As its namesake faces market pressures, Millwood contends with related property tax increases

The town of Millwood is intertwined with its namesake industrial engine, Inland Empire Paper.

Much of that is by design. Founded as a company town for families of workers at the mill, Millwood grew as the mill grew. Housing was in such short supply during the early days that the company started its own home loan fund to help employees select the designs of the houses that line the city’s streets to this day.

The town and its namesake remain tethered more than 110 years later, as evidenced by the property tax bills residents received earlier this spring.

Homeowners are seeing an increase in their statements this year after the Inland Empire Paper Company successfully appealed its taxable value to the Spokane County Assessor’s Office, dropping the worth of the property by nearly $50 million.

Inland Empire Paper is owned by Cowles Co., which also owns The Spokesman-Review.

The amount a taxing entity like a local government, fire agency or school district collects does not change as a result of the mill’s depreciation, meaning the rest of the properties in the same district are left to pick up the slack.

The majority of Millwood homeowners – 86% of them – had to pay an additional 13% in city property taxes year over year as a result.

Joe Hollenback, chief deputy assessor for the county, told the Millwood City Council it was the mill’s first such request since before 2001. While he “about fell over” when he saw the dramatic change in value, he stressed that company officials exercised their right to have the value based on the strength of their business.

As an income producing property, the company requested the mill site be appraised on “capitalization of income that would be derived from prudent use of the property,” as it’s stated in Washington state law. Hollenback said two county staffers inspected the property last fall and found a “massive amount of economic obsolescence” in the plant based on the state of its equipment, buildings and market forces that dropped its 2024 appraised value of $82.3 million to $33.5 million.

In turn, the mill saw its total tax bill drop from $851,789 a year ago to $355,370.

“I’m not happy about it personally, I’m not happy about it when I see the tax bill and I’m not happy from the city standpoint, because we’ve now distributed the burden across all of everyone here,” Millwood Mayor Kevin Freeman said. “But it is an available tool to use for an assessed value, and other entities do use it.”

Doug Krapas, environmental manager for Inland Empire Paper Company, said its last valuation request was in 2003, just a few years after the company replaced its circa 1914 paper machine with a more efficient, versatile and higher-yielding version.

“The recent re-evaluation and assessment of IEP’s facility by the Spokane County Assessor’s Office simply reflects the present valuation based on the depreciation of IEP’s assets since 2003 and the current market conditions of the paper industry,” Krapas said.

That purchase arguably saved the mill from closure, Krapas said. The decline in demand for traditional products from paper mills has led to bankruptcy claims and closures at similar mills across the country, like former Usk, Washington-based Ponderay Newsprint in 2020.

At one point, Inland Empire Paper Company was one of the West Coast’s leading producers of newsprint, with clients overseas and throughout much of Canada. But the decline in print media in recent decades has led to a reduction in what was once the plant’s main economic driver.

Industry advocacy group the American Forest and Paper Association estimates domestic demand for printing and writing paper has declined 50% since 1990, while demand for newsprint has declined even more drastically, by about 90 %.

Meanwhile, demand for all sorts of paper packaging products is on the rise, as reported by Slate. Krapas said the plant’s current machine, now nearly 25 years old, has helped the mill diversify its offerings and capitalize on the increased demand for some of those products.

“We’re at this really critical transitional time in the paper mill’s history,” Krapas said.

In addition to ramping up production of paper packaging products for companies like Amazon, the mill also recently received FDA approval to create paper products for food and medical use, like butcher and counter paper.

The company continues to make newsprint that later becomes The Spokesman-Review, the Inlander and the United Kingdom-based Financial Times. Krapas said the hope is that offering a broader range of products will help ensure the mill’s health for years to come.

“So we don’t go the way of our peers up north,” Krapas said, referencing the closure of Ponderay Newsprint.

In turn, the health of the company will help promote the health of the town. Krapas said the company always has strived to be a good neighbor by supporting local civic and social service functions in addition to providing employment opportunities. He said the employee recognition wall in the plant’s lobby highlights just how many families in the area are connected to the mill and have been for over a century, in some cases.

“You’ll see a lot of familiar names, three or four generations sometimes,” Krapas said.

Hollenback acknowledged a dramatic increase year over year “is never good,” but the county is not expecting any similar changes in statements for Millwood property owners in the years to come. The adjustment in the mill’s taxable value likely would have happened years earlier if the mill had requested it sooner, he said.

“In the grand scheme of things, we probably should have been more reactive,” Hollenback said. “The plant manager, they probably should have let us know eight years ago.”

Ron Gillett, a Millwood resident of more than 25 years, said he noticed the increase in his bill this year, but was unaware of the root cause. While he’ll be able to meet the bill, he said he feels for the many senior residents like him who live on a fixed income and were unable to plan ahead.

“No one likes an increase in their property taxes,” Gillett said.

Gillett said he would like more transparency from local taxing entities such as the fire departments, school districts and local government on how collected taxes are put to use.

Anticipating such queries, Hollenback told the council that Spokane County property owners can visit the assessor’s website and use the county’s “Tax Transparency tool” to find a breakdown of how their payments are distributed.

The majority of property taxes area homeowners pay each year is devoted to school districts, followed by fire districts. Local governments tend to appear in the middle to bottom of the appropriation list, depending on where in Spokane County the homeowner lives.