Wednesday, May 22, 2024

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County leaders may reach conflict with big box retailers over tax revaluation

Alamance County’s leaders are inching ever closer to a full-on “war” with several big box retailers that they believe may have finagled excessively low tax values for property that appears on the county’s tax rolls.

During a regularly-scheduled meeting on Monday, the county’s board of commissioners agreed to obtain professional assessments for 10 retail properties that the county’s tax administrator had previously identified as conspicuously undervalued.

These new valuations, which are to be performed by an organization called the Membership Appraisal Institute (MAI), may ultimately replace the tax values which the county’s own tax office obtained in the county’s latest mass revaluation. If the county does, indeed, implement these new values, the tax administrator has warned it would likely set off an onslaught of appeals from the property owners, which include such imposing names in the retail sector as Walmart and Lowes Home Improvement.

According to Alamance County’s attorney Rik Stevens, the commissioners have chosen to farm out these proposed assessments to MAI in anticipation that the new tax values will indeed embroil the county in an administrative war of attrition. Stevens added that MAI’s status as the “gold standard” in real estate appraisal would give the county a leg up if as it faces the armies of lawyers and real estate experts that these retail juggernauts will inevitably muster.

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“If we are going to war,” Stevens went to explain in an interview after Monday’s decision, “we’re going to need the best resources we can get.”

The commissioners ultimately voted 5-to-0 to retain the MAI’s services after a 65-minute closed-door discussion that followed an otherwise open meeting on Monday. The board’s justification for this closed session was twofold – first, to confer with Stevens about the prospective tax appeals; and secondly, to consider the unrelated acquisition of two parcels that attorney Todd Allen Smith owns in downtown Graham. (These parcels include a row of office buildings at 106 South Maple Street as well as adjoining parking lot that, together, have an assessed tax value of about $1.4 million. According to Stevens, the county would potentially use this property for office space – possibly to house a public defender’s office or a fifth district court judge that appear in the state’s latest annual budget.)

[Story continues below photo of potential property purchase.]

The commissioners conducted this closed-door discussion nearly a month after they betrayed their first glimmers of interest in a legalistic crusade against some of the nation’s largest retail chains over the rock-bottom tax values that these companies have allegedly clinched in Alamance County.

These lowballed values were initially brought to the fore on September 5 when Alamance County’s tax administrator Jeremy Akins approached the commissioners to correct a claim he had previously made about the assessed worth of the Lowe’s Home Improvement outlet in Burlington. In response to scrutiny from an area resident, Akins had initially assured the commissioners that this property’s taxable worth was based on comparable sales from other parts of the state. On September 5, however, the tax administrator admitted that he had since learned the staff member who assessed this property hadn’t even looked at sales data but relied, instead, on the tax values of Lowe’s stores in other parts of the state.

Akins told the commissioners that some additional research on his own part revealed that these interjurisdictional values were predicated on an eerily constant figure of $65 a square foot. He went on to surmise that this number had ultimately emerged from the various appeals which Lowe’s had successfully fought all the way to the N.C. Property Tax Commission.

“I will say that I completely disagree with the assessor’s office taking the role of the property tax commission and trying to guess what that board would come out with at the end of the appeal,” he went on to note at the time. “I didn’t know that was happening…But I take full responsibility for this having occurred.”

Akins went on to speculate that the true market value of the Burlington Lowe’s could be as high as $125 a square foot. In either case, he promised the commissioners that his office would do a better job appraising this store in the future as well as any others that were likewise based on the property tax appeals rather than honest market assessments.

Akins went on to identify nine other retail properties that may have been undervalued for the same reason as the Lowe’s store in Burlington. These included the Lowe’s Home Improvement in Mebane, all three of the Walmart supercenters in Alamance County, and the Burlington locations of Home Depot, Target, Belk, J.C. Penney, and Dillard’s. In each case, Akins said that these properties have tax values based on the same figure of $65 a square foot.

The county’s tax administrator assured the commissioners that his staff would rectify any errors in these 10 properties when they conduct the county’s next mass revaluation in 2027. He added, however, that the commissioners could correct any mistakes even sooner if they authorized his office to conduct new assessments based on information that wasn’t available during the most recent reval. Akins nevertheless warned the commissioners that this sort of move would inevitably bring down the full legal and financial muscle of the seven companies whose stores are under review.

“I guarantee you that we will get 10 out of 10 to file appeals,” he added. “And there is absolutely no way that we could defend teams of lawyers coming in on those appeals with in-house staff. This would be a situation where we would have to get outside support, and I don’t know how much that would cost. It would depend on how far we go. But I heard that Forsyth spent over $50,000 on just Lowe’s and didn’t get anywhere,”

Akins went on caution the commissioners that the county may wind up exactly where it began even if it mounts a no-holds-barred response to any appeals.

“My theory is that the [appeals] board would put it somewhere near where it is now,” he conceded. “It could be higher; it could be lower…We could get a high enough value to cover all of the legal expenses. Or we could be at a minus at the end of the day.”

Even so, a majority of the commissioners were eager to try their luck against these formidable national chains.

“We can’t be cowards here,” insisted commissioner Pam Thompson when Akins first broached the issue last month. “I think we need to go to war with this…I would much rather pay our attorneys to do the right thing.”

“I think it might be a good idea to look at what our costs might be if we defend it,” added Steve Carter, the vice chairman of Alamance County’s commissioners. “When I first heard about it, it really bothered me that we had merchants competing with local merchants in our community getting a benefit that our local merchants don’t get.”

“When this comes up again,” commissioner Craig Turner chimed in, “I will be supporting Ms. Thompson’s view that we assess the value for what it should be assessed.”

The outcome of Monday’s closed session suggests that the county’s governing board may have doubled down on its initial inclination to take these retail giants to the proverbial mat. At this point, however, the board hasn’t made any irreversible moves to impose new tax values on any of the 10 stores under consideration.

In the meantime, Belk and Dillard’s already have appeals pending against the tax values which came out of the county’s recent reval – and which Akins now deems unrealistically low despite the owners’ objections.

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