Pactiv’s request for a tax break is soundly rejected
It took all of about 25 minutes for the Haywood County Board of Equalization and Review to reject Pactiv Evergreen’s request to reduce the assessed value of its $19.8 million parcel in Canton.
“I was not surprised, but I was ecstatic,” said Zeb Smathers, Canton’s mayor. “The Board sent a clear signal that Pactiv did not deserve a tax break, period. Again, for a company that has broken our economy and broken our hearts, they’re not entitled to relief.”
Back in April, Pactiv filed an application to request a hearing on the assessed value of the 185-acre parcel that’s home to the paper mill. The application, submitted by Greg Poore of Baden Tax Management on behalf of Pactiv, says the property is only worth $5.8 million.
If Pactiv had gotten the value it wanted, the $5 billion company would have saved approximately $140,000 in tax payments, with the Town of Canton and Haywood County each out about $70,000.
Boards of equalization and review are enabled under NCGS 105-322 and normally consist of the members of the county’s board of commissioners; however, commissioners can adopt a resolution to appoint others to the board instead.
It’s not clear when Haywood County did so, but the current Board consists of two Democrats, Margaret Ruff of Clyde and Evelyn Cooper of Waynesville; one Republican, Ted Carr of Bethel; and two unaffiliated residents — Chairman Jimmy Flynn of Canton and Jonathan Sears of Waynesville.
Skipper Russell serves as an alternate, and appeared in place of Ruff.
Tax Assessor Judy Hickman acted as clerk to the Board, took minutes and was available to act in an advisory capacity, although that wasn’t needed.
The Haywood County Board of Equalization and Review has several powers and duties enumerated in statute, including reviewing tax listings and hearing taxpayer appeals.
During such appeals, the Board is required to hear any evidence presented by the appellant and by the tax assessor. The Board also has subpoena power for witnesses or documents.
Attorney Charles Mercer, of Raleigh-based Young, Moore & Henderson, represented Pactiv in the hearing, and laid out his case for the lower value.
“Due to the age and design of the mill, as well as the market conditions for paper mill transactions, the improvements have little or no contributory value to the land. There is no demand in the market for purchase of the property for continued use as a paper mill,” Mercer said. “The property suffers from high levels of physical depreciation due to age and condition, functional obsolescence due to design factors and external or economic obsolescence due to changes in the domestic pulp and paper industry.”
When The Smoky Mountain News broke the story of Pactiv’s appeal on May 18, Hickman told SMN that the appellant can ultimately challenge the Board’s decision with the North Carolina Department of Revenue’s Property Tax Commission within 30 days of the date the Board mails the decision to the appellant.
That appeal window was one of the major arguments offered by the attorneys representing Haywood County, Collier Marsh and Charles Meeker of Raleigh-based Parker Poe. Meeker is the former mayor of Raleigh.
“Although this is a 2023 tax year appeal, please keep in mind that this is an appeal from the value of the property as of January 1, 2021 valuation,” Marsh told the Board. “So that date, that is important to the Board.”
In 2021, Pactiv’s parcel was assessed at $23,605,600. Pactiv appealed that, and was successful in getting it reduced to the current value of $19,791,400.
“The Board has already considered this appeal once. By statute, when the Board issued its decision in 2022, the taxpayer has 30 days to appeal that decision to the North Carolina Property Tax Commission and this taxpayer elected not to appeal that decision,” Marsh said. “We contend on behalf of the county [that] the taxpayer had a chance to continue that appeal to contest the current assessment and did not, and they should be estopped from continuing any further appeal.”
Marsh’s final point was that Pactiv had not actually presented any proof that there was a problem with the current assessment.
“There are a number of property record cards for this property and a number of documents to go through,” Marsh said. “But the taxpayer hasn't presented any evidence of flaws or any details of issues with those cards, has not identified any errors with the application of the county's schedule of values or the schedule of values itself. Therefore, there's really no evidence in front of the Board today to support a change in value.”
The county then called Jimmy Tanner, a contracted appraiser who performed the valuation in 2021, to testify.
Tanner said that the buildings had already been fully depreciated and in addition, the county had added a 50% functional and a 25% economic obsolescence to the current values.
“We just don't see any reason to reduce the values any more beyond what they are,” Tanner said, adding that any further reduction would basically be saying the buildings aren’t even there.
Pactiv’s attorneys said that they weren’t aware of any buildings that had been torn down since the 2021 valuation, and that they also weren’t aware of any efforts by Pactiv to market the parcel.
Chairman Flynn repeatedly pushed the Board to consider how much deliberation it wanted to put into the issue, and asked if it was the will of the Board to consider the matter more intensively later in the day, or perhaps reconvene on Monday.
Each member asked questions of Pactiv, mostly looking for any real justification for the reduced assessment. They found none.
At one point, the appeal nearly backfired on Pactiv; Sears asked Tanner what the assessed value of the parcel might be if the functional and economic obsolescence modifiers were removed from the value. Tanner opined that it would be maybe $35-45 million.
Sears then took the initiative, moving to side with Tanner’s recommendation for no change to the $19.8 million assessment. Carr seconded the motion, which passed unanimously.
Pactiv’s next move, should it so decide, would be to appeal to the North Carolina Property Tax Commission, although Marsh appeared to plant the seed that as with Haywood County, Pactiv could have and should have appealed long ago and thus the window for such an appeal had since slammed shut.
The Property Tax Commission consists of five members, three appointed by the governor and one each by the president pro tem of the Senate and the speaker of the House. The Commission’s website lists the members, but it’s not known if the list is current. Party affiliations and county of residence information for Commission members is not listed.
An informational bulletin about the Commission outlines the conditions for appeal, but they’re extremely limited — per a 2009 appellate ruling, a county’s ad valorem tax assessment is presumptively correct.
Appellants may challenge a county board’s determination only if they believe the property is not taxable, if it’s been assessed to the wrong person or if procedural requirements have not been met.
However, there is a way for Pactiv to challenge the ruling even if none of those conditions are met — by producing competent, material and substantial evidence that shows the county assessor used an arbitrary or illegal method of valuation, or that the assessment substantially exceeds the true value of the property.
Hearings before the Commission are de novo, meaning they’re not simply a review of the county board’s decision but rather are a complete re-argument of the original appeal, by both sides. Rules of evidence adopted by state courts are in force.
If Pactiv still doesn’t get what it wants from the Property Tax Commission, its next move would be to a North Carolina Court of Appeals, utilizing the record made at the Commission’s hearing.