Senate votes down Marx nomination to tax appeals board

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The Senate on Thursday rejected Gov. Laura Kelly’s nominee to the state tax appeals board over questions about whether he had a conflict for his role in the debate over whether big-box stores should be appraised as if they were vacant, or “dark.”

The Senate voted down Robin Marx’s nomination 27-11 despite complaints that he was wrongly maligned by the Kansas Chamber of Commerce in opposing his appointment to the three-member board that resolves tax disputes including property appraisals.

The Senate voted 35-0 to confirm Virginia Powell to the tax appeals board.

Marx became the governor’s second nomination to be voted down this session after the Senate didn’t confirm public defender Carl Folsom to the state appeals court.

Robin Marx

A third nominee, Wyandotte County Chief Financial Office Kathleen VonAchen, is in jeopardy of not being confirmed to the state retirement system’s board of trustees after a Senate committee advanced her nomination without a recommendation.

Democratic Sen. Tom Holland of Baldwin City vigorously defended Marx, an appraiser for 45 years at one of the most established appraisal firms in the Midwest.

Holland said the Kansas chamber had its own conflicts by representing clients with business before the Board of Tax Appeals without revealing that information to lawmakers.

Holland accused chamber lobbyist Eric Stafford of circulating information opposing Marx’s nomination without disclosing whether members of his organization had tax appeals pending before the board.

“We have the lobbyist for the state chamber whose members have open cases before (the Board of Tax Appeals) and they’re casting aspersions on the professional integrity of a person who might end up on that court judging their cases. Why is that?” Holland said.

“Is it truly an integrity or professionalism issue?” he asked. “Or is it because they’re afraid he might actually rule against them once in a while?”

Holland charged that there was a coordinated effort in the business community to defeat Marx’s nomination in the Senate. He unsuccessfully tried to get the nomination sent back to the Senate Judiciary Committee for further review.

Stafford declined comment after the vote.

Marx’s nomination has been percolating since last spring when he was first nominated to the Board of Tax Appeals.

At one point, the governor withdrew his nomination last year and resubmitted it to the Senate for this session.

The Kansas Chamber said Marx — working as an outside expert — had a conflict of interest 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.

The chamber characterized Marx as more of an advocate seeking to change appraisal law, pointing to legislative testimony where he said box stores should not be valued as if they were vacant.

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 said — and reiterated during his confirmation hearing — 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 his hearing.

Marx said he wouldn’t try 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.”

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.

Last April, Marx sent letter to the former Senate majority leader, saying  that he has “never advocated the cause or interest of any ‘client’ or any valuation ‘issue’ as alleged” by the chamber.

Marx promised to follow the Kansas Code of Judicial Conduct as a member of the board.

“I will judge each case on the evidence,facts, and the law. I am prepared to recuse myself for real or apparent conflicts with the parties or properties before BOTA when required or appropriate,” he wrote,

Marx said it was 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.”