Mill’s Tax Battle Becomes Millstone Crown Pacific Challenge To Valuation Of Property Put Off Until 1998

A property tax lawsuit worth hundreds of thousands of dollars to local taxpayers is being delayed until 1998 because of a legal logjam.

The delay means the stakes in Crown Pacific’s suit against Kootenai County over the value of its Coeur d’Alene sawmill are multiplying. And if Crown wins, almost everyone else who pays property taxes will lose.

Crown Pacific’s trial was supposed to begin Tuesday. The Kootenai County case was expected to set a statewide precedent on the question of whether sawmill owners can claim that log supplies are so tight that their mills are obsolete - and therefore worth significantly less than tax appraisers say.

Louisiana-Pacific Corp., Potlatch Corp. and Idaho Forest Industries undoubtedly will demand the same tax break in Kootenai County if Crown Pacific prevails, said Ron Craig of the Idaho State Tax Commission.

Residential and commercial property owners would have to pay substantially more in property taxes to make up the amount the sawmill owners no longer would have to pay, he said.

Taxpayers throughout the state could be nicked by a decision that favors sawmill owners. Potlatch is pursuing a similar appeal in regard to its St. Maries plywood mill, Craig said.

Boise Cascade is contesting the value set for its mills in Cascade, Emmett and Horseshoe Bend and wants as much as a 50 percent reduction, according to the tax commission. Bennett Lumber Co. is suing Latah County over the estimated value of its Princeton mill.

Kootenai County District Judge Gary Haman delayed the Crown Pacific trial until March 1998 because there are too many criminal cases with more pressing deadlines. The delay also was necessary because both sides want three weeks for the trial and that much time wasn’t available on the court calendar until 1998.

The delay means a precedent-setting sawmill decision likely will come in either Bonner County or Boundary County, where Crown Pacific also is suing over the estimated value of its mills.

The delay, while seemingly unavoidable, could cause significant problems for the counties. Crown Pacific is contesting its 1994, 1995 and 1996 tax assessments in Kootenai County. By the time a court decision comes down, there could be another year or two of tax dollars at stake.

“If we refund all of these dollars to them, it will be a big crunch for the county, city and school districts,” Craig said. And the refund would have to include interest on the taxes paid.

In Kootenai County, Crown Pacific wants the tax man to reduce the value of its mill from $16 million to $4 million. That would drop its tax bill from $210,000 a year to $50,000 a year.

Bonner County could face refunding more than $100,000 of Crown Pacific’s 1995 tax bill alone.

Boundary County could lose $40,000 of the $78,000 it now collects. “That’s a significant amount to Boundary County,” said Steve Fendos, county assessor. “With our county getting strapped like they are, every dollar counts.”

The delays in getting these lawsuits to trial also figures to complicate the litigation, said Steve Fiscus, Latah County assessor.

“You could have a complete turnover of staff and no one familiar with the original appraisals,” Fiscus said.

The problems snowball. Property tax assessments of other sawmills were put on hold pending the outcome of the Crown Pacific case, said Gregory Cade of the Kootenai County assessor’s office.

“I’d certainly like to put this to rest with a conclusive decision,” Cade said. But he’s left not knowing what to do about Crown’s 1996 assessment, much less how to deal with other area mills.

The trend of trying to beat back sawmill tax assessments also is occurring in other states and has been particularly successful in Oregon.

Crown Pacific’s case is more complex than the other appeals.

Like other companies, Crown Pacific argues that it is difficult to get raw materials for its mills and that prices for finished lumber are so low that they make its mills worth much less than their appraised values.

Crown also is claiming that the 1993 purchase price for its North Idaho mills was significantly lower than the current tax valuation.

But the tax commission says there’s plenty of evidence to the contrary. “My position is there have been other mills sold that show the property is worth what we said it’s worth,” said Craig, of the state commission.

As for log shortages, “when they had their appeal to the county, they indicated they were shipping several million board feet out of the area,” Craig said.

“And they have a sourcing permit that allows them to ship logs overseas,” Craig said. “I have a hard time buying that there’s no raw material.”

Other tax officials point out that the company is selling North Idaho logs to Boise Cascade and Potlatch.

Crown Pacific won’t comment on the suit itself but disagrees with the picture tax experts present of its log sales.

The Portland-based timber company made deals to sell logs to Boise Cascade and Potlatch when it bought out DAW and WI in 1993. “Those transactions are what made the original transaction economic,” said Fletcher Chamberlin, a Crown spokesman.

At the time, those mills were getting most of their timber from outside sources.

The company doesn’t send any logs from North Idaho or Oregon overseas, Chamberlin said - only logs from Western Washington.

And while it has sent logs from this area to its mills in Oregon, it no longer does so, he said.

, DataTimes