The Wal-Mart Corporation is challenging the tax assessment on its Sharon Springs Distribution Center—something that could have serious local financial implications if it’s successful.
The Route 20 facility, built in 1995, is assessed at $59 million, a figure based on construction costs, officials said.
But in a notice of petition filed six months ago, Wal-Mart is seeking to have that figure slashed to $15.8 million.
Because Wal-Mart makes payments in lieu of taxes--$975,000 a year under a 10-year PILOT renegotiated in 2015, if the challenge is successful, the impact on taxes won’t be felt immediately; Wal-Mart will continue to make the PILOT.
But a lower assessment would change the distribution of sale tax revenues, and it would hit especially hard in the Village of Sharon Springs, were water and sewer revenues are based in part on assessments.
As a first step toward challenging the move, Sharon Springs Central School, the Town of Sharon, and the Village of Sharon Springs have all agreed to chip in toward the cost of an independent appraisal of the property, along with associated legal fees, and Schoharie County Treasurer Bill Cherry is expected to advice supervisors to do the same Friday.
The Vincelette Law Firm out of Albany, which has experience in dealing with other Wal-Mart sites, will be handling the job at a cost of about $30,000.
Because it receives 40 percent of the PILOT, SSCS will pick up 40 percent of that cost with the other entities dividing the rest equally.
“Information is always good and we all need to know what the Distribution Center is really worth,” said SSCS Business Manager Tony DiPace. “But after that…we’re going to have to evaluate.”
Sharon Supervisor Sandra Manko said much the same thing Thursday.
“This is just step one,” she said. “Then we’ll have to step back and see where we go from there. It’s a first step.”
With little discussion, the Village of Sharon Springs also agreed to fund its portion of the bill Thursday.
But according to Mr. Cherry, that’s where the impact of any change in the assessment will hit first.
Not only would the village see a drop in sales tax revenues as the total value of its assessed properties goes down, it would also see a drop in water and sewer revenues collected from Wal-Mart because they, too, are based in part on Wal-Mart’s assessed value and not just usage.
“And though the biggest impact would be on the Village of Sharon Springs, there are implications for all of us,” Mr. Cherry said.
If the independent appraiser finds Wal-Mart’s figure of $15 million is correct, taxes would be $750,000 annually—less than the PILOT, which runs to 2025.
“They could say ‘Just send us the tax bill,’” Mr. Cherry said.
“And even if we settle somewhere in the middle, what do we do when the current PILOT expires? The facility is worth a lot more than $15 million…”
“I have a lot of compassion for the village,” added Mr. DiPace.
“If Wal-Mart’s successful, they’re going to be paying a lot less in village water and sewer revenues. And that’s going to shift the burden to everyone else. But there’s only so far the school district can go.”
Among those who would also feel the impact are the Sharon Springs Free Library and the Fire District, which as special districts collect about $78,470 combined through the Wal-Mart assessment.
According to Mr. Cherry, if the Wal-Mart assessment is cut to say, $30 million, the amount the two collect would be cut to about $39,000 million.
“The special districts would probably increase the tax rate per thousand for everyone in the district to compensate for the lost revenue,” he added in a December 1 letter to Ms. Manko.