Coldstream braces for big financial hit

By Jennifer Smith - Vernon Morning Star Published: August 26, 2008

The closure of Lavington’s glass plant is sending a ripple effect through the region. On top of the 300 employees who will be out of work when the plant, owned by Owens-Illinois, shuts down Oct. 31, the entire region will be impacted. The District of Coldstream will be particularly effected, since the plant has been a major industry in the community since it opened in 1969. The plant represents approximately six per cent of Coldstream’s total taxes. When the plant closes, Coldstream will then lose tax revenue in the range of $150,000. To make up for that shortfall, Coldstream taxpayers could be on the hook for a four per cent tax increase for 2009. “We’d have to increase the taxes or find the money somewhere else,” said Catherine Lord, Coldstream’s director of financial administration. Part of the financial loss comes from the fact that if the plant property is sold, the tax classification will change. It will go from the highest tax bracket of major industry to light industry or commercial.

“Rates for both of these classes are about the same, but they are only about 35 per cent of the major industrial rate,” said Lord. But the loss doesn’t stop there. With Terasen Gas and B.C. Hydro paying the district for usage in the community, there will also be a loss there depending on how much gas or power the glass plant uses. Lord is trying to round up more information on these aspects to come up with some firm numbers. She estimates that the overall financial impact will be significant. “By the time it all falls out, it’s going to be around $150,000 to $200,000,” said Lord, adding that there is also direct impact on those residents who work at the plant and their families.

A report is expected to be brought forward to Coldstream’s Sept. 8 council meeting. While Coldstream residents are going to feel the greatest impact, the plant closure effect extends beyond the district’s boundary. “It’s going to be felt throughout the region,” said Lord. “This is just Coldstream’s taxes, but Coldstream collects taxes for the regional district, the library, the schools.” Vernon city council is also worried about the financial implications of the glass plant’s closure as many of the employees either live in the city or shop in that community. “The loss of 300 well-paying jobs is devastating to Coldstream and Greater Vernon,” said Coun. Barry Beardsell.

“We are in rough economic times. It will hurt this economy.” Beardsell is warning his colleagues that the plant closure could impact the city’s finances and that should be considered when developing the 2009 budget. “We had better pull our horns in because that loss will hurt real estate and businesses,” he said. Owens-Illinois announced a permanent closure of the plant Friday, which comes into effect Oct. 31.The closure was driven by the company’s ongoing global asset utilization process, which identified an opportunity to shift production to other, more efficient O-I North American facilities.

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Don Quixote Note: The 2007 rate for major industry in Coldstream was 30.84265 while the business rate was 5.33826 and the light industrial rate was 5.01133. This class change seems to bring up at least a 80% reduction of tax revenue not the 35% rate reduction used in the story.

Property Tax Mill Rates - 2008
Download Property Tax Mill Rates - 20Kb PDF

Major Industry 23.337135 + 2.843229 = 26.180364

Business 4.026166 + .441241 =4.467407

Lt Industry 3.296166 +.275598= 3.51764

This class change using 2008 figures seems to bring up at least a 80% reduction of tax revenue not the 35% rate reduction used in the story.