By Jeff Labine
paNOW.com

Prince Albert city council has agreed to pay Domtar Pulp and Paper Inc. back $2.81 million.

The city and Domtar have been in a legal battle over property taxes dating back to 2009. The company argued the assessment of its property was too high and requested a refund. Domtar asked for roughly $5.1 million from the city.

At Monday night’s meeting, council voted to accept the settlement offer. The money to cover the settlement will come out of a reserve fund.

Ward 4 Coun. Don Cody wasn’t happy with the agreement.

“It’s unforgivable that this city should give $2.81 million to people who have had a free ride for how long,” he said. “They probably had a free ride of $60 to $70 million from that tax agreement that the people of Prince Albert handed to them. They took, raped and pillaged the forest, took the best forest and leave us high and dry and we still have to pay $2.81 million and the government of Saskatchewan didn’t protect us.”

Cody referred to the 1986 agreement the city made with another company, which Domtar eventually purchased the property from. The agreement ensured the property the company owned wasn’t assessed.

According to Cody, Domtar wanted to change the agreement to allow property assessments because the company owned buildings that were considered worthless, which in turn could help lower their taxes.

“The reason tax agreements are there is because you want to attract the mills and all the employees,” he said. “There’s nothing wrong with that. But then the agreement should be good for the rest of the time, not all of a sudden when you are quitting and leaving us high and dry.”

He said the city was “duped” by the province after former minister of energy and resources Bill Boyd offered to help. In an April 2011 letter, Boyd stated the government would pass legislation if changes were made to the tax agreement.

Cody said the province didn’t follow through on that promise.

“We have a commitment made by the minister of the Crown, the Hon. Bill Boyd, member of the cabinet of Saskatchewan,” he said. “He’s going to hold us harmless, he is going to hold us whole. We’re not going to suffer this $2.8 million loss. But at the end of the day, the reneged. The letter is useless.”

The settlement with Domtar means the city, as well as Sask. Rivers Public School Division and Prince Albert Catholic School Division, have to pay Domtar back. The city will pay $2.81 million, Sask. Rivers $1.5 million, and the Catholic school division roughly $670,000.

School divisions collect a portion of property taxes from the city, which is why they are included in the settlement. Both school divisions have agreed to pay the amounts owed and will be covered by the province.