The Riley County Commission is sending two legislative policy proposals to the Kansas Association of Counties to potentially lobby for in the statehouse.
The first resolution, which the commission approved at its meeting Monday morning, would address several counties’ concerns with what’s called the “dark store theory.”
Under that theory, big-box retailers across the country have challenged their commercial properties’ values as appraised by county officials. They argue that in making their valuations, county appraisers should value their commercial property based on the hypothetical value their stores would see if they were vacant or “dark.”
The county’s policy proposal would amend the state constitution to exclude this approach, called hypothetical lease fee value, in the state’s definition of fair market value, which county assessors use in determining the value of a property.
Without action on the issue, county counselor Clancy Holeman said the state’s counties, cities and school districts could see sizable dents in their budgets going forward. In making their arguments for hypothetical lease fee value, big-box retailers have typically asked for 40% reductions in their assessed values, which can amount to hundreds of thousands of dollars in lost tax revenue — as well as refunds with interest in disputed tax valuations — for local taxing entities.
In June, county appraiser Greg McHenry told the commission that the county was fighting three dark store theory cases before the Kansas Board of Tax Appeals. Home Depot is appealing its 2018 assessed valuation of $6.4 million and arguing for a $2.9 million reduction in value. Local taxing entities would have to refund Home Depot about $106,000 in property taxes.
Manhattan Marketplace, the shopping area that includes Hy-Vee, has two separate cases for its 2018 and 2019 assessed valuations that seek a $2.9 million, or 45% decrease, from $6.5 million in assessed value. That would mean refunds of $158,000 for 2018 and $173,000 for 2019.
Based on the results of those cases and other cases statewide before the board, McHenry said he wouldn’t be surprised if more local big-box retailers appealed their values this year. Without that tax revenue from commercial properties, local citizens would have to take on a larger share of the tax burden, the commission noted.
The other policy proposal the commission approved Monday was support for Kansas House Concurrent Resolution No. 5007, which is an amendment to codify county home rule powers in the state constitution.
With home rule authority, the state allows counties and cities broad authority to enact local ordinances, as long as those ordinances don’t conflict with existing and applicable federal and state legislation that apply uniformly to all entities in the state.
However, while city home rule powers are spelled out in the state constitution, county home rule powers are only based on state statute.
Since the Legislature enacted county home rule by statute in 1974, the state has also gradually expanded the list of restrictions on what counties can do, Holeman said.
In advocating for the resolution, Holeman said the amendment would only protect counties from further restrictions.
Both policy proposals now head to the Kansas Association of Counties, and pending approval by that organization’s legislative affairs committee and at-large membership, the association will lobby for the policies before the state Legislature.