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In re Equalization Appeals of Target Corp.

Tax Court of Kansas

September 11, 2013

IN THE MATTER OF THE EQUALIZATION APPEALS OF TARGET CORPORATION FOR THE YEARS 2006 & 2007 FROM SHAWNEE COUNTY, KANSAS AND IN THE MATTER OF THE EQUALIZATION APPEAL OF TARGET DISTRIBUTION CTR 3803 FOR THE YEAR 2006 FROM SHAWNEE COUNTY, KANSAS

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT

Now the above-captioned consolidated matters come on for consideration and decision by the Board of Tax Appeals of the State of Kansas pursuant to K.S.A. 79-1609. Target Corporation ("Target") appears by its attorney of record, Scott C. Palecki of Foulston Siefkin LLP. Shawnee County appears by its attorney of record, Jim Crowl, Assistant County Counselor.

These matters are an appeal by Target from Shawnee County's assessment of ad valorem tax on real estate and improvements commonly known as the Target Distribution Facility, located in Shawnee County, Kansas, also known as Parcel ID# 089-147-36-0-00-01-011.07-0, along with certain personal property known as ID# 089-PP-1546600000.

The parties filed cross motions for summary judgment and submitted supporting memoranda. The parties also jointly filed an Order Accepting Partial Stipulation of Facts and incorporated in that order certain relevant documents. The parties' statements of uncontroverted fact in their summary judgment memoranda are based primarily on the stipulations contained in their joint Order Accepting Partial Stipulation of Facts. The Board heard oral argument on these cross motions for summary judgment on October 10, 2007.

I.

Uncontroverted Facts

The Board hereby makes the following findings with regard to the statements of fact contained in the parties' respective memoranda.

In the County's Motion for Summary Judgment, the county sets forth nineteen (19) statements of fact with adequate support in the record. In Target Corporation's Memorandum in Support of Motion for Summary Judgment, Target sets forth thirty-nine (39) statements of fact with adequate support in the record. In Target Corporation's Response in Opposition to Shawnee County's Motion for Summary Judgment, Target sets forth four (4) additional statements of fact. The Board finds that all statements of fact in the parties' lead briefs are uncontroverted. The four (4) additional statements of fact set forth in Target's response memorandum are not material.

Following is a summary of the material uncontroverted facts:

In January 2002, representatives of Target contacted representatives of Shawnee County and the City of Topeka and advised them that Target was considering locations for a new distribution facility. The parties discussed the amount of land and the types of infrastructure improvements that would be necessary for the project. The parties also discussed possible economic incentives available to Target in the Topeka/Shawnee County area. In addition to Shawnee County, Target also was considering Olathe and Wichita as possible sites for its distribution facility.

On March 19, 2002, Shawnee County filed an eminent domain action to take property necessary to develop a suitable site for the Target distribution facility. At the time, Target had not yet announced its selection of a location for the facility. Target announced its selection of Topeka/Shawnee County for the new facility on June 13, 2002. Target selected the Topeka/Shawnee County site in large part because of the city and county's incentive package.

On June 27, 2002, pursuant to K.S.A. 79-251, the Board of County Commissioners of Shawnee County enacted HR-2002-9, a resolution "Stating the Policy and Procedures for Tax Exemptions and Incentives for Economic Development." That resolution repealed and replaced two earlier resolutions prescribing Shawnee County's policies and procedures for granting tax exemptions and incentives for economic development.

In August 2002, Target, Shawnee County, the City of Topeka, and the Growth Organization of Topeka ("GO Topeka") entered into a contract titled "Real Estate Development and Assessment Agreement" (the "Development Agreement"). The Development Agreement outlined the terms and conditions under which Target would construct and operate a distribution center in Shawnee County.

Prior to execution of the Development Agreement, Shawnee County Counselor, Richard V. Eckert, sent a memorandum to the Board of County Commissioners regarding the proposed Development Agreement. In the memorandum Mr. Eckert wrote that the "final contract is the culmination of several prior contracts, resolutions and intensive negotiations between the parties."

The Development Agreement contains various provisions concerning the Target distribution facility, including among other things provisions governing acquisition and conveyance of the land, public improvement work, construction of the facility, creation and retention of jobs, and property tax exemption provisions. Particularly relevant provisions of the Development Agreement are set forth below.

Section 7.1 of the Development Agreement, titled "Creation of Jobs, " provides in pertinent part as follows:

[Target] acknowledges that no later than one (1) year after the Opening Date defined herein, [Target] currently plans to create a minimum of Six Hundred and Fifty (650) Full-Time Equivalent Jobs…. If [Target] fails to achieve the aforementioned number of jobs described in this section by the first anniversary of the Opening Date, the County [sic] shall not be in default hereunder but [Target] shall pay the County the sum of Four Thousand Dollars ($4, 000) for each job fewer than Six Hundred Fifty (650) Full-Time Equivalent Jobs created….

Section 7.2 of the Development Agreement, titled "Retention of Jobs, " provides in pertinent part as follows:

[Target] agrees to retain the number and type of Full-Time Equivalent Jobs described in subsection 7.1 for a period of nine (9) years following the initial (1) year period described in subsection 7.1. If [Target] fails to retain the requisite number of Full-Time Equivalent Jobs during the ten (10) year period, [Target] shall not be in default hereunder but [Target] shall pay the County the sum of Four Thousand Dollars ($4, 000) per year for each job not so retained after the initial one (1) year period….

Section 9 of the Development Agreement, titled "Property Tax Exemption, " provides as follows:

In the event [Target] has fully performed its obligations under the Agreement in all material respects and has not defaulted beyond cure, the County agrees that [Target] may apply to the County for an exemption from taxation of real and personal property as may be provided by Shawnee County Home Rule Resolution No. HR-2002-9. The tax exemption shall be available for the first assessment year after the construction of the distribution facility is complete. The exemption from ad valorem taxation shall be in the amount of one hundred percent (100%) for a ten-(10) year period of the appraised valuation of buildings, land, and tangible personal property of [Target] in connection with the Facility. [Target] understands that the tax exemption can only be favorably recommended by the County and that the tax exemption must be independently approved by the Kansas State Board of Tax Appeals, and that County warrants that it shall cooperate fully in assisting [Target] in obtaining this tax exemption.

Subsection 13.1 of the Development Agreement, titled "Termination, " provides in pertinent ...


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