Kootenai County governments will lose more than $200,000 by settling a lawsuit with Crown Pacific over the value of its local sawmill.
County commissioners reached a formal agreement with the timber giant Thursday, reducing the assessed value of its mill by $3 million to $5 million each year from 1994 to 1997.
The agreement will save Crown Pacific roughly $13,000 in property taxes for every $1 million in property value reduction, Commissioner Dick Compton said.
But the settlement ends a four-year legal battle, saves the county in legal fees and “was a fair and equitable solution,” Compton said.
Starting in 1994, Crown Pacific complained that Kootenai County had overvalued its mill at Huetter by as much as 75 percent. The company argued that high log prices, low finished lumber prices and a drop in availability of federal timber made the mill economically obsolete.
At that time, the county valued the mill at $16 million, but Crown claimed it was worth $3.8 million. Over four years, the tax payments in question amounted to more than $600,000.
Between 1995 and 1997, commissioners hired an independent appraiser to assess the mill. That company determined Crown Pacific’s timber operation was worth about $10 million. The county offered to reduce the sawmill’s value to that amount, but company officials declined.
“We hadn’t talked in 13 months,” Compton said.
Last week, all that changed.
With parties to the case preparing to go to trial next spring, Commissioner Ron Rankin, long known for his acerbic tongue, called a press conference last week to blast Crown Pacific.
Rankin attacked the company for wasting tax dollars by fighting the assessments while at the same time claiming to be good public stewards.
“They won’t deal, they won’t talk, they won’t compromise,” Rankin said.
Compton, meanwhile, called company officials and asked to sit down one more time.
“They’re interested in their image and interested in appearing to be good corporate citizens,” Compton said.
The company agreed. Company spokesman Bob Hess said simply that “both parties realized there was flexibility on both sides.”
“We finally got to sit down with decision-makers instead of middlemen,” Compton said. “When you get to the principles of a company, historically, I’ve found them to be reasonable people. That’s how they get there.”
Commissioners said they didn’t budge on dollar amounts but reduced Crown Pacific’s value for 1996, too. The company had missed the deadline for that appeal year.
Compton vehemently denied he and Rankin planned a “good cop/bad cop” routine.
“There was no scheme,” he said.
But Rankin said the two orchestrated “probably all of it.”
“Things were stalled dead in the water, so they needed a hard shot in the corporate image,” Rankin said. “It was a matter of using the press, yes, but it was also news. And it got them to come to the table.”
The county already had spent $58,000 in legal fees and expected to spend another $50,000 if the case had gone to trial.
Because Crown Pacific already has paid its taxes for the past four years, it is entitled to a refund of more than $200,000. But the company instead will let Kootenai County keep the money and just apply it to future tax payments.
Commissioners said that as part of the agreement they also promise to re-evaluate the way sawmills are appraised and may consider an approach that takes into account the value of the industry as a whole.
“The mills are unique,” Compton said. “It is an industry in flux.”
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