Court Office of Appellate Courts
R. Bradford, Christine Hinrichs, Bassford Remele, P.A.,
Minneapolis, Minnesota; and Robert A. Hill, Robert Hill Law,
Ltd., Wayzata, Minnesota, for relator.
Anthony C. Palumbo, Anoka County Attorney, Jason J. Stover,
Christine V. Carney, Assistant County Attorneys, Anoka,
Minnesota, for respondent.
Retail-store properties that lease space within the store to
vestibule occupants are income-producing properties under the
mandatory-disclosure provision of Minnesota Statutes section
278.05, subdivision 6(a) (2018).
Because the property owner failed to produce the information
required by Minnesota Statutes section 278.05, subdivision
6(a), by August 1 of the taxes-payable year, the tax court
correctly dismissed the owner's petitions.
and decided by the court without oral argument.
consolidated tax appeal we must determine whether retail
stores that permit franchisees to operate their businesses
inside the retail store in exchange for rent are
"income-producing properties" within the meaning of
the tax statute's mandatory-disclosure provision.
See Minn. Stat. § 278.05, subd. 6(a) (2018).
When an owner of real property challenges the county
assessor's valuation of a property that is
"income-producing," the owner must disclose certain
information by August 1 of the taxes-payable year.
Id. Failure to disclose this information by the
deadline results in dismissal of the taxpayer's petition,
unless an exception applies. Id., subd. 6(b).
Wal-Mart Real Estate Business Trust ("Trust") owns
three parcels of land in Anoka County ("County").
Each parcel has a Walmart retail store, operated by Walmart,
Inc. ("Walmart"). The Trust is a wholly-owned
subsidiary of Walmart.
Trust filed petitions challenging the County's assessment
of the three parcels. The tax court dismissed the petitions,
however, because the Trust failed to provide the information
required by the mandatory-disclosure provision before the
deadline. The Trust filed timely certiorari appeals from the
tax court's orders dismissing the petitions. It claims
that it is not subject to the mandatory-disclosure rule
because the Walmart stores are not
"income-producing." We consolidated the three
appeals for briefing and non-oral consideration. Because we
agree with the tax court that the properties are
"income-producing" and that the Trust's
disclosures were inadequate, we affirm the dismissal of the
of the Trust's retail properties are at issue here: Ball
Road, Blaine ("Ball Road store"), Ulysses Street,
Blaine ("Ulysses Street store"), and University
Avenue, Fridley ("University Avenue store").
Although the Trust owns all three parcels, it receives no
income tied to the properties because retail income is kept
by Walmart and recorded as ordinary business income. Walmart
does not pay rent to the Trust.
has contracted with several "vestibule businesses"
to operate within its stores. Among the three properties at
issue, Walmart has vestibule arrangements with four entities:
Twin Towers Trading Site Management, LLC, a franchisor of
Subway sandwich restaurants; Da-Vi Nails Salon and Spa, LLC,
which operates nail salons; Seva Beauty, LLC, which operates
beauty salons and spas; and Regis Corporation, which operates
hair salons. The Ball Road store has a Subway, a Da-Vi Nails
salon, and a Seva Beauty salon. The Ulysses Street store has
a Subway and a Regis hair salon. The Fridley store has a
vestibule arrangements are governed by generally applicable
master lease agreements along with site-specific attachments
to the master agreement. The Trust is not a party to any of
these agreements. The master lease agreements are negotiated
by Walmart on a national scale and include, among other
terms, promises by Walmart to deliver possession of the
premises to the vestibule occupant in exchange for promises
by that occupant to pay rent. The site-specific attachments
provide further terms, such as a description of the leased