Kmart Suing Municipalities Over Property Taxes

TROY, Mich. - Kmart here is suing hundreds of municipalities nationwide in a lawsuit that claims the communities overcharged the discount retailer millions of dollars in property taxes on stores and other facilities, according to an Associated Press report.

The discrepancies range in value from a few thousand to tens of thousands of dollars. Some municipalities have settled with the chain, but others, including several in California, have banded together to fight, saying Kmart is using the suit to pressure them into accepting its demands.

The company's suit was filed May 5, 2003, the day before it 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, "and constitutes no proper basis for the valuation of the...property."

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