Editorials

Victory for schools, fair taxation

Walgreens contested the property tax bill on its Nicholasville Road property, which became a test case for the state. A Fayette circuit judge ruled that the methodology used to value the property was correct, and the Kentucky Court of Appeals and Supreme Court upheld that ruling.
Walgreens contested the property tax bill on its Nicholasville Road property, which became a test case for the state. A Fayette circuit judge ruled that the methodology used to value the property was correct, and the Kentucky Court of Appeals and Supreme Court upheld that ruling. Herald-Leader file photo

After nearly five years of litigation, this month Fayette County Property Valuation Administrator David O’Neill chalked up a victory that will mean millions in added revenues for Kentucky school districts.

At issue was how some commercial properties are valued for tax purposes. This case involved Walgreens, which has seven properties in Fayette County but was selected as a test case for national retailers in Kentucky.

Typically, companies work with a developer to build a property to specifications and then enter into a long-term lease. O’Neill based his calculations on the value of the lease and came to about $5 million. Walgreens looked at what it said were comparable properties and came up with $3.4 million.

While this may sound dry — and some of it indeed is — it has a real impact on how much those properties pay in real-estate taxes, the bulk of which go to fund public schools.

Walgreens and some other commercial property owners in Fayette have been paying lower valuations while the issue was litigated. Now, they will have to pay back taxes plus interest, amounting to about $1 million, of which about $660,000 will go the schools.

Walgreens contested O’Neill’s valuation first to the Board of Tax Appeals and then in circuit court and the court of appeals, losing at every level. This month, the Kentucky Supreme Court declined to hear an appeal of the ruling, which means it stands and can be applied throughout Kentucky.

O’Neill deserves credit for aggressively pursuing this case. Working with Fayette County Attorney Larry Roberts, he asked school boards to help support the cost of the lengthy process. Ultimately school districts pitched in about $26,000 to help pay for appraisers and outside attorneys.

The cooperative effort won a victory not only for the schools but for fair taxation.

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