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Three tax-related suits by company now pending in court

ISLE OF WIGHT

For the second time in less than a year, International Paper has filed a lawsuit against Isle of Wight County over what the company believes to be erroneous assessment of real estate taxes on the Franklin paper mill.

The latest complaint, filed in Isle of Wight County Circuit Court on Feb. 2 on behalf of IP by Craig D. Bell of the Richmond-based law firm McGuire Woods LLP, alleges that for the 2017-2018 tax year, Isle of Wight County has assessed the Franklin mill at more than four times its actual fair market value, an overstatement of approximately $71 million.

According to background information provided in the complaint document, for the 2017-2018 tax year Isle of Wight valued the Franklin mill at $92,839,800 as of July 1, 2017, and as a result, levied a total of $789,138.30 in real estate taxes upon IP. This figure was the result of a real estate tax reassessment by Wampler-Eanes Appraisal Group Ltd. on behalf of the county in 2015. Half of this amount, a total of $394,569.15, has to-date been billed and collected by the treasurer of Isle of Wight and the remaining half is due on June 5. IP, however, alleges that only $183,600 should have been billed for the entire tax year based on the actual fair market value of the mill.

To support its position, IP claims that during the 2015 reassessment Wampler, among other alleged errors, failed to assign any meaningful physical depreciation and/or functional obsolescence penalty to decades-old improvements to the Franklin mill, many of which were partly or completely abandoned or even slated for demolition as of the date of valuation. IP further claims that most of the 137 improvements Wampler identified saw no change in their physical depreciation or functional obsolescence during the five years between the county’s 2010 and 2015 reassessments, and that three improvements were appraised higher in 2015 than they had been in 2010 despite no material change or capital investment. These were the No. 6 recovery boiler building, elevator shaft and main office building.

On Feb. 23, Isle of Wight County, with representation by the Richmond-based law firm Sands Anderson P.C. And County Attorney Mark Popovich, filed a demurrer in response to IP’s latest lawsuit. A demurrer is a legal motion that admits the truth of a plaintiff’s presented facts, but contends that the facts are either irrelevant or insufficient to justify ruling in the plaintiff’s favor. In response to the allegations that Wampler failed to take into account the depreciation or functional obsolescence of structures at the Franklin mill, the demurrer states that “the County does not have sufficient information to either admit or deny the allegations contained… and, therefore, denies the allegations contained” and that “the 2015 tax card speaks for itself.”

Jennifer Dixon, spokeswoman for IP’s Franklin mill, said she could not comment on the new lawsuit because it was pending litigation. Don Robertson, spokesman for Isle of Wight County, said he also could not comment for the same reason.

With this latest lawsuit, there are now three pending lawsuits by IP against Isle of Wight County. The first two were filed on Aug. 16, 2017.

The first concerns a dispute over machinery and tools taxes levied during fiscal year 2017-2018. The second makes the same allegation as the 2018 suit regarding real estate taxes, but for the past several fiscal years.

On April 18, a circuit court judge granted a motion by IP to combine the 2018 and 2017 real estate tax cases. As a result, both matters will go to trial on Sept. 17 of this year. The trial is expected to last five days. The trial for the lawsuit concerning machinery and tools taxes is scheduled to begin on Aug. 30 of this year, and is also expected to last five days.