July 22, 2024

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Supreme Court refers ‘big box’ property tax case to Board of Tax Appeals

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The Kansas Supreme Court today released its opinion on Johnson County’s appeal on Walmart property tax valuations dealing with so-called ‘big box’ stores.  The opinion authored by Justice Dan Biles says the Board of Tax Appeals (BOTA) should have reached its decision without consideration of the findings of the Court of Appeals decision in Prieb.

The Supreme Court didn’t examine whether BOTA’s decision on the appraisal methodology is right or wrong, just that BOTA must reconsider the case without relying on Prieb.

“By following Prieb, BOTA imposed an exclusionary rule on the County’s evidence – rather than simply considering its weight and credibility.  BOTA held the Taxpayers’ expert opinion “better adhered to the Prieb mandate regarding built-to-suit rental rates than the County appraisals.”  We remand this case to BOTA to reconsider the County’s evidence without Prieb’s constraints.  Thought BOTA may reach the same result on remand, that decision must be based on its own determination of the facts and witness credibility.”

Randy Hargrove, Senior Director of National Media Relations for Walmart, is optimistic about going back to BOTA.

“While we disagree with the decision, we look forward to asking the Board of Tax Appeals to reaffirm its prior findings about the proper assessed values of Walmart’s stores.”

JoCo changed big box valuation method and jacked taxes 85%

Johnson County changed how it appraised big box stores in 2016.  Instead of valuing the land and building, the County added intangible value attributable to a lease in place.

Assessed values for the 57 Johnson County big box stores larger than 40,000 square feet increased from more than $400 million in 2015 to $742 million in 2016, an 85% increase in a single year. The 10 Walmarts in Johnson County saw their valuations jump from $10 million to $22 million in a single year. Every big box store in the county filed a property tax appeal in 2016, Terrill told a Senate committee in February of 2018.

Tax attorney Linda Terrill in 2019 likened Johnson County’s methodology argument to setting residential values based on a homeowner’s income.  She told the Kansas City Star, “If you win the lottery on Monday, your house isn’t suddenly worth more on Tuesday,” Terrill said. “And if you file bankruptcy on Wednesday, your house is still worth exactly the same thing.”

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