The Tulsa County Assessor’s Office is asking for help to determine whether the Macy’s Fulfillment Center north of Tulsa is eligible for more than $8 million in property tax breaks it received as part of its agreement to locate to Oklahoma, The Frontier has learned.
Pat Milton, chief deputy for Assessor Ken Yazel, told The Frontier that the Assessor’s Office plans to ask the Tulsa County District Attorney’s Office and the Oklahoma Tax Commission to weigh in on whether the fulfillment center should be considered a retail business.
State law prohibits retail establishments from receiving property tax incentives or exemptions.
The problem, Milton said, is that the state’s definition of “retail” may not have been written with facilities like the fulfillment center in mind.
“We think they might have been really thinking about a storefront, so we are not sure,” Milton said. “This is not for our office to determine.”
As defined in Title 62 of the state statutes, “retail purposes” means “the objectives of selling tangible personal property, other than art, on the physical premises of an establishment.”
No merchandise is sold in-person to customers at the center, known as the Macy’s-Bloomingdale’s Fulfillment Center.
However, the facility does sell products directly to customers online.
On its website, Macy’s describes its fulfillment centers as the place where merchandise moves from suppliers through distribution centers to stores and customers.
“The merchandise sold on our Internet sites is received at the facility, individually wrapped and prepped for future orders, then stocked,” according to the Macy’s website. “When a customer order is placed on either macys.com or bloomingdales.com, the merchandise is picked, packed and shipped — not just across the country, but around the world!”
“Does this statute really apply in this kind of a case?” Milton said. “These are the kind of things for the attorneys to answer.”
The 1.6 million-square-foot fulfillment center at 76th Street North opened earlier this year. It is projected to employ more than 1,300 full-time or full-time equivalent people.
As part of the county’s memorandum of understanding with Macy’s-Bloomingdale’s, county commissioners agreed to establish a Tax Incentive Finance District that exempts the company from paying property taxes on new construction at the 72-acre site from 2016 to 2020.
The Assessor’s Office has estimated Macy’s-Bloomingdale’s could save $1,748,979 a year, or $8.75 million over the life of the five-year county abatement.
First Assistant District Attorney John David Luton said Tuesday that he was unaware of the Assessor’s Office concerns but that his office would be happy to assist.
“If they want to slip us a question, we’ll be happy to research it,” Luton said.
The Assessor’s Office under Yazel has not been afraid to go against conventional wisdom when determining whether a property should be tax exempt.
His decision to place a value on continuum-of-care facilities like Montereau Retirement Community, for example, led to a long legal battle that ended in defeat for the Assessor’s Office.
Milton said the Macy’s issue is different. The Assessor’s Office is simply looking for guidance in administering a tax abatement agreement between two parties — Macy’s and the county commissioners —not attempting to defend a decision it made to exempt a property from tax or place a value on it.
There is plenty of time to iron things out, Milton said. Macy’s-Bloomingdale’s Fulfillment Center was completed this year, meaning the earliest it could go on the tax rolls is next year.
Until the Assessor’s Officer hears back from the District Attorney’s Office and the Oklahoma Tax Commission, it plans to proceed according to the terms of the agreement between Macy’s and the county, Milton said.
“We are not going to tip over the apple cart, because we’re not sure,” Milton said.
This story is part of a partnership between The Frontier and NewsOn6.