Major retailers' tax challenge in New Albany costs city's law firm its job

Though it’s a large firm with attorneys working on both sides of the issue, the New Albany Redevelopment Commission declined to renew its $50,000 lobbying contract with Faegre-Baker-Daniels as a result of The Home Depot appeal.

“We have got to draw the line somewhere,” said Dan Coffey, a New Albany City councilman and a member of the redevelopment commission.

The city annually hires a firm to represent its interests when it comes to local government funding. There are some potential bills that could be considered at the Statehouse this session that would limit some funding for municipalities. The commission and administration agreed that lobbying to protect those funds, including tax-increment financing levies, is critical.

While Faegre-Baker-Daniels is well-equipped to lobby on behalf of the city, Coffey said the firm’s representation of The Home Depot makes it difficult to want to hire them.

“Why do I want to pay somebody who is basically cutting our throats?” Coffey asked.

David Duggins, director of economic development and redevelopment for the city, said he proposed the firm because it has a history with the city. Duggins proposed tabling the item for two weeks until another firm could be selected that doesn’t have ties to The Home Depot or Meijer, which are the only businesses fighting their property tax assessments to the state.

The commission elected to approve the $50,000 in funding and allow Duggins to hire a firm, as members said they wanted somebody in place to lobby on behalf of the city as soon as possible, as long as there isn’t a conflict of interest.

The Home Depot, 2239 State St., and Meijer, 4206 Charlestown Road, are asking the Indiana Board of Tax Review to lower their assessed per-square-foot value. A date for hearings hasn’t been announced. The city has hired an attorney to represent New Albany before the board.

The Home Depot and Meijer are located with New Albany tax-increment financing districts. The increment from those TIF districts — which includes payments from those stores — is used to pay off bonds such as the $19.6 million loan the city OK’d to foot an aquatic center, Silver Street Park and upgrades to Binford Park.

If state laws are approved this year to cut local government funding — and The Home Depot and Meijer were to win their appeals — Coffey said it could be a devastating double blow to New Albany.

Duggins said no other businesses within the city’s TIF districts have appealed their assessments, but city leaders have expressed fear that The Home Depot and Meijer cases could set precedents if the appeals are won.

In December, the state ruled in favor of an Indianapolis Meijer that challenged its tax assessment. The board ruled the store should have been assessed at $30 per square foot, not $83 per square foot.

Duggins said the stores are essentially arguing their business profits don’t match their property assessments, but he doesn’t believe it’s a truthful claim.

“Meijer is packed at 10 p.m. on a Saturday,” he said, adding that challenging assessments is a corporatewide strategy for Meijer.

Jeffersonville is facing a similar challenge from Kohl’s, Duggins said. The cities have been working together because its important for municipalities facing these challenges to come out victorious, he continued.

Duggins added New Albany has been garnering sales numbers for retailers and restaurants near The Home Depot and Meijer to use in defense of the assessments. He said Floyd County Assessor Patricia Badger-Byrd has been instrumental in assisting the city with its defense.