Catalyst Paper receives check for C$5M from City of Port Alberni in British Columbia for company's waste treatment plant and land; deal calls for Catalyst Paper to accept sludge at no cost to the city until city upgrades plant's lagoon

PORT ALBERNI, British Columbia , October 4, 2013 () – Catalyst Paper and the City of Port Alberni officially completed their $5-million deal Wednesday for the city's purchase of the paper mill's lagoon facility.

Catalyst will also accept the sludge from the lagoon at no cost to the city prior to the start of renovations on the lagoon.

Port Alberni is also providing tax certainty to Catalyst, by far the city's biggest taxpayer, to keep taxes at 2012 levels for the next five years.

The purchase of the lagoon also allows the city to utilize an $11 million federal grant for treatment upgrades to the lagoon facility, a crucial step for the city's waste water system.

Mayor John Douglas called the deal critical. "It's going to allow us to grow, and grow as the community grows, and have the facilities here so that we can have the luxuries that we sometimes take for granted, such as a sewage system and water system that's adequate," Douglas said. "It also allows us to facilitate transportation corridors down at the waterfront to the port in terms of the industrial road and take the industrial traffic off of residential areas."

Catalyst Port Alberni general manager Fred Chinn said Wednesday the deal has multiple implications.

"It's a great opportunity to work closely with the city," Chinn said. "We're looking for projects and initiatives that are a benefit to both ourselves and the city, because we need to co-exist in a real productive and successful way."

Chinn said Catalyst had no actual use for the lagoon, although the mill was still maintaining it.

"Due to the configuration of the mill now and the streamlining of a lot of our processes, the actual use of this facility is almost redundant," he said. "We really have very little need or use for it, and the city has a huge need for this facility. This is going to help offset a lot of costs."

The $5 million that was spent by the city to purchase the lagoon was part of the city's five-year financial plan passed March 2013 that included a 8.54 per cent tax hike for home owners.

It will come at a cost to taxpayers at $400,000 per year over about 12 years.

However, the cost could have been significantly higher had the city not acquired a lagoon in an innovative way.

The reason the city received the grant from the federal government, Watson said, was because of its innovation in acquiring an existing lagoon "If we were on our own and weren't acquiring the Catalyst facility and we were to build a traditional sewage treatment plant, that would cost north of $30 million," Watson said, "and we would be on are own."

The upgrades will include an interconnection of lagoons, a new outflow to different locations for the affluent, and providing new aeration for the lagoon. Watson said it should be ready and connected into the city's sewage system "in the next couple of years."

According to Chinn, the city is getting a good deal on the lagoon as buying its own would have been much more expensive.

"It's in great shape, and it will be purposeful now rather than having something that we're maintaining but actually have little need for," Chinn said.

"It's a great benefit for both groups."

The $5 million deal was arrived at through a negotiating process between Catalyst and the city, which had an appraisal done that resulted in the price being much higher, according to Watson.

"It wasn't in our budget, and we didn't have the capacity to pay the amount that the appraisal indicated," Watson said.

"So after that it just became a negotiation about what they were willing to accept [for the property]."

Watson said there was not a lot of extra land around the lagoon, "but we did purchase as well a road alignment from Argyle Street through to the paper mill property."

That includes the roundhouse, rail lines and industrial road, as well as a road right of way from the end of the industrial road through to Redford Street.

"That will allow us to complete the planned industrial waterfront route right from Ship Creek Road right through to Redford Street," Watson said.

Douglas said the acquisition of this infrastructure will allow Port Alberni's population to grow "as it becomes the central hub of Vancouver Island over the coming century."

"We need to have our infrastructure in place to support a large population, and that's what this is going to do," Douglas explained.

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