Supreme Court upholds cyclical property tax values

Part of lawsuit against Grant County resolved

OLYMPIA — A recent decision by the state supreme court has several entities celebrating the resolution of part of a Moses Lake facility's lawsuit against Grant County.

The Washington State Supreme Court ruled last week that counties revaluing properties on a four-year cycle cannot adjust the taxable value of a business curtailing its operations in mid-cycle.

The court said Advanced Silicon Materials, LLC (ASiMI) could not mount a mid-cycle challenge of the assessed valuation of its Moses Lake plant, which makes high-grade silicon for computer chips.

The Grant County Assessor set the taxable value of the plant at $209 million in 1999 for taxes due in 2000 through 2003. Due to deteriorating market conditions, the company contended that the plant was worth no more than $9.4 million by 2002. It sought a $2.5 million refund of property taxes paid in 2003.

Grant County and 17 other counties operate on a four-year valuation cycle in which they revalue a quarter of properties each year. With few exceptions, the assessed value of properties does not change between revaluations. Nineteen counties revalue all properties annually, while two others operate on two- and three-year cycles.

A Kittitas County Superior Court judge ruled that Grant County must adjust the assessed value of the property between cycles to reflect the diminished value of the plant. The county appealed directly to the Supreme Court.

Mike Gowrylow, spokesperson for the state department of revenue, which filed a friend of court brief supporting the county's position, explained the ruling means mid-cycle revaluations can't be allowed unless a property is destroyed, and companies cannot use a bad business climate or declining economics as a reason to revalue their plant downward or refund taxes they have paid.

The decision has big implications, Gowrylow said, because in Grays Harbor County, Weyerhauser has announced they will be shutting down. The value of the mills remaining by Weyerhauser's location continues at the same value until the next cycle, he explained, when it would be adjusted downward. Had the case been ruled otherwise, any business could come in at any time, say business has gone downhill and ask for a revalue downward, which would either cause a tax loss to the district or shift the burden to tax payers in future years.

"Obviously, I'm happy about it," said Barry Moos, chief appraiser with the Grant County Assessor's office. "It saves the taxing districts potentially from refunding a lot of money."

Moos said that ASiMI's lawsuit against Grant County has not been resolved, just one facet of it.

"It's up to ASiMi and their attorneys to decide (with) this ruling going against them, do they want to proceed," he said. "If they think the case is still strong without that, the case will still proceed."

Gowrylow thinks ASiMi will go back to the Kittitas County Superior Court and decide what to do about the valuation.

"ASiMI could still argue the 1999 value is too high and seek a reduction," he said.

"We have yet to receive any detailed information, therefore we are not in a position to comment," said Dean Martinez, administrative services manager with REC Silicon, the parent company of ASiMI. "We basically haven't received a decision yet."

Gowrylow said that the Department of Revenue and Grant County are saying mid-cycle revaluations would disrupt the systematic approach to cyclical revaluations.

"It must be systematic to meet the state's uniformity clause," Gowrylow said. "Had the county lost the case, then it probably would have meant either a lot of challenges to values midcycle, or the county would have had to begin monitoring value."

Gowrylow added that if values can go down, they can also go upwards.

"It would have the effect of forcing many counties go to annual valuations," he said.

"Our goal in the assessor's office is equity to all taxpayers," Moos said.

In its 5-4 ruling, the Supreme Court agreed that to be fair, a cyclical revaluation program must be systematic so that property owners are subjected equally to its benefits and burdens.

"We have repeatedly said that, if the four-year revaluation program is conducted in an orderly manner and pursuant to a regular plan, and if it is not done in an arbitrary, capricious or intentionally discriminatory manner, then it does not violate the constitution nor does any incidental inequity which flows from it," the court said. "A program is not invalid just because it is imperfect; minor discrepancies will be tolerated in an otherwise acceptable statewide system."

In late 2002, ASiMI, a subsidiary of Japan' Komatsu, Ltd., entered into a partnership with Solar Grade Silicon to convert the plant to produce silicon for solar panels. The plant was valued at $25 million valuation during the county's 2003 revaluation of the area.