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Editorial: Deal targets goals

City of Powell River officials unveiled a new agreement-in-principle (AIP) with Catalyst Paper Corporation this week, one that takes some time to understand.

City of Powell River officials unveiled a new agreement-in-principle (AIP) with Catalyst Paper Corporation this week, one that takes some time to understand.

The complexities of the deal stem from two complicated arrangements in which the city was already involved.

First, PRSC Limited Partnership is owned by the city, Catalyst and Tla’Amin (Sliammon) First Nation. PRSC purchased about 325 hectares (805 acres) of land considered surplus to the mill’s operations from Catalyst in 2006. PRSC assumed a five-year mortgage held by Catalyst of $4.5 million. Since then, only $200,000 of the principal has been paid down, while $1.5 million has gone to interest payments.

The AIP contains a provision for the city and Tla’Amin to each pay $1.5 million to buy out the mortgage and Catalyst’s shares in PRSC. They would become equal partners in PRSC and own the remaining six parcels of land, mortgage-free.

The land includes prime waterfront parcels zoned industrial, rare property in BC. The plan has always been to sell these parcels and, if that happens, the city and Tla’Amin will benefit.

The other main part of the AIP is a complex deal that will settle the ownership of the barge ramp, which was built by City Transfer Inc. The facility had to be relocated from Westview due to the expansion of the south harbour. Toward the end of 2010, the city asked City Transfer to build a temporary ramp when other options failed to materialize. The cost of building a replacement ramp turned out to be more than the city had anticipated, which led to ongoing negotiations with City Transfer. The deal outlined in the AIP appears to settle the issue while at the same time generating own-source revenue for the city.

Does the AIP contain risks for the city? One risk is that the land PRSC owns will not sell. Attracting businesses to the community is difficult and finding one to buy the property could prove to be challenging.

However, there is a risk in doing nothing as well. As it winds its way through the Companies’ Creditors Arrangement Act, Catalyst’s future remains uncertain. It may not survive, it may survive in a different form, it may be owned by unknown companies that would become the city’s partner in PRSC. There is no assurance that if the ownership changes, those companies would have the best interests of the community in mind.

The city’s role is to do what’s best for its citizens. Our community leaders have decided that the AIP is the best option for protecting the community’s assets, stimulating economic diversity and generating own-source revenue. The AIP lays the foundation for those goals. Let’s hope it works.