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Monday, August 10, 2015

Indy Gov't. - "Monroe County's tax loss from 'big-box' store appeals may near $300,000"

Updating this July 7th post from the ILB, Megan Banta in the Bloomington Herald-Times on Friday had more of her continuing coverage of this issue. Some quotes from Friday's $$ H-T story:

In the midst of an ongoing debate about valuing retail property, five “big-box” stores in Monroe County have appealed the assessments that will determine their property tax bills next year.

Tax representatives for Target, Best Buy, Lowe’s, Menards and the Kmart store on East Third Street all sent letters to Monroe County Assessor Judy Sharp’s office before the July 31 deadline, requesting an appeal.

That’s fewer than Sharp expected, but that’s about the only good news, she said.

So far, the county only knows what two of those stores — Lowe’s and Best Buy — would like to see as their new assessment, but Sharp’s office estimates the potential total refund to the national chains could total about $300,000, which would mean a similar reduction in future property tax revenue should they be granted their appeals. * * *

County assessors value real estate based on the current condition of the building (generally based on the cost of land and construction, less depreciation), but big-box chains across the country are pushing to have their buildings compared to others that have been vacated and sold. Appraisers across the nation refer to this tactic as the “dark store” method.

Sharp and other county assessors call it a corporate decision that saves the national chains money while negatively affecting local communities, which don’t see the money flow back through discounts, workers’ wages or in other ways.

“This is a game,” Sharp said. “This is how they all make their money.”

Others, though, say the chains’ arguments make sense, especially since they’re now backed up by decisions in tax courts and by the Indiana Board of Tax Review. * * *

The Indiana General Assembly passed a law earlier this year that applies to nonincome-producing property of at least 50,000 square feet that’s occupied by the original owner or tenant. It doesn’t apply to strip malls or malls.

The law says that appraisals of buildings less than 10 years old must use the “cost approach,” which considers construction costs, consistent with the current method of assessment.

Comparable sales must include properties that have been on the market for less than a year, that are used for a similar purpose and that were sold at arm’s length (that is, the buyer and seller have no relationship to each other). Comparisons cannot include property with substantial deed restrictions.

The law also calls for the topic to be taken up in the Legislature’s summer study session, which begins soon.

Posted by Marcia Oddi on August 10, 2015 08:31 AM
Posted to Indiana Government