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Elk Falls mill sale to developer collapses

The $8.6 million deal to sell the Catalyst pulp mill to an elusive Edmonton developer with a questionable track record has collapsed.

But, Campbell River Mayor Walter Jakeway says: “The town shouldn’t worry; we will end up with a better result. This deal was too strange right from the beginning.”

Catalyst Paper made the announcement Wednesday saying “the sale of the Elk Falls site in Campbell River to Pacifica Deep Sea Terminals Incorporated did not close and the sale agreement has been terminated.”

It was hardly a surprise. Four deadlines for the sale of the 400-acre property were missed on Sept. 5 and 19, Oct. 19 and Dec. 18. And, none of the grandiose promises made by developer Harold Jahn materialized.

As well, the property has been declared “contaminated” and all development has been frozen pending the approval of remediation plans by B.C.'s ministry of the environment.

Rivercorp CEO Vic Goodman says, “The highest priority at Rivercorp is the transition of the property to a new owner. We are working actively with credible parties that are interested in the site for industrial purposes and that would result in the regeneration of the industrial tax base.”

Jakeway says he’s glad some of the parties that were interested back in August are still at the table.

“This deal started strange and it ended strange,” the mayor says. “I’m not disappointed.

“It’s good for the city. I’m glad the deal collapsed.”

Campbell River City Manager Andy Laidlaw said Rivercorp was advised on Tuesday that Jahn would be unlikely to complete the sale.

“Interest in the site remains high and Rivercorp will continue to work aggressively in the interests of the re-development of the property,” Laidlaw says.

 

Non-refundable deposit

 

A Catalyst press release stated that Jahn had given the company “a non-refundable prepayment of a portion of the purchase price and the transaction timeline was extended multiple times up to the ultimate deadline of Dec. 18.”

Catalyst CEO Kevin J. Clarke says: “It’s disappointing that this transaction with Pacifica could not be completed even with the extended timeline.

“This is a fully-serviced property in an excellent location and we remain confident that the right fit between site and buyer will be found that will bring new jobs and opportunities to Campbell River.  In the meantime, site personnel are maintaining safety, security and environmental requirements and complying with all applicable legislation.”

The deal may have collapsed because of Jahn’s inability to come up with the bulk of the agreed sale price. Catalyst Corporate Responsibility Vice-President Lyn Brown told the Mirror that not receiving the balance owed “would have been part of what led to this ... I’ll leave you to draw your own conclusions.”

“We’re still very hopeful we’ll find a buyer that’s a good fit. The mill was part of our past and we’re eager to see the site be viable in the future,” Brown says.

 

Experienced developer

 

In mid-August the sale was announced with great fanfare.

Catalyst’s CEO described Jahn as “an experienced developer with the capacity and an industrial concept that will fully utilize the site’s infrastructure and bring new business and jobs to the region.”

Jahn said, “The site is strategically located to serve a variety of marine, light manufacturing, clean energy and distribution uses and we intend to transform it into a dynamic industrial park and port facility with the goal of creating 400 full time jobs in the Campbell River region over the next three years.”

However, warning signs that the deal was too good to be true surfaced later in August when the Mirror started investigating Jahn’s work record in Alberta. The Mirror quickly discovered that at least two similar Alberta projects proposed by Jahn are not off the ground.

And, one municipal official in the Athabasca region said, “It’s a good thing that your alarm bells are ringing.”

About the same time a government memo surfaced that raised the issue of site contamination.

Environment ministry senior contaminated sites officer Vincent Hanemayer stated that “the Elk Falls Mill has been identified as a contaminated site by the ministry and prior to redevelopment contamination would have to be assessed and addressed.”

At the time Jahn said: “The current state of the site will be our liability. When we have gone through the sale closing process we will meet with the government’s environmental officials and with the (Catalyst’s) environmental consultant.”

He added that the “rejuvenation” process at the mill site will include water and sewer technologies that should help reduce the operating costs on the property.

In early October, Jahn said he and a group representing Pacifica Deep Sea Terminals would be at the site later that month handing out forms for prospective employees to fill out. He also promised there would be an “open house” in November.

 

Promise of jobs

 

More than 20 jobless workers came up empty when they went to the Catalyst main gate expecting to meet the new industrial park owner offering job opportunities.

In November, Jahn was still making promises that would not be kept.

He issued a press release that he declined to send to the Mirror declaring the Pacifica Industrial Park “open for business” and said he was “accepting business and lease proposals for the use of the buildings, lands, and water lots.”

Finally, this month it was learned that the Environment Ministry in Jahn’s home province Alberta had slapped a contamination remediation order on the developer because of his failure to deal with groundwater contamination at the site of a shutdown chemical plant in Lamont County northeast of Edmonton.

He has been planning to convert the site into a condominium development, a ministry official said.

On Thursday there was no room in Jahn’s cell phone mail box to log a message and he did not respond to emails.

Activity at the former Catalyst pulp and paper site was indefinitely curtailed in 2009 and it closed permanently in 2010.

It has since been decommissioned with removal of chemicals, process wastes, and key papermaking equipment.

The landfills remain intact as does the wastewater system which continues to operate in preparation for the site’s redevelopment to other industrial uses.

The Elk Falls mill began operation in 1952, and at its peak, produced 784,000 tonnes of pulp, paper and kraft paper annually.

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