British Columbia

Company's unpaid tax bill leaves huge hole in B.C. village's finances

An unpaid tax bill in a small town on Vancouver Island is bringing the community to the financial brink and leading to drastic cutbacks.

Neucel Specialty Cellulose’s taxes generate about 70% of Port Alice’s revenues — now cutbacks are planned

The arena in Port Alice will remain closed this winter, and the community centre will have reduced hours to cut back on costs. (Google maps/screenshot)

An unpaid tax bill in a small town on Vancouver Island is bringing the community to the financial brink and leading to drastic cutbacks.

Port Alice, on the northern tip of the island, is struggling to meet municipal costs after the biggest employer in the one-industry town, Neucel Specialty Cellulose, failed to meet the July 31 tax deadline.

"What went through my mind was actually terror on how we were going to continue to pay our debts to operate the village," said Mayor Jan Allen.

The taxes collected from the wood pulp company adds up to about 70 percent of the North Island community's revenues and this year's bill came to around $1 million.

"It's very important [for the community]," said Allen. "Without that, we would have to cut back."

As a result, Port Alice won't be opening its arena this winter. It's also shortened the opening hours of the community centre and is cutting back on municipal staff.

"We could have borrowed money but I don't think borrowing the money is in the best interest of the residents," Allen said.

The village is still paying back debt a previous council borrowed nearly a decade ago to upgrade the community centre and will continue to do so until 2035.

'Difficult decision'

"It was a very, very difficult decision for us," said Jim Herculson, vice-president of finance with Neucel Specialty Cellulose.

The decision came down to paying the tax bill on time or using the money to fund a project to start up the mill again after it shut down more than three years ago.

"We have limited funds — what are we going to do with this? We can pay our taxes or we can pay the money necessary to develop this plan," he said.

For Herculson, a resident of Port Alice, the survival of the mill is directly related to the survival of the village.

The village population has shrunk to 664, less than half of what it was 20 years ago. Since 2015, Neucel has been in a curtailed state and reduced employees to "maybe a dozen people on site keeping the lights on."

"If this mill doesn't succeed — and it's not a slam dunk —  then maybe we have to decide  as a village what do we want to be and what can we sustain for amenities in the long run " Herculson said.

With files from On The Island

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