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Archive for Thursday, April 1, 2004

Kmart sues hundreds of communities

Retailer claims property tax overcharging

April 1, 2004

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— Kmart has taken aim at several hundred towns, cities and counties nationwide in a lawsuit that claims the communities overcharged the discount retailer millions of dollars in property taxes on stores and other facilities.

Some of those being sued have agreed to settlements for the disputed tax assessments, which range in value from a few thousand to tens of thousands of dollars. But other communities, including several in California, have banded together to fight, saying Kmart is using the suit to pressure them into accepting its demands.

"The scope of Kmart's lawsuit is almost overwhelming," Donald Hurley, a lawyer representing the tax assessor for California's Ventura County, which Kmart says overcharged it about $30,000 in 2001, said Wednesday. "The only way we can really respond to it is do it together, which is what we're doing."

The company's suit was filed May 5, 2003, the day before Kmart emerged from 15 months of bankruptcy protection. The lawsuit asks the U.S. Bankruptcy Court in Chicago to step in and lower the 2001 and 2002 tax assessments, claiming decisions by assessors overstated the value of Kmart's properties.

"The allocation formula adopted by the defendants in arriving at the assessments is arbitrary, imprecise and unreasonable," the lawsuit states.

Kmart declined to comment Wednesday on the suit.

In recent court filings, communities that refused to settle have asked the bankruptcy court to dismiss the suit. They say the Troy-based company failed to appeal tax decisions locally, waited too long to object and failed to detail in its lawsuit why their assessments are flawed.

Some of Kmart's claims ask the court for reductions of less than $100 in taxes on certain properties, while one against Detroit says the city overcharged Kmart more than $627,000 in 2001. A city spokesman on Wednesday had no immediate comment.

States with communities named in the suit are Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Georgia, Idaho, Kansas, Louisiana, Michigan, Missouri, Mississippi, Montana, Nevada, New Mexico, North Carolina, Oklahoma, Oregon, Rhode Island, Tennessee, Texas, Washington, Wisconsin and Wyoming.

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