Gov. Laura Kelly’s nominee to the Kansas Board of Tax Appeals promised to adhere to state appraisal law Tuesday during a hearing in which he was questioned about whether he would bring a bias to the panel.
Robin Marx, an appraiser for 45 years at one of the most established appraisal firms in the Midwest, is facing questions about whether he has a conflict for his part in the debate over whether big-box retail stores should be appraised as if they were vacant, or “dark.”
The so-called dark store debate is an emerging issue in Kansas and across the country as local governments push back against the idea of appraising retail properties as if they were vacant, saying it would cost them millions and shift the tax burden to homeowners.
There is a fear among some in the business community, however, that there is an effort to change the makeup of the board in favor of local governments, a prospect one Democratic legislator raised at a forum last year.
Marx has said — and reiterated Tuesday — that occupied big-box stores should not be valued like vacant big-box stores.
“There’s nothing in the law that says for me to make that hypothetical assumption, but if the courts say to do so, I am absolutely prepared to take that approach,” Marx told the committee during a sometimes-contentious hearing.
But Republican Sen. Caryn Tyson questioned whether Marx would remain an independent arbiter on the board, which resolves tax disputes including property appraisals.
“We have people legislating from the bench in Kansas,” Tyson said.
“My concern is that you may take that upon yourself to legislate from the bench and not follow the letter of the law,” she said.
Marx said he wasn’t trying to make law on the board, but he said there’s nothing in the statute that says he must assume the property is vacant when it’s appraised.
“There’s nothing in the statutes that I’m aware of that say, ‘Oh, assume that it’s dark,'” he said. “That’s not the law.”
The hearing grew contentious Tuesday when Democratic Sen. Tom Holland of Baldwin City turned the tables on the Kansas Chamber of Commerce, which has lobbied against Marx’s appointment to the board.
Holland peppered chamber lobbyist Eric Stafford about whether his group had a conflict because it had members with cases before the Board of Tax Appeals.
Holland asked Stafford why he didn’t reveal the chamber had clients with appeals before the board when the organization submitted opposition testimony to Marx’s nomination.
“We have a lobbyist who is lobbing accusations at the conferee and he is inherently conflicted,” Holland said.
Stafford said Marx has a duty to recuse himself regardless of whether the chamber has members that have cases before the Board of Tax Appeals.
“It doesn’t matter,” he said. “We’re doing what we can do to represent our membership.”
The chamber said Marx has a conflict because of his work as an outside appraisal expert for Johnson and Wyandotte counties, which it says make up 60% of the pending cases at the board.
Marx has figured into the dark-store debate, conducting outside appraisals for Johnson County on five box store properties whose values were challenged.
Marx appraised three Walmart properties and two Sam’s Club properties on behalf of Johnson County.
He later appeared as a witness for the county at the Board of Tax Appeals.
He said his appraisals of the properties came in lower than the county’s appraised values.
The retailers challenged the county’s appraised values — not Marx’s — on those five properties and six others.
The retailers won at the Board of Tax Appeals, which cut the combined value of the 11 properties by $60 million after their lawyer argued that the county tried to account for the values of the businesses and the property.
Johnson County is appealing the decision to the Kansas Court of Appeals.
At issue in the dark-store debate is how the phrase “fee simple estate” is applied in the arcane vocabulary of property appraisals.
Lawyers for the big-box retailers believe the phrase means the properties should be appraised without considering anything else, including any leases that might be in place.
They say the law is on their side, pointing out that their definition of “fee simple” was already upheld by the Kansas Court of Appeals.
Marx disagrees with that analysis.
“Nowhere in the definition of fee simple estate is a requirement that the property must be vacant,” he wrote in his 2018 testimony to the Senate Tax Committee.
“For occupied properties, the accepted approach to value fee simple is subject to a hypothesized lease at market rent and terms,” he told senators.
Marx said it is a “misstatement” that he wants to change the law.
“I just value the fee simple estate with all of the property rights,” he said in an interview earlier this year.
“That’s the way I’ve got to do it according to the standards that are in place right now.”
