Darigold Inc., which recently announced that it would close the doors of its facility in Chehalis by the end of the year, is set to receive a $1.3 million property tax refund after a settlement with Lewis County signed earlier this year reduced the property value of that facility by more than $70 million.
The large refund represents tax dollars that are now considered overpaid by the Seattle-based dairy company. According to a document from the Lewis County Treasurer's Office, the recent settlement not only reduced the property value of the Chehalis facility for the current tax season, but also reduced the property for multiple tax years stretching back to 2022.
As a result, Washington state, Lewis County, the City of Chehalis and others have to refund four years worth of overpaid property taxes to Darigold Inc.
The total lost tax revenue is even higher than the total of the refund at approximately $1.7 million. The $1.3 million, however, represents the amount overpaid by the company. It had not paid its 2025 property taxes in full when the settlement was reached. The gap between the two numbers represents tax revenue that governments and tax districts had expected to collect this year but now will not be able to.
The lost tax revenue could mean small increases in property tax levy rates over the next year as local governments and tax districts recover the taxes that would have been charged to property owners had the new property value been in place from the start. The process of recovering tax revenue in that way is known as an administrative refund.
A large portion of the lost tax revenue — nearly half a million dollars — will come from the state of Washington for the extra property tax dollars it has collected on the property since 2022. It's unclear the exact amount the state will pay back to the company as part of the refund. According to state law, the state cannot recover those costs through an administrative refund. That means the revenue lost by the state should not directly affect property tax rates.
The rest of the refund, however, will be paid out by five local governments and taxing districts: Lewis County, the City of Chehalis, the Port of Chehalis, the Chehalis School District and, finally, the Timberland Regional Library. Each of those districts may also qualify to recover the tax revenue through an administrative refund.
The Chehalis School District faces the largest loss in tax revenue, according to data from the county treasurer, largely because it was receiving money from both a general property tax levy and a school bond over those four years. In total, the school district faces a loss of more than half a million dollars — or, more precisely, $525,802.
The City of Chehalis is the next to face a major impact. Much like the school district, it also faces an increased loss because it had two levies active over the four years: the city’s standard property tax as well as the city of Chehalis EMS levy. In total, the city faces a loss in tax revenue of around $389,560.
Lewis County will see a lesser loss in tax revenue — $202,619.50 — to its one general property tax levy when compared to the school district and the city. Finally, the port and the Timberland Regional Library face the smallest losses in tax revenue. The Port of Chehalis faces a loss of $49,943.84 and the Timberland library lost $50,597.48
Moving forward, the departure of the Darigold plant is likely to have other future financial impacts apart from the tax refund being paid. The relocation could result in the company paying out slightly less in property tax as it begins to relocate equipment that would normally be taxed to different locations, like its newly constructed plant in Pasco. That being said, as long as the company owns the property, it will continue to owe property taxes.
According to Chehalis City Manager Stacy Denham, the change could cause headaches for the city in other areas, as well. The Darigold plant was a major user of city water and wastewater. With the plant no longer operational, the city will lose between $300,000 and $500,000 in revenue.
“Now, the water department and wastewater will be going forward, if the facility is not being run, with net losses in revenue stream,” Denham said.
The relocation could also have local economic impacts that have not yet been felt. The plant currently employs 55 full-time employees. The company has left the door open for some of those jobs to relocate to the Pasco facility, according to previous reporting by The Chronicle.
In September, Darigold said it was offering compensation packages to impacted team members along with opportunities to apply for other positions in the company. According to Darigold Inc. Vice President of Communications Chris Arnold, the new plant in Pasco will employ around 200 people when fully staffed.
“In terms of relocating employees, we don’t have a number to share at this time,” Arnold said. “Chehalis is still operational, and employees will have opportunities to apply for open roles at other Darigold locations (Pasco or elsewhere) in accordance with labor agreements.”
Operations at the Chehalis facility are expected to conclude by early December.
According to The Chronicle’s archives, the Chehalis Darigold plant went into operation in 1975.
For more information on the property tax adjustment, visit https://tinyurl.com/mr46z978.
