In the past five years, the values of two of the biggest retail stores in the Center Grove area have gone down.
At the same time, traffic continues to increase along State Road 135, retail space and land continue to be developed, which will bring more shoppers to the area, and most home values have grown or stayed the same.
But Meijer and Target say their properties on the busy route aren’t worth the value the county assigned to them — both in the millions — and think those numbers should be even lower.
Both took their arguments to the state, and now a decision on one could have a significant impact, including the loss of tens of thousands in tax dollars on multiple properties.
The county gets from a few hundred to a few thousand appeals of the values assigned to businesses, land and homes each year; but most are settled locally. In a few cases each year, the county and the property owner can’t agree and don’t resolve their argument at a local board. The dispute then goes to the Indiana Board of Tax Review, a state board with three members appointed by the governor.
Appeals made by both Meijer and Target went to that state board more than once, and currently the county has five cases with values topping $1 million that the state will consider.
One appeal is over the Meijer store on State Road 135 in the Center Grove area. The cases span multiple years, after the value already had been reduced, and could have a significant impact on the big-box retailer’s tax bill. But if the state board repeats a decision made for an Indianapolis Meijer store, the impact could be even greater.
Earlier this month, the state board decided that the value Marion County assigned to the Meijer store on East 96th Street should be significantly reduced. The store argued that the value of its property should be compared with similar-size buildings, regardless of how they are being used and even if they are vacant. Last month, the Indiana Board of Tax Review ruled that the store should have been assessed in 2012 at $30 per square foot, not the $83 per square foot assigned by Marion County. That means the county could have to pay back $2.4 million in property taxes to the store.
Other counties are eying the ruling for what impact it will have. Meijer has appealed the assessment on its store off State Road 135 in the Center Grove area multiple times, and the case is going to the state board in August.
The value of the store in Johnson County already was reduced to adjust for base amounts assigned to similar stores that the state has lowered due to depreciation and other cost updates. In 2008, the store was valued at $13.1 million, and this year is valued at $9.3 million. During that time period, the amount of property taxes the store pays also went down by about 32 percent — meaning local governments, including Center Grove schools and the city of Greenwood, lost a total of more than $86,000 per year.
The same has been true at Target, whose value fell from $11.6 million in 2010 to $8.7 million this year. That reduction also resulted in the loss of tax dollars — more than $63,000 or 26 percent. No hearing has been set on the appeal to the state board, according to the assessor’s office.
The retailers argue their respective values should be even lower and want to take their case to the state. Other large businesses, whose values top $1 million, also have appealed in past years, such as KYB Americas, Aldi, Nachi, Bayshore Apartments and Greenwood Park Mall, but those appeals were settled locally, Assessor Mark Alexander said.
“We spend more time, and rightfully so, on the properties that have extra zeroes,” he said.
For retailers, the decision to appeal comes down to money.
Meijer reviews each store’s property value and appeals when company officials believe that value is too high, spokesman Frank J. Guglielmi said in an email.
“Our customers expect us to keep prices as low as possible, and one way we do this is by managing our costs in the most effective way, which includes paying a fair and equitable level of property tax for our stores and facilities,” he said.
At Texas Roadhouse, which appealed the value on the restaurant off State Road 135, company experts look at the property values just as they would any expense from a vendor or other cost, spokesman Travis Doster said.
The company watches the cost of supplies, including meat, and the prices vendors are charge them. Keeping an eye on property values and making sure they are fair and accurate is no different, he said.
“We have to make sure we are getting a fair price. We have to watch these things,” he said.
Craig May, from Royal Pin, which owns Southern Bowl in Greenwood, declined to comment on the company’s appeal of the $1.4 million value assigned to the property off U.S. 31.
If the county has put an incorrect value on a property, it should be changed, Alexander said, adding he knows any change impacts local governments.
Local governments base their tax rates on the overall value of properties in the area they serve, so when that changes — by millions of dollars — that affects the money they collect to provide services, Alexander said.
His office is in charge of assigning values to all properties in the county, which then are used to calculate tax bills. They use specific formulas that figure in replacement costs for materials in the building, which are provided by the state, the age of the building and market value, or sales of similar buildings and land. He has heard the arguments from people who say they change the values of properties so that governments can collect more in taxes, such as increasing values so the owners have more to pay before they reach state-required property tax caps that limit how much they pay in their tax bills.
“We have nothing to do with taxes, but this does directly affect government units. We do work to sustain that value, that’s what the tax rate was based on,” he said.
Alexander declined to comment on the Meijer case, since he could be called to testify at the hearing by the state board. The office’s attorney is handling the case, which is expected to go before the state board this summer.