A Fairway appraiser whose work was cited by Johnson County in its opposition to lower valuations of big box retailers is now being opposed by the Kansas Chamber of Commerce for a spot on the state tax appeals board.
Robin Marx, vice president and senior member of the appraisal consulting firm Bliss Associates, was tapped by Gov. Laura Kelly to fill one of three vacant spots on the Board of Tax Appeals. The Chamber says he has a conflict of interest because of that and his position supporting a different method of appraisal by the International Association of Assessing Officers.
Marx counters that he is a professional with 44 years experience who has worked on many appraisal cases and has always abided by the law. “It doesn’t matter who’s hiring me. I am an unbiased expert,” he said.
The Chamber letter went to the office of Senate Majority Leader Jim Denning, who chairs the Senate Oversight Committee. The Senate has confirmation power over the appointment.
If Marx is confirmed, he would sit on the state board that handles appealed property tax cases. That four-member board is in flux right now, with one member resigned and two others past their term limits. The board has not met since March and has continued its cases through June 1 because of the pandemic. There are more than 1,000 dockets waiting to be heard. Marx is the only appointment made so far by the governor’s office.
The Chamber letter from Eric Stafford, vice president of government affairs, raised two main objections to Marx’s appointment. First, the Chamber argues, Marx has a conflict of interest because he was hired by Johnson County as an outside expert to provide valuations of five of the 11 big box stores that were part of last year’s case. He has also been an expert for Wyandotte County.
Since those two counties comprise about 60% of all tax appeals cases, the Chamber says Marx would therefore have to recuse himself from more than half the cases before the board.
Marx said he would recuse himself from pending cases that he participated in, but it is unrealistic to expect a qualified appraiser not to take part in all such similar cases. Ruling out appraisers who meet all the qualifications and have extensive experience would make it all but impossible to fill the position, he said.
“Either you’re going to get an expert that knows the territory or you’re not. To be disqualified because I’m overqualified – I don’t accept that.”
He also pointed out that he has worked on both sides in appeals, and that the valuation he put on the stores in last year’s case was lower than the county’s own.
The other objection had to do with Marx’s position on how such properties are valued.
Property tax has been under a cloud as local governments wrestle with recent efforts by big box retailers to bring down their valuations – and hence their taxes – through a method that has come to be known as “dark store theory.”
The method has been used across the country recently by retailers, who consider it a fairer way to set values. Briefly, the method calls on appraiser to imagine the stores hypothetically empty and not consider the value of the lease to the current occupant.
This appraisal method has worried local officials, who say it could cost millions in property tax revenue and shift more of the burden onto homeowners who are themselves suffering due to the pandemic job losses.
Marx said that method is inconsistent with how it’s done on other properties in, for instance, condemnation appraising. The hypothetical vacancy in dark store also ignores the reality that demand by the occupants for space would set a market value as well, he said.
Johnson County fought the first big case and lost at the tax appeal board last year, when board members declared the retailers were overvalued by $60 million. That case is being appealed.
Since Marx testified for the county and also at a 2018 Senate committee discussing the issue, the Chamber concluded that he is an “advocate,” and would have to recuse himself from all cases involving fair market value. “It is important that members of (the appeal board) understand Kansas law, not advocate to rewrite what they believe the law should be,” the Chamber letter said.
But Marx said he does not see himself as trying to change the law because the existing law already supports his view. He has represented both sides of tax appeals cases and judges on evidence, he said.
“Let the court sort it out. I’ll follow the law,” he said.
Property tax is only one leg of the “three-legged stool” that state budgets are based upon. But further property tax losses could cloud an already murky state budget outlook as state lawmakers the governor deal with jaw-dropping revenue loss projections. A work group from the state budget office and legislative research department reduced its estimate for tax receipts downward by 10.8%, or $826.9 million, from November, before the pandemic. Instead of collecting $7.6 billion, the state is now estimated to collect $6.8 billion.
The downward trend covers just about every type of sales and excise tax, as well as income tax.
So far the timeline on Marx’s confirmation is unclear. The Legislature is currently out of session but due to return May 21 for a limited time. The matter could come up in committee before that, but so far there’s no indication on when or whether the entire Senate will take it up before adjourning.