Jackson County may be forced to pay back millions in taxes to the Country Club Plaza
A State Tax Commission hearing officer ruled the county overvalued 20 properties on the Plaza in 2019 by almost $113 million. If the ruling is upheld on appeal, taxing districts in Jackson County might have to refund millions of dollars. The shopping district is also planning to appeal its 2023 reassessment.
In a major loss for Jackson County, the Missouri State Tax Commission has ruled that the county overvalued the Country Club Plaza in 2019 by 38%. If that ruling is upheld on an expected appeal, taxing districts — including Kansas City Public Schools — would be forced to refund the Plaza millions of dollars.
The fight over 2019 taxes for one of the most iconic shopping districts in Kansas City is happening while the county is struggling with about 40,000 appeals by property owners over 2023 reassessments.
In 2019, Jackson County reassessed 20 properties on the Plaza at $291,820,974. The Taubman Company and the Macerich, who jointly own the shopping district, appealed. The dispute boiled down to this: The county argued the properties should be valued as a group because they “operate as a single economic unit as a lifestyle center for shopping, dining, and entertainment.” But the Plaza argued — and won — saying that all the properties are leased separately, operate separately and that is how they should be valued.
The appeal, filed in February 2020, has been contentious. “The parties engaged in a lengthy series of disputes regarding discovery,” hearing officer Amy Westerman wrote in her finding.
In a ruling published June 30, the State Tax Commission knocked the Plaza’s assessed value back to $179,650,000.
“Complainant produced substantial and persuasive evidence establishing overvaluation,” Westerman wrote.
Taubman and Macerich bought the Plaza in 2016 for $660 million. They lease about 1.3 million square feet of retail, restaurant and office space. The joint venture owns 29 Plaza properties, but only 20 valuations were appealed. In a statement to KCUR, the companies said they're pleased with the ruling and will also appeal their most recent assessments.
"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 statement said.
There is a lot of money at stake. While the case was appealed, the Plaza paid property taxes at the disputed assessment. The county has collected $18.7 million, which was put in escrow. Should the county fail to win an appeal, a large portion of that will have to be returned to the Plaza.
“The county is reviewing the hearing officer's decision and discussing our options with our contract appraisers that assessed these properties," Jackson County said in its statement to KCUR.
The county is expected to appeal the hearing officer's ruling to the full Missouri State Tax Commission. If the ruling stands, taxes would be recalculated using the new values at the property tax levies in effect in 2019, which means each taxing district would receive a smaller portion of the taxes that have been paid to this point.
About 60% of the property taxes in this case go to the Kansas City Public School district. Kansas City, Jackson County, the Kansas City Public Library and Metropolitan Community College also get much smaller shares.
Because the paid taxes have been held in escrow, it’s likely none of those funds have been distributed to the taxing jurisdictions. However, the county says taxing districts can petition courts to release escrowed funds. It is unclear if any have.