MERRILLVILLE — The town could lose more than $2 million and suffer future financial distress if assessed value appeals of several big-box stores are successful.
Lowe's, Meijer, Menards and Costco locations in town are appealing their assessed values, Ross Township Assessor Angela Guernsey said during Tuesday's Redevelopment Commission meeting.
Guernsey said each of the appeals is in various stages, and the big-boxes are asking the assessed value reductions be retroactive for various years.
Based on figures discussed Tuesday, Merrillville could lose about $2.3 million if all the appeals are successful, said Councilman Shawn Pettit, a commission member. That doesn't include interest that could be applied.
In addition to Merrillville paying the stores back for previous years, the assessed value appeals could have drastic future affects on tax increment financing districts in town.
All of the big-box stores are in TIF districts, and there are bonds associated with those districts.
Pettit said if assessed values of big-boxes drop, future property tax draws in TIF districts likely would only go to paying debt service and interest for those bonds, and the TIF project funds would “suffer.”
“That's going to mean no paving, that's going to mean no capital infrastructure projects that should be done,” Pettit said.
There have been other big-box stores in the state that have successfully appealed their assessed values.
“The Indiana Board of Tax Review has ruled in favor of allowing the use of comparable vacant stores, or what they call dark stores, sales to value single owner occupied big-box stores,” Guernsey said.
She said Senate Bill 308 could have an affect on future rulings.
The Council and Redevelopment Commission have each approved resolutions asking state lawmakers to support Senate Bill 308, which could “narrow the list of comparable properties for valuation by looking at only those properties that are similarly situated in the market place of real estate transactions,” according to the resolutions.
Town Attorney John Bushemi said Senate Bill 308 has passed the Senate and is pending before the House.
Merrillville also is exploring hiring an appraiser and an attorney to represent the town during assessed value appeal proceedings. It's possible Merrillville could collaborate with other communities facing similar situations with big-box appeals for appraisals and legal representation.
When appeals go to the Indiana Board of Tax Review, the panel asks for evidence, Guernsey said.
“The best evidence you can have is to have an appraisal,” she said.
During the Town Council meeting that followed the commission session, Merrillville officials learned of another financial matter affecting the municipality.
Pettit announced the town's 2016 budget was reduced by $1.2 million by the state.
Town Manager Bruce Spires said the town expects the state to reduce the town's budget proposal each year, and that is taken into account when Merrillville creates its spending plan.
“It's not the end of the world,” Spires said of the budget reduction.