IP trial continues
Published 8:13 am Saturday, September 22, 2018
ISLE OF WIGHT
On Friday at 9:30 a.m., the fifth day of trial commenced for a lawsuit filed last year by International Paper against Isle of Wight County concerning what the company believes to be erroneous assessments of real estate taxes on the Franklin paper mill.
The trial is being held in Isle of Wight County Circuit Court with Judge Carl E. Eason Jr. presiding.
The complaint, filed by Craig D. Bell of the Richmond-based law firm McGuire Woods LLP on behalf of IP, alleges that for the past seven fiscal years, the county has assessed the tax value of the Franklin mill three to four times higher than its fair market value. IP’s prayer for relief seeks a total of $3,904,602.73 in damages for all seven fiscal years, plus accrued interest and any other relief as justice may require.
Earlier in the week, the court heard testimony from Michael G. Miller, an appraiser with Colliers International Group Inc., whom McGuire Woods hired to produce a report contesting the county’s tax evaluation of the Franklin mill. On Thursday and Friday, attorneys with Sands Anderson P.C., the firm representing Isle of Wight County, called Ivo Romenesko, founder of the Charlottesville-based appraisal firm Appraisal Group Inc., to the witness stand to give his opinion on Miller’s report. Both were declared experts in their fields.
Miller testified that according to the county’s tax records, Isle of Wight had assessed a turbine generator building constructed in 1997 at approximately $3.4 million, and that the same building was also listed further down on the assessment at $1.7 million. He then added that in 2015, the county’s tax records show that the same building at $1.9 million, despite three additional years of depreciation.
Miller also testified as to the methods he used to calculate his assessment of the Franklin mill, which included comparing the county’s valuation of the mill to sales of other industrial properties.
Romanesko, on Friday, testified that in his opinion, most of the comparable sales Miller referenced were not, in fact, comparable to the Franklin mill. When asked if there was a theme to the type of industrial properties Miller had cited, Romanesko said that most if not all were older industrial properties, all of which were closed and had not yet been repurposed. He added that many were more similar to warehouses rather than manufacturing facilities and had sold for a low price per square foot.
Romenesko also testified that the land belonging to IP that Miller’s report had identified as excess, was not, in his opinion, excess, since the land was used to pump approximately 14 million gallons of water per day.
During cross examination, attorneys with McGuire Woods asked Romenesko if it would be an error to reject the sales approach to real estate appraisal if the appraiser were unable to find an identical industrial site, meaning a fluff pulp facility. Romenesko replied, “no,” but added that he felt Miller should have looked for other paper mills. When asked what would be appropriate if no other paper mills could be found for comparison, Romenesko said that may eliminate the sales approach as an effective means of comparison.
The trial had originally been scheduled to go five days, but shortly after noon on Friday, attorneys with McGuire Woods anticipated that a verdict would not be reached until Monday.