Nova Scotia

Court rules in favour of county on paper mill tax deal

The Nova Scotia Supreme Court has ruled in favour of Richmond County to uphold a 10-year agreement between the county and the paper mill in Port Hawkesbury.

County calls decision, 'judgement for fairness'

The shutdown of the former NewPage Port Hawkesbury mill in Point Tupper has created a six-month slowdown for the area's economy. (Andrew Vaughan/Canadian Press)

Richmond County officials said Monday's Supreme Court decision holding new owners of a paper mill to an existing tax regime is a victory for fairness.  

"It's a judgement for fairness, not just for Richmond County but for all municipalities across Nova Scotia," deputy warden Victor David told reporters outside court in Halifax on Monday. 

David refused to discuss what impact the ruling will have on Pacific West and its plans to reopen the mill with vastly lower costs. The mill wanted to break a 10-year tax agreement with Richmond County to save $2.2 million dollars a year, reducing its annual property tax bill to $420,000.  

The mill is currently in court protection from creditors as it restructures to become a leaner, lower cost operation. 

"It's one of a couple of factors we are continuing to work on. We expect that the mill will reopen before the end of the month," said Peter Wedlake, the court-appointed restructuring officer. 

Asked by CBC News if Monday's ruling will have a negative impact going forward, Wedlake replied, "I don't think it will have a significant impact going forward. No."  

County established its case, says judge

Justice John Murphy said Richmond County was able to establish that it would suffer real financial hardship if the mill's prospective owners, Vancouver-based Pacific West Commercial Corp., was allowed to void the 2006 tax agreement.

Pacific West wanted to pay about one-sixth of the current $2.6 million annual tax bill.

Murphy said the mill had not provided enough detail to support its claim that it needs the tax break to enhance the viability of the mill .

"Without some information of that nature it is impossible to assess the impact of a $2-million tax hit. I have assessed for Richmond and I find it will have significant financial hardship," Murphy said.

Richmond estimated cancelling the tax deal would result in a tax revenue decrease of 24 per cent, leading to a $1.8 million annual budget shortfall. The county predicted a potential 26.5 per cent increase in residential taxes and 25.7 per cent increase in business taxes if the court had ruled in favour of Pacific West.

On Friday Richmond County made a last minute offer to cut the tax bill in half, but that offer was rejected by Pacific West.

The county said municipal programs would have to be cut if Pacific West were to get the cut it was requesting.

Port Hawkesbury Mayor Billy Joe MacLean has said Pacific West has been given everything it has asked for, including union concessions that will see a reduced workforce with no pay increases over 10 years and reduced electrical rates.

The current tax rate was set in 2006 in a ten-year deal with the mill's former owner, Stora Enso.

Pacific West has not responded to calls for comment on the tax ruling.

With files from Paul Withers