County regards HyVee as delinquent in taxes
Although county officials had thought the matter of disputed property assessments was resolved, a tax consultant for a plaintiff against the county is seeking further concessions for overpayment of taxes.
HyVee was one of four companies that disputed assessments by the Cherokee County Assessor's Office, dating back to 2003. According to Bob Hart, Cherokee County assessor, the settlement with Tyson's Foods lowered the assessed value of that company's property in Cherokee County from about $14 million to $9 million. Western Iowa Co-op had property reduced in assessment from $536,121 to $481,027 and at First Co-op the assessment was reduced from $6,881,654 to $5,549,745.
A subsequent agreement was reached with HyVee lowering the total assessment on two parcels of property, including the HyVee Distribution Center, from about $9.6 million to about $3.9 million. The initial assessment challenge from HyVee involved five parcels of property but three undeveloped rural properties with insignificant assessed value were dropped from the wording in the settlement reached and the wording in the subsequent court order resulting from that settlement.
The settlement with HyVee aknowledged that more than $300,000 in property tax was overpaid and that no property tax would be paid on the parcels mentioned in the assessment challenge until this amount was recovered by HyVee. Over $100,000 of the tax credit has been used, leaving over $200,000 in tax credit still due to HyVee.
Where the dispute comes in is HyVee's refusal to pay property tax on any of the properties it owns or leases in Cherokee County, including the HyVee Food Store in Cherokee, which the company owns, and HyVee Drug in Cherokee, which the company leases. The assessment was not challenged on these properties.
Property tax due in September for those properties was not paid, making the property owners delinquent, according to the county.
One problem, according to county officials, results from the fact that although the county collects property tax, most of the property tax does not go to the county. A little over 30 percent of the tax on HyVee's rural properties goes to county government and a little more than 60 percent goes to the Cherokee School District. The remaining amount goes to other taxing entities, including Western Iowa Tech Community College, the Ag Extension Office and townships.
John Chalstrom, superintendent of the Cherokee School District, has explained to school board members at board meetings that the change in assessments for all four of the companies have resulted in a hardship for the school district because they came after the school district levy was figured based on total taxable valuation in the county.
The state sets a per pupil amount for school district revenue to be collected by a combination of property tax and state aid in accordance to a complex formula. The levy for the local portion of this per-pupil amount is set after the total taxable valuation is figured. However the settlement lowered the taxable valuation after the levy was set, meaning the school district did not receive the total per-pupil amount supposedly established by the state.
For the next fiscal year, the taxable valuation has been adjusted to reflect the settlement but if HyVee does not pay taxes on property that was not specifically mentioned in the settlement, this will again lower the amount of property tax revenue below the per-pupil amount established by the state.
In the case of the property in Cherokee, the county receives even less of a percentage of the property tax revenue, since there are city taxes within city limits. The city revenue was not affected by the reassessment of the property outside of city limits. There has been no reassessment of the HyVee Food Store or HyVee Drug properties.
There was a special meeting on Friday of the Cherokee County Board of Supervisors regarding HyVee's property taxes. At the regularly scheduled meeting on Tuesday, the supervisors received a conference call from Bruce Green of the legal firm of Willson and Pechacek in Council Bluffs. Green explained to the supervisors that he was the legal council for the county board of review and the county assessor's office during the challenge of assessment. He was not generally representing the county or the county board of supervisors. Mark Cozine is legal council for the county.
Green noted that Jerry Chatam of J.W. Chatam and Associates in Overland Park, Kans., is a tax consultant working with HyVee. Chatam has raised two issues that were not specifically resolved in the county's settlement with Cherokee County.
One of the issues is the possibility of interest on the amount of tax that was overpaid and the other was the possibility of an immediate rebate of taxes. Green said that past court precedent indicates interest is not typically awarded in such situations.
Regarding rebating of the overpayment, Green said that his clients, the county board of review and the county assessor's office, do not have access to any fund to provide any rebates to anybody. He said the supervisors will need to get a legal opinion from its own legal council on the matter.
Ron Wetherell, supervisor, asked how an assessment can be that far off, a difference between $9.6 million and $3.9 million.
Green said that it happens sometimes. He noted that a warehouse or industrial property assessment is often a matter of guesswork, particularly in a rural area where there is not a history of sales of such property.
The legal opinion for the county would need to address whether the county can waive tax revenue for other entities, including the city for which the revenue in question comes totally from property that was not affected by the reassessment. Also, whatever arrangement HyVee has with the owners of the property HyVee leases for HyVee Drug, the actual property owners are responsible for any delinquent taxes on the property.
Even if it is determined that the county, as the agency responsible for collecting taxes, has the authority not to collect taxes on behalf of other entities, that does not necessarily mean the county is legally compelled to refrain from collecting such taxes or to refrain from declaring uncollected taxes as delinquent.
Cozine requested that Green informally convey to the attorney for HyVee that the county believes a settlement has been reached and Cozine wishes to refrain from involvement in further litigation unless it becomes necessary.