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Kansas Property Tax Updates

Updated september 2019

Kansas Board of Tax Appeals rejects Korpacz /IAAO methodology for Big-Box Retail Properties

The Kansas Board of Tax Appeals recently issued a decision in various tax appeals for Walmart stores located in Johnson County, Kansas. 

 The County hired Peter Korpacz, MAI, and Bliss & Associates to appraise the properties.  The County also hired Dr. Tom Hamilton, MAI,  to join Korpacz in advocating for the new IAAO method of valuing the illegitimate “fee simple subject to a lease”.  

The properties were owner-occupied but Korpacz valued the property ‘as if leased to Walmart with 20 years left on a lease’.  He utilized the sales comparison and income approaches to value the properties and relied on sale leaseback and build-to-suit comparables for both approaches.   The taxpayer’s expert, Gerald Maier, MAI, excluded build-to-suit and sale leaseback comparables to value the property in fee simple. 

 The Board ruled that the County’s methodology was contrary to Kansas law, which prohibits the use of build-to-suit comparables without proper appraisal adjustments to limit the value attributable to the leased fee interest.  The Board reaffirmed Kansas is a fee simple state and not a leased fee state. 

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Property Tax Law Group, LLC
American Property Tax Counsel (APTC)

 

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