Saint John City Councillor Gerry Lowe said he is stunned to hear about the reductions because the original 2021 assessment increases on the mills appeared bulletproof given the multi-year review Service New Brunswick launched to analyze and implement them.

"How could they put it up and say they did a complete study and then turn around two years later and knock it down," said Lowe.

 "It's off the wall how they do things."

Anne McInerney, J.D. Irving Ltd.'s vice president, communications, said in an email the company challenged the 2021 assessment of $27 million given to the paper mill soon after receiving it. The amount was $3.7 million (16 per cent) higher than the 2020 assessment.   

With a decision on that dispute still pending, the company then challenged the mill's 2022 assessment which Service New Brunswick had issued in the meantime for $27.3 million, a one per cent increase from the 2021 amount.

J.D. Irving Ltd. is New Brunswick's largest forestry company. It runs a pulp, paper and tissue mill in Saint John that will pay a combined $4.7 million in municipal and provincial property tax in 2023. That is down from $6.4 million it paid in 2012. (Roger Cosman/CBC)

Twin Rivers Paper Company followed a similar pattern with assessment increases it got at the same time on its pulp mill.

Sometime earlier this year, Service New Brunswick informed both companies their challenges had been successful. In Irving's case, the agency lowered the assessment on the mill by $3.5 million in each of the two years in dispute. The reduction for Twin Rivers is closer to $4 million per year. 

It is the right decision, according to McInerney.

The review "was successful given economic challenges in the paper industry, including consumers' growing reliance on screens over paper," she said.

'Property should be assessed at a lower value'

Caryn King, the director of strategic marketing with Twin Rivers, agreed. 

"We concluded that it merited an appeal and we availed ourselves of one through Service New Brunswick, as any ratepayer is permitted to request," said King in an email.

"We agree with Service NB's determination that our property should be assessed at a lower value."

The lower assessments require property tax refunds to J.D. Irving Ltd of about $170,000 of what was billed on the mill for the 2021 year and $165,000 for 2022. The refund for Twin Rivers is closer to something over $180,000 for each year.

The Twin Rivers Paper Company pulp mill in Edmundston is a major employer and tax payer in northeastern New Brunswick. It will save about $180,000 per year in property tax with assessment reductions it has won from the province. (Étienne Dumont)

Over half of those amounts involve municipal property taxes that were paid to Saint John and Edmundston, although the province alone will pay the refunds since it is responsible for assessments and revisions.

However, the mill's reduced assessment will lower tax revenue to the cities going forward. Lowe said that is a problem, and he questions why Service New Brunswick wouldn't have more faith in the extensive work it did assessing the mills and deciding on the increase.

"They put it up, and they reduced what they put up by 90 per cent," said Lowe. 

"They did a two-year study of it and they were wrong by 90 per cent. How could anybody do that? They should be replaced." 

Longstanding issue

Property taxes on the mills have been a hot issue for the last decade.

In 2012, the two plants were assessed to be worth a combined $113.1 million by Service New Brunswick, and they paid municipal and provincial property taxes that year of $5.5 million. 

In 2013, Service New Brunswick dropped their assessments almost in half as part of a province-wide reduction granted to all pulp and paper mills to help them weather tough markets. 

More assessment decreases followed in subsequent years until 2019, when the assessed value of the two mills had fallen to a combined $45.2 million, and they were paying $2.203 million in annual property taxes — 60 per cent less than in 2012.

Irving Paper employs 325 people on Saint John's east side. It bills itself as North America's largest 'supercalendared' paper producer, with an annual production capacity of 410,000 tonnes. (Roger Cosman/CBC)

In 2019, Lowe was a Saint John MLA and he initiated two days of hearings at the legislature into how major industrial properties are assessed and taxed in New Brunswick.

At those hearings, Service New Brunswick officials revealed a major, multi-year and in-depth "reinspection" of pulp and paper mill properties was underway to follow up on the 2013 reductions, and the province would be resetting assessments at new levels based on the results.

"They are significant properties and they are complex properties. It takes us two to three years to actually do a full, complete reinspection," then-executive director of assessment services, Stephen Ward, told the hearing.

"We have three people on our heavy industrial team. They are specialists. They specialize in these heavy industrial properties. That is all they do, heavy industrial property valuation. They are trained. They are specialized with specific expertise in the valuation of these properties."

'Enduring consequences'

Service New Brunswick eventually increased the assessed value of the Irving paper mill and Twin Rivers pulp mill in 2021, based on that specialized and in-depth review, by $3.7 million and $4 million respectively.   

Although not pleased with the decision at the time, J.D. Irving Ltd. did acknowledge in a press release the 2021 assessments were the result of an "independent review of market values," and it had been given a chance to present its side of the issue.

"We co-operated fully with the work of Service New Brunswick," said the company.

Two years later, Service New Brunswick has retracted most of the increased valuations on the two mills but with little explanation as to why.

In an email, Service New Brunswick confirmed that it did change the assessments after the companies asked for a review and said that is part of normal reviews and market analysis it does on all properties to identify whether "improvements or changes" are required.

Lowe is not sure he believes that, but said whatever caused the change it will have enduring consequences.

"I just shake my head when they do things like this," said Lowe.

"It affects us in the years to come. We will definitely be getting less taxes in the city than we got in 2021."