VOL. 122 | NO. 200 | Monday, October 22, 2007
Trends & Analysis
Wal-Mart's Low Price Mantra Extends to Tax Appeals
By Andy Meek
LOW PRICES: Bentonville, Ark.-based Wal-Mart Stores Inc. has been recognized in a recent study for its penchant to attain lower property tax bills, including in Shelby County. -- Photo Courtesy Of Wal-Mart Stores Inc.
After the most recent countywide reappraisal of property in 2005 by the Shelby County Assessor's office, Wal-Mart Stores Inc. did what scores of residential and commercial property owners in the Memphis area typically do.
It filed tax appeals. And in those challenges, Wal-Mart argued that most of the values for its Shelby County stores were too high. In many cases, the retail giant was successful in getting them reduced.
For its Supercenter store on Germantown Parkway, for example, Wal-Mart appealed the $16.68 million property appraisal there and won a reduction in value of more than $600,000, according to data from the assessor's office.
The tax bill also got lighter for its store at 6990 Shelby Drive, where Wal-Mart won a value adjustment that went from $7 million down to $6.6 million.
The appraisal for its store at 7525 Winchester Road was likewise cut from $13.6 million to $13 million.
And in one of the most successful challenges Wal-Mart mounted to its local property values after the 2005 reappraisal, the appraisal of its store at 6520 Memphis-Arlington Road was sliced from $4 million to $3.3 million. The assessor lists the address as 6506 Memphis-Arlington.
Saving a buck
On a larger level, Wal-Mart is one of the most recognizable and successful discount chains in the world, the No. 1 company on the Fortune 500 listing and a major player on the international economic stage. The company's recent slogan, "Always Low Prices," referred to its often unbeatable bargains on merchandise.
Yet a study released this month suggests the company's penchant for low prices also extends to the lengths it will go in attaining low property tax bills.
Even though cities and towns across the U.S. often embrace big-box stores such as Wal-Mart for the economic boost they bring, a report by the group Good Jobs First found that Wal-Mart routinely challenges its own stores' property values in aggressively vying for lower tax bills.
Washington-based Good Jobs First is primarily a research group focusing on economic development subsidies and smart-growth efforts.
The group's report surveyed all of Wal-Mart's distribution centers and 10 percent of the more than 2,800 Wal-Mart stores open at the beginning of 2005. Wal-Mart challenged property values at about 100 of the 283-store sample Good Jobs First spotlighted in its report.
"We looked at Wal-Mart for a couple of reasons," said Philip Mattera, research director for Good Jobs First. "One, it's the biggest retailer in the country. Second, Wal-Mart is clearly the most controversial retailer in the country today.
"The company usually claims its stores will benefit the local economy - and we found that they don't tend to come right out and say their stores will raise property values, but they kind of imply it. Now, in these (tax) challenges, Wal-Mart in effect has to argue the opposite."
Repeated phone calls to a Wal-Mart spokesman were not returned.
Wal-Mart paid more than $82 million in state and local taxes in fiscal year 2007, according to corporate information touting its statewide community impact on Tennessee. As of September, the retail chain's presence in Tennessee included 99 Supercenters, which are stores that generally are 185,000 square feet and stocked with about 142,000 items.
On the local level, Wal-Mart's successful tax appeals following the 2005 Shelby County property reappraisal, according to data from the assessor's office, resulted in this statistic: The cumulative value of all the company's Memphis stores was reduced by about $3 million, which correspondingly reduced Wal-Mart's local property tax burden.
The assessed value of property is the percentage of a property's appraisal on which taxes are paid. If a single-family home in Shelby County is appraised at $100,000, for example, that property owner only would pay taxes on its assessed value of $25,000.
While the pattern of those appeals by Wal-Mart similarly corresponds with the national trend outlined in the Good Jobs First study, the assessor's office cautioned that alone does not make Wal-Mart unique among commercial property owners in the Memphis area.
Despite the successful reductions on other properties, Wal-Mart filed no appeal on three of its Memphis stores. One of the appeals it did file was later withdrawn.
The assessor's office generally gets a mountain of property value appeals, said Greg Moody, director of reappraisals for the assessor's office.
"(Wal-Mart) certainly doesn't stick out from where I'm sitting," Moody said. "Target's right there behind them."
Mattera agreed that other businesses do the same as Wal-Mart.
"We're not saying this is unique to Wal-Mart," he said. "But certainly it's happening quite a lot. Overall, we did find that a lot of the amounts that they were able to recover in these proceedings were modest, particularly if you compare it to Wal-Mart's size.
"Overall, we found they had won about $30 million worth of these appeals over the past 10 years."