The Missouri State Tax Commission has agreed to set aside Jackson County's assessment values for most properties owned by the Country Club Plaza — from two tax cycles ago.
The Country Club Plaza JV LLC, a 50-50 joint venture between Taubman Centers and The Macerich Co., saw value reductions for 20 of its 29 property parcels, or all of those for which it had outstanding appeals for the 2019-2020 tax cycle. The shopping center owners first filed the appeals from determinations by the county's Board of Equalization in February 2020.
The result from the state tax commission's June 30 decision and order was a $112.2 million, or 38.4%, decrease in value for the 20 Plaza parcels in question — from $291.8 million to $179.65 million for 2019-2020. The Plaza's property holdings overall decreased by 32.4% in that tax cycle — from $345.8 million to $233.6 million — counting four more parcels for which the shopping center owners dismissed appeals, and five others for which it did not contest county assessments.
The Plaza since 2019 has ranked as Jackson County's third largest taxpayer, behind two Evergy entities rooted in legacy Kansas City Power & Light Co. operations. It was uniquely large but hardly alone among local property owners that pushed back against Jackson County's 2019 assessments. A state audit later found that the assessments yielded value increases more than 70% higher than those in other Missouri counties, and more than 21,000 appeals.
The Plaza's owners initially sought even lower values for the 20 properties subject to the state commission's recent ruling, down to $122 million, based on a 14.9% increase from 2018. The commission's $179.65 million number matches the sum of values the Plaza subsequently presented from Lenexa-based Mainland Valuation Services, which assumed market rent and market occupancy in appraisals for each parcel. Those appraisals represented "substantial and persuasive evidence establishing overvaluation," the state tax commission found.
During a two-day evidentiary hearing in November 2021, Jackson County's attorneys argued that the Plaza's appraisals were misleading and did not account for the properties' highest and best use as "a single economic unit as a lifestyle center for shopping, dining and entertainment," as they had been acquired by current ownership for $660 million in March 2016.
But the state tax commission sided with the Plaza, describing that argument as "not credible" in its decision. While Taubman and Macerich bought the properties as a collective, each is leased, assessed and taxed on an individual basis. Standalone Plaza parcels also since have been sold, such as the Valencia Place office tower, the commission wrote.
Some, including local taxing jurisdictions, historically have questioned Jackson County's accuracy in capturing the Plaza's fair market value — or, alternatively, whether its owners paid well above that value — when subsequent assessments have fallen well below its $660 million sale price. The state commission's decision notes that that figure extended beyond real property and improvements to include "personal property, art, contracts, financial instruments and other intangibles as well as all assets and rights to operate the Country Club Plaza."
The commission's June 30 decision gives Jackson County 30 days to file an application for it to be reviewed, with "specific detailed grounds upon which it is claimed the decision is erroneous." A representative said the county's Assessment Department did not have a decision on the matter from the County Counselor's office as of late last week.
It's not clear what tax revenues the Plaza stands to recoup from a potential final resolution of its 20 appeals. Once a county tax collector receives notice of a property owner's appeal to the state commission, any taxes paid under protest are held in an escrow fund until such a resolution occurs. Jackson County received a cumulative $23.75 million in tax receipts from the Plaza in 2019 and 2020, its annual financial reports show.
The state tax commission's decision is poised to have ramifications for additional appeals the Plaza has outstanding for the 2021-2022 tax cycle. It seeks a $196.5 million decrease for 24 parcels, from the county Board of Equalization's $328 million figure to a proposed $131.5 million.
A representative said the Plaza also will appeal its assessments for the 2023-2024 cycle, for which the county valued all of its properties at $401.9 million.
"We are very pleased that the State Tax Commission ruled in our favor regarding our appeals of the 2019 and 2020 tax assessments for Country Club Plaza," a Plaza spokesperson said. "This decision gives us great confidence in the strength of our legal arguments for our additional pending appeals for which we believe will result in the same outcome."
The county Board of Equalization on Friday agreed to extend its deadline for appeals of 2023 assessments from Monday to July 31. County officials said at least 22,000 residents already have filed appeals as of last week, in connection with what they estimated were 30% and 25% respective average increases for residential and commercial properties.
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