RICHFIELD, Minn. — Best Buy asked the Richfield School Board to approve a deal already reached with the city that would end a special tax agreement a year early, allowing the company to reduce its property tax burden.
The agreement was reached more than 20 years ago when Best Buy sought to build its new headquarters in Richfield. As part of the deal, Best Buy agreed to pay taxes based on an assessed value of at least $118 million through 2025. The purpose was to make sure the city was reimbursed for bonds it took out to invest in the multi-million dollar headquarters and the infrastructure needed to support it.
Those bonds will be paid off by early 2024, and Best Buy says a lot has changed since 2000.
“Today’s workforce and workplaces have permanently changed,” Best Buy attorney Tracy Smith told the Richfield School Board. “Our Richfield campus today is half-vacant.”
The company has teams who work fully remote, while others work a hybrid schedule — coming to the Richfield headquarters just three days per week.
Meanwhile, Hennepin County said the assessed value of the property would be $81.5 million, significantly less than the agreed to minimum of $118 million.
Best Buy has asked to pay taxes on that lower amount, starting next year.
“Best Buy wants to pay property tax on its office space at fair market value, just the same as other Richfield residents, and importantly, Best Buy’s competitors,” Smith said.
The company argues that a lower property tax will allow them to rent out office space to other employers at a more competitive rate, bringing more jobs and more stability to Richfield.
Meanwhile, the company pledges the deal will be structured in a way that won't harm other taxpayers.
“There are no losers to this situation and solution. The risk to the district and its taxpayers has been fully addressed,” Smith told board members at their Dec. 4 work session.
But some board members had concerns with the shortened timeline they were given in which to weigh in, saying they weren’t brought into the conversation until after agreements had been made with the city. They want assurances students and taxpayers won’t feel the impact of terminating the tax deal early.
“There are no losers," said board member Crystal Brakke. "We don't want to be the sole exception to that."
School District Superintendent Steven Unowski said he hoped to reach an agreement, but would only sign off if he believed taxpayers were protected.
He estimates ending the agreement early would shift $100,000 from Best Buy’s taxes to other taxpayers. Plus, he said the process has created significant extra work for school district staff.
He wants Best Buy to commit to a $150,000 payment to Richfield Schools to cover the burden.
Responding to questions from KARE 11 Unowski said, “We must ensure school funding is not reduced in any way and that our taxpayers are not impacted by this. We have discussed this with representatives from Best Buy and we are working toward an agreement based on these expectations.”
At the meeting Smith, from Best Buy, seemed inclined to agree.
If they come to a formal agreement, the school board will vote at its Dec. 18 meeting.
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