Millcraft asks court to make city fork over refund

February 20, 2013

A Cecil Township real estate developer filed a lawsuit Friday asking a court to force the city of Washington to refund a tax overpayment.

The suit filed in Washington County Court on behalf of the owners of Millcraft Center, a West Chestnut Street building held by Millcraft Industries, claims the city owes the developer a refund of $42,583 for tax overpayment, plus more than $5,000 in interest.

The suit claims the developer has received timely refunds from Washington School District and the county for overpaid taxes, but not from the city.

“Without intervention by the court in this action, (Millcraft) may never see the refunds due it, nor the interest accrued thereon,” the suit states.

In December, the Washington County Board of Assessment Appeals determined the city owed Millcraft for a clerical error that caused the company to overpay taxes from 2007 to 2011 on the West Chestnut Street building. The error, made by the assessment office, occurred after the developer continued to pay taxes on a portion of the property sold to the city for a parking garage adjacent to Millcraft’s Crossroads Center building at West Beau and North Franklin streets.

Mayor Brenda Davis contends the land value of the Crossroads Center building should have been assessed at a higher amount from the start. However, since the property is receiving Tax Increment Financing, it can’t undergo a reassessment in value.

“They’ve been underpaying on the land value of the Crossroads building the entire time,” Davis said Wednesday.

Last month, City Council voted to proceed toward the filing of a lawsuit against Beau Street Associates, a Millcraft subsidiary, in an effort to determine the legality and enforceability of a 2007 amendment to the original TIF agreement involving the Crossroads project. The amendment changed the assessed valuation of the property from approximately $5 million to $3.7 million. Davis said the amendment was passed without a required public hearing.

Approved in 2004 by the city, school district and county, the original TIF allowed 80 percent of the new tax revenue that was paid on the Crossroads project to go toward the construction of the adjacent parking garage. The remainder of the TIF payment was split among the taxing bodies.

Such agreements allow local governments to borrow money for infrastructure development that will be paid off using new tax revenues.

The 160,000-square-foot Crossroads building became the headquarters for the title insurer LandAmerica and 350 of its employees. However, the company abandoned the building in the recession, leaving a mostly empty structure.

The city has been responsible for the cost of the parking garage since LandAmerica’s departure.

Andy McNeil has been with the Observer-Reporter since 2011 as a general assignment reporter. He covers courts and education, and also serves as a photographer and videographer. He graduated from Pennsylvania State University, The Behrend College, with a degree in English; Duquense University with a post-baccalaureate paralegal certificate, and Point Park University with a graduate degree in journalism and mass communication.

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