State legislature must fix ‘dark store’ problem
Is “your fair share,” particularly when it pertains to taxes, a subjective phrase?
It’s a question we ask as yet another financial challenge bares its head in Marquette Township.
Michigan-based retail giant Meijer Inc., which became a part of the community here in spring 2018, is seeking to slash the value of its 195,000-square-foot store in Marquette Township.
Meijer, which is situated a ways off U.S. 41 to the north of Lowes — another retailer that successfully cut the amount it pays in taxes several years ago — wants to reduce the taxable value at the year-old supercenter by nearly 43 percent, from roughly $7 million down to about $4 million.
The company filed a property tax appeal in May with the Michigan Tax Tribunal, and according to calculations by Marquette Township Assessor Dulcee Atherton, local taxing entities would lose about $140,000 in revenue if the state tribunal OKs Meijer’s request.
Meijer representatives said they want a “correct valuation of the property” and that their “goal is to always keep prices as low as possible” for customers.
We can appreciate the low prices, but it could be at the expense of our pocketbooks should new or higher millages be proposed to shore up funding for the services we’ve come to expect from our local governments.
But Meijer isn’t alone. Moves like this, where big box stores attempt to cut their taxes by significant amounts, have come to be known as a byproduct of the “dark store” method to property valuation.
Michigan’s tax law, and how it’s been interpreted and argued before the tribunal and in the courts, has allowed these big box stores to be assessed as if they were vacant, or “dark.” Using the comparable sales of these vacant stores, which also typically have deed restrictions limiting the structures’ future uses, results in a much lower taxable value. Ultimately, the business owner is able to reduce the amount they pay in taxes, which in turn reduces the amount collected by local taxing entities and municipalities, putting further strain on local budgets and jeopardizing the services these entities provide to residents.
Counties, cities, townships, police and fire services, schools, libraries, public transit and more all feel the squeeze, especially when this dark store approach is undertaken by multiple companies in one taxing jurisdiction, as is the case in Marquette Township. But not just there.
To the south in Escanaba, the city continues its dispute with Menards, which has been a long and costly legal battle. A decision is hoped for later this year, and maybe a precedent can be set.
But if that falls short, maybe the Legislature can propose a fix to this dark store situation — but, unfortunately at this point, that seems unlikely.
Upper Peninsula lawmakers have tried to stop the bleeding by introducing legislation at the beginning of this term to close the dark store loophole, but state Rep. Beau LaFave, a Republican from Iron Mountain, said recently that the effort has stalled.
LaFave told the Iron Mountain City Council that he’s been unable to get a hearing on the bill he introduced in January, as reported by The Daily News.
“We need more friends south of the bridge,” LaFave reportedly said to the council.
LaFave’s report came after Iron Mountain and Dickinson County learned in June that Wal-Mart Stores Inc. was appealing the property tax assessment for its supercenter on South Stephenson Avenue, seeking a roughly 22% reduction, or about $1.1 million less in taxable value.
The legislative committee chairman blocking the bill is state Rep. James Lower, R-Greenville, although earlier attempts at reform also have languished. In 2016, a bill that passed the House with overwhelming support died in the Senate’s finance committee without a hearing.
It’s amazing that Michigan lawmakers, especially those downstate, can’t seem to grasp the importance of the so-called dark store theory being put to rest.
It’s spread across Michigan like a cancer. Something needs to be done.