American Appraisal’s valuation assists a leading paper producer in receiving an out-of-court agreement to reduce the real property assessed values associated with its midwestern paper mill.
The midwestern paper mill is the largest employer within its community, with a workforce of more than 1,000. The paper mill manufactures premium coated two-sided sheet-fed, web-offset products that support both coated freesheet and coated groundwood products in the top four grade lines. A fully integrated facility with three paper machine systems, a pulp dryer, two pulp mills and a 100-megawatt electrical generation capability, the mill has a total paper and paperboard capacity of approximately 800,000 tons per year, or 2,200 tons per day.
American Appraisal has assisted the paper mill’s parent company and its associated entities for many purposes, so when company management needed to review the reasonableness of its assessed real property values for property tax purposes, it turned to American Appraisal.
The real property improvements associated with the paper mill consist of a complex array of land improvements, buildings and tanks – in fact, the site contains more than 70 freestanding and interconnected buildings having a gross building area of about 2 million square feet. Some of the improvements date back to the 1920s, although there have been multiple building additions over the years through 2008.
The key to the proper valuation of these complex improvements included the careful inspection and consideration of their overall depreciation through appropriately evaluating and quantifying physical deterioration, as well as existing functional and economic obsolescence. In addition, our valuation needed to exclude assets that, through Industrial Facilities Agreements, are not subject to property tax assessment. These assets include pollution control structures. Our diverse backgrounds in real estate, our understanding of the domestic and international paper markets, and our experience with finance and engineering concepts allowed American Appraisal to accurately quantify the value of the paper mill improvements.
Our objective and independent valuation assisted the paper mill’s parent company in receiving a multiyear out-of-court agreement to reduce the assessed values associated with the paper mill.