Opinion
A19-0419 A19-0424
10-22-2019
WAL-MART REAL ESTATE BUSINESS TRUST, Relator, v. COUNTY OF WASHINGTON, Respondent.
Mark R. Bradford, Edward F. Fox, Peter L. Gregory, Bassford Remele, P.A., Minneapolis, Minnesota; and Robert A. Hill, Robert Hill Law, Ltd., Wayzata, Minnesota, for relator. Pete Orput, Washington County Attorney, James C. Zuleger, Assistant County Attorney, Stillwater, Minnesota, for respondent.
Mark R. Bradford, Edward F. Fox, Peter L. Gregory, Bassford Remele, P.A., Minneapolis, Minnesota; and Robert A. Hill, Robert Hill Law, Ltd., Wayzata, Minnesota, for relator.
Pete Orput, Washington County Attorney, James C. Zuleger, Assistant County Attorney, Stillwater, Minnesota, for respondent.
Considered and decided by the court without oral argument.
ORDER
David L. Lillehaug, Associate Justice
These consolidated appeals arise out of the tax court’s dismissal of two petitions that relator Wal-Mart Real Estate Business Trust (Trust) filed in Washington County (County). The petitions challenged valuations for properties in Cottage Grove and Woodbury for taxes payable in 2017. The tax court dismissed the petitions, concluding that the Trust was subject to—and had failed to satisfy—the property tax mandatory-disclosure provision, Minn. Stat. § 278.05, subd. 6(a) (2018).
To trigger the mandatory-disclosure provision, the property at issue must be "income-producing." The Trust argues that its properties are not income-producing for three reasons. First, the Trust asserts that "vestibule businesses" on its properties do not make those properties income-producing. The Trust argues that the vestibule businesses are part of Walmart’s business enterprise, are not subject to market-based leases that would indicate property value, and are irrelevant to the income approach to property valuation. Second, the Trust argues that it does not receive anything from the vestibule businesses as the properties' owner. Third, the Trust argues it did not "admit" that the disclosure statute applies simply by attempting to comply with it.
The relationship between the Trust and its "vestibule businesses" is one where "retail stores [ ] permit franchisees to operate their businesses inside the retail store in exchange for rent." Wal-Mart Real Estate Bus. Tr. v. Cty. of Anoka , 931 N.W.2d 382, 384 (Minn. 2019).
The County asserts that the Trust’s properties are income-producing because the properties generate income from third-party entities who occupy space on the properties.
We resolved a similar tax appeal last term in Wal-Mart Real Estate Business Trust v. County of Anoka , 931 N.W.2d 382 (Minn. 2019). In County of Anoka , the Trust argued that its properties were not income-producing because the vestibule businesses: generated rental income for Walmart, Inc. rather than the Trust; were subject to national rather than local agreements; and were tied to Walmart’s business enterprise and were not relevant to valuation. We rejected those arguments and held that the Trust’s Anoka properties were income-producing and were thus subject to the mandatory-disclosure provision and, further, that the Trust had failed to satisfy the provision’s requirements. Id. at 388–89. We ordered supplemental briefing to address whether County of Anoka controls the disposition in this consolidated appeal. The County’s brief asserts that County of Anoka is controlling in all aspects. The Trust’s brief asserts that County of Anoka is distinguishable based on the more comprehensive disclosures in this case and affidavits that clarify the relationship between the vestibule businesses and Walmart, Inc.
We have reviewed carefully all of the Trust’s submissions and conclude that County of Anoka is directly on point in all relevant respects and controls the disposition of these consolidated cases. We therefore affirm the decision of the tax court.
The Trust does make an argument not made in County of Anoka : that the tax court erred when it considered the Trust’s disclosures to be binding admissions. In applying County of Anoka to these cases, we need not reach that reason for the tax court’s decision and we express no opinion on it. Further, nothing in this order or in County of Anoka should be read to suggest that a disclosure that a property is "income producing" under Minn. Stat. § 278.05, subd. 6(a), requires use of the income approach to determine fair market value or forecloses a party from arguing that the income approach does not apply.
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Affirmed.
ANDERSON, J., took no part in the consideration or decision of this case.