Last week, a judge ruled in favor of county and state officials in a property tax lawsuit brought by Walgreens Co., which otherwise could have potentially changed the way commercial properties are assessed and cost Kentucky school districts "hundreds of millions of dollars." The ruling upheld an earlier finding in favor of Fayette County Property Valuation Administrator David O'Neill by the Kentucky Board of Tax Appeals, saying the method O'Neill used to value the property "was not arbitrary or capricious, nor was it clearly erroneous."
According to the Lexington Herald-Leader, the subject Walgreens' is worth $5 million, according to O'Neill, but the company has contested its property tax bill for the past two years, paying the taxes as though the store were worth $3.4 million. There were similar appeals for six other Walgreens in Fayette County, and more than 20 total appealed statewide. Central to the company's lawsuit was its contention that Kentucky PVAs are using the wrong methodology to determine the value of Walgreens stores, resulting in inflated values and unfairly high tax bills. For an existing commercial property, PVAs usually determine a value by calculating how much income it can generate. In other words, what could a real estate holding company collect by renting the property over time to a corporation. However, Walgreens contended that its stores should be assessed based on the value of comparable properties, not its cost to lease the stores.
For the full article from the Lexington Herald-Leader, click here.