Kmart Corp. is taking advantage of its own Bluelight special on taxes.

The retailer will pay about 70 cents on the dollar for its 2001 and 2002 taxes on personal property. Such property includes equipment and other items at its sprawling distribution center north of the Kansas Turnpike.

Douglas County commissioners approved the negotiated settlement Monday morning.

Commissioners opted to accept a $187,647 payment within the next two months, rather than take a chance on going to court to battle for $237,493 that might or might not get paid over the next six years.

The county also agreed to forgo any interest costs and penalties that could have applied, pushing the potential loss to taxpayers beyond $80,000.

“Ideally, we’d never be in this case, and I suspect there are a lot of people who are dealing with Kmart who would say the same thing,” said Bob Johnson, commission chairman. “But that’s where we are, and we believe that we’ve done the right thing to protect the interests of Douglas County taxpayers as best we can.”

At issue were the taxes Kmart was responsible for as of Jan. 22, 2002, when it filed the largest retail bankruptcy in U.S. history. At the time Kmart had 2,114 stores — including one in Lawrence — and $17 billion in assets, including the distribution center and its contents.

The county’s settlement won approval last month from the Kansas Board of Tax Appeals, which determined that the deal would be “in the best interest” of the state and other governments affected by the loss of revenue. Among them: the county, school districts and the cities of Lawrence, Eudora, Baldwin and Lecompton.

In October, Kmart sued the county and hundreds of other governments, saying the company was being taxed unfairly. Kmart asserted the U.S. Bankruptcy Court in Chicago had the authority to reduce tax payments to help the retailer emerge from bankruptcy.

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In response to the lawsuit, Johnson County commissioners accepted a similar settlement and hundreds of other governments have agreed it would be better to take a sure thing now rather than take their chances in court, said Evan Ice, Douglas County counselor.

“We could hire a lawyer and go defend the county in Chicago and pay them $40,000 in fees,” Ice said. “Maybe we’d collect a few thousand dollars more in taxes if we win, but we’d get paid over several years instead of right now. And we don’t get paid at all — or get paid worse — if Kmart goes back into bankruptcy.

“Those are the thoughts that carried the commissioners’ decision.”

Kmart is up to date on all its tax payments on real estate and personal property for 2003, said Pat Wells, county treasurer.