Richfield's school board approved a measure Monday night that could lower Best Buy's property taxes in 2025 and allow the district to accept one-time money from the company to offset the impact.
Richfield school board grants Best Buy's request to lower property taxes
The city, schools and county have all approved ending a minimum-valuation agreement one year early as Best Buy says the Richfield headquarters has plummeted in value.
December 19, 2023 at 4:18AM
Best Buy sought to end a "minimum valuation" agreement that set a floor for the assessed value of its Richfield headquarters at $118.5 million. The company believes the offices are now worth tens of millions of dollars less and want to pay taxes on a lower value. The city of Richfield and Hennepin County had already signed off on the agreement, but the company needed approval from the school board before the deal was done.
Richfield school Superintendent Steven Unowsky said during Monday's board meeting it was critical that Best Buy would make sure the school district would not lose funding and that school taxes would not rise because of the company's moves.
"If Best Buy were to reduce their property value, the impact on property taxpayers would grow," Unowsky said. "Raising taxes on everyone but Best Buy was seen as an unacceptable outcome."
He and the school board members said Best Buy's request to end the minimum valuation agreement was acceptable only if students did not lose funds and taxpayers did not see higher bills.
The school district negotiated with Best Buy to get a one-time payment of $150,000 to the district, both to offset the lost tax revenue and the staff time spent dealing with the issue. If the difference in revenue for the school district is greater than $150,000, Best Buy is meant to reimburse the school district.
School board members said they were upset about changing the agreement but voted to approve a new assessment for Best Buy because they believed students would not be hurt.
Best Buy built its headquarters in the early 2000s for $300 million, according to Star Tribune archives, including public subsidies worth more than $59 million.
The minimum-value agreement was meant to shield the city from risk by making sure the it would always have enough income from the tax-increment financing district to make payments on the bonds that funded the subsidies. The bonds will be fully paid in February, so Best Buy argues its obligations to the city will have been met.
The company says it wants to rent out vacant space in the cavernous building, but argues high taxes are preventing it from offering competitive rates amid a glut of office space in the Twin Cities.
Best Buy officials have told Richfield the property may be worth between $60 million and $81.5 million because it is so empty.
Tracy Smith, Best Buy's vice president and tax counsel, told the school board earlier this month that a recent estimate pegged the market value of the campus at $81.5 million, but over the summer told the city it could be worth as little as $60 million.
"Our Richfield campus today is half vacant," she said.
Residents attending the board meeting were still upset about the development of the Best Buy headquarters, and its effect on the city.
Richfield resident Deb Nordmarken fought the deal 25 years ago, and said it still stings.
"We were so taken advantage of," Nordmarken said, remembering how city leaders at the time brushed off residents' concerns.
"It's time to start making Best Buy pay their fair share," Nordmarken said. "This is it. No more for Best Buy. Let's be done."
