After appeals that stretched on for months, four big box retailers are being refunded nearly $700,000 in property taxes and the values used to determine their tax bills were cut by millions.
The county expects more businesses will try to have their assessed value — or property value used for tax purposes — lowered based on this reason: the value of closed locations.
The issue stems from appeals filed by Meijer in Marion County that reached a state board, which eventually voted in the retailer’s favor. Other retailers followed suit statewide.
In Johnson County, Target, Home Depot and Meijer — all along State Road 135 in Greenwood — appealed the values of their properties stretching back for years. Lowes also recently appealed the value on its property in Franklin, and Menards has appealed one year’s value as well.
The new argument made by retailers has been to challenge the value the county put on their property, which is used to calculate property tax bills, to say the amount should be lower based on the value of retail stores that are closed. In the precedent-setting case in Marion County, the state board agreed and required the values to be lowered.
The retailers base the value of stores they are using with other properties similar in age, size and market that are closed or are no longer used as a big box retail store, which has been coined the dark store method. But the county bases the value of the property on its current use and current owner, Assessor Mark Alexander said.
Johnson County officials decided to reach settlement agreements with the local retailers, where the county agreed to lower the value of their properties and refund what they overpaid in taxes, with interest in some cases, in past years. That refund, which totals nearly $700,000, will be paid back over the next 10 tax statements. That means for the next five years, those retailers will pay a significantly lowered tax bill, and local governments, including Center Grove schools and the city of Greenwood, won’t collect as much in taxes.
In the case of Target in the Center Grove area, the value of the store on State Road 135 was lowered from $11.5 million in 2010, to just under $7.5 million — a drop of about $4 million, or about 35 percent. The value was lowered for the following years after that appeal as well.
Reaching a settlement with the retailers made the most sense in order to avoid more legal fees, Alexander said.
But he doesn’t think the issue will end with these appeals; he expects more.
Fast food restaurants could make the same argument, Alexander said. For example, Burger King could appeal the value of its open restaurants, and say that their properties’ worth should be based on a closed restaurant in Trafalgar, he said. Other businesses could do the same, he said.
“I am expecting more cases. There is nothing to prevent them from appealing,” Alexander said.
Alexander doesn’t agree with the argument because the value of a closed building isn’t comparable to a business that is open and running, he said. But after the state agreed with Meijer in the Marion County case, he had to consider that with the appeals filed in Johnson County, he said.
He was prepared to make his case, but eventually decided settling would be the best decision because the county would face mounting legal fees the longer the appeals went on, he said. That doesn’t mean he thinks the value was too high, or that he agrees with the lowered value in the settlement; it just means it was the agreement that could be made to resolve the case, he said.
But that does have an impact, such as local governments losing money in property taxes for the next five years, he said.
The county is not changing how it value properties, including businesses, he said. The county calculates the value of businesses based on a cost schedule from the state, which considers the type of store, such as a discount retailer, and the square footage of the store, he said.
“That is what we do and what we will continue to do,” Alexander said.
And while state lawmakers have tried to help with new legislation, Alexander doesn’t see it making a big difference.
For example, in last year’s session lawmakers approved a proposal that dealt with multiple issues involving property taxes, including buildings newer than 10 years old that are occupied by the original owner. Comparable sales used to determine that building’s value for property tax purposes should include properties that have been for sale for less than a year and are used for similar purposes, according to the legislation.
But in Johnson County’s case, that ended up delaying the appeals, since the judge allowed both sides to make any changes to their arguments in light of the new law, Alexander said. And both sides still agreed to a settlement.
“I don’t think legislation can get this completely fixed,” he said.
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Here is a look at the settlements the county made with local big box retailers, who appealed the value assigned to their properties:
Home Depot
850 S. State Road 135, Greenwood
Refund amount: $125,044
Original values the company appealed
2010 – 2011: $6,701,300
2013 – 2014: $5,083,900
2015: $4,325,900
Adjusted values
2010: $2,036,500
2011: $6,701,300
2013: $3,519,900
2014: $5,083,900
2015: $4,325,900
Meijer
150 Marlin Drive, Greenwood
Refund amount: $449,564
Original values the company appealed
2002, 2003 and 2005: $10,221,300
2006: $11,294,100
2008 – 2010: $13,104,300
2011: $12,496,900
2012: $10,699,600
2013 – 2014: $9,319,600
Adjusted values
2002, 2003 and 2005: $8,698,700
2006, and 2008 – 2012: $9,786,100
2013 – 2014: $9,319,600
Target
895 S. State Road 135, Greenwood
Refund amount: $124,638
Original values the company appealed
2010: $11,555,100
2012: $9,530,800
2013: $9,234,500
2014: $8,678,800
Adjusted values
2010 and 2012: $7,477,300
2013: $9,234,500
2014: $8,678,800
Lowes
2219 N. Morton St., Franklin
Original value the company appealed
2015: $6,749,000
Adjusted value
2015: $5,128,600
SOURCE: Johnson County Assessor’s Office
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