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Mill restart revitalizes North Shore township

Terrace Bay has put out the welcome mat for the Aditya Birla Group, the new owners of Terrace Bay Pulp . Now the township wants to do the same to attract home builders to this picturesque community of 1,500 on the north shore of Lake Superior.
The arrival of the Aditya Birla Group has revitalized Terrace Bay and sparked plans for a residential building boom if a land liquidation process can be completed.

Terrace Bay has put out the welcome mat for the Aditya Birla Group, the new owners of Terrace Bay Pulp.

Now the township wants to do the same to attract home builders to this picturesque community of 1,500 on the north shore of Lake Superior.

Municipal administrators are anxiously awaiting the outcome of a liquidation process of some valuable property that they hope will spur some much-needed residential development.

A court-appointed monitor, Ernst & Young, is overseeing the sale of a vast acreage that once belonged to Terrace Bay Pulp. The mill, formerly owned by the Buchanan Group, entered creditor protection in January 2012.

Last July, the Aditya Birla Group of India purchased the operation for $2 million with big plans to integate the mill into its global textile network.

Birla's arrival has touched off a flurry of activity. Local businesses have the confidence to grow, extensive community preparations are underway and leaders are not afraid to use the word “boom” to describe the anticipated wave of change that's coming.

Township CAO Carmelo Notarbartolo said when Birla came out of nowhere to buy the mill “it was like winning a jackpot. It was a dream come true.”

The newly-christened AV Terrace Bay operation is currently being run as a kraft pulp mill. Birla plans to spend $250 million over the next three years to convert it into a dissolving pulp operation to make its viscose staple fibre, used in the production of rayon and other non-woven applications.

Company officials were not available to comment but Notarbartolo said about 285 employees are back to work. Once the conversion starts in 2014, a slew of contractors are expected to flood into town.

The town has hired a consultant to take stock of the housing inventory and forecast future needs.

All available rental units are fully occupied on the heels of an earlier promotional campaign to attract seniors to the community.

“Our multi-residential buildings are 100-per cent full occupancy,” said Notarbartolo. “We don’t have an apartment to rent in Terrace Bay.”

Company officials have told him looming retirements at the mill could turn over almost half of AV Terrace Bay's workforce within a decade.

And there could be more retirees and workers on the way.

Canadian Pacific Railway in nearby Schreiber expects significant retirements shortly and there could be housing issues stemming from the new Stillwater Mining operation down the road in Marathon.

Notarbartolo identifies a need for medium to large-sized homes. But trying to convince builders to make the investment is a tough chore.

A big hurdle to overcome is that Terrace Bay homes are small and cheap to buy, $100,000 at the most.

Notarbartolo knows it’ll cost a developer $250,000 to build a 1,500-square-foot home with little chance of selling it.

A huge magnet to attract investment is a vast track of land, some 4,500 acres of bush lot and vacant lakefront property, including a nine-hole golf course that was once own by Terrace Bay Pulp.

Birla bought only the core mill assets leaving the remaining land up for sale through the creditor process.

“We’re hoping that developers, and maybe the township, can purchase some of the lands to turn them into developable lands,” said Notarbartolo.

Armed with a completed housing study, the township could market the area to prospective home builders.

“It gives me a tool to go to developers and say here’s the proof that we need homes. They could probably sell those homes before they even build them,” said Notarbartolo.

“You can easily sell a home on Lake Superior for $250,000-$300,000, doesn’t matter if it’s in Terrace Bay.”

But an April 30 deadline to resolve the land question has been pushed back into the fall as the monitor and prior mill owner were granted an extension by the court until Oct. 31.

“They (the monitor) have not talked to us, not told us how many bids they got, or where they are with the process,” said Notarbartolo. “All we heard is they got an extension and they need to do more work on it.”

It throws a wrench into the municipality's update of its Official Plan and further stalls home construction.

“It’s been a very frustrating process,” said Norbartolo. “The last hurdle out of our control is the sale of these lands.”

The tax revenue derived from residential development could pay for new community infrastructure.

On the waterfront, the municipality is working on a feasibility study that could propose a new marina, hotel, restaurant and a residential subdivision.

Norbartolo said Birla's presence, combined with a downtown revitalization project in recent years, has created a buzz that’s filled hotel rooms, expanded retail and attracted new business people to town.

“The downtown’s incredibly busier, and when the summer comes it’s just a constant flow of people.”