fuller explanation of why it recently cut the mill’s 2021 assessment increase by $3.5 million.
She said, “We need to be more open.”