Lawmakers to big box stores: Pay your fair share of taxes!

Last year, a Menard’s home improvement store won a property tax appeal that required the City of Escanaba to refund the company $121,000. That’s about the cost of what the Upper Peninsula community of 12,000 on Little Bay de Noc budgeted for major street repairs next year.

Meanwhile, in Marquette Township, Lowe’s also won a $755,000 tax refund for its store. As a result, Marquette’s Peter White public library, the largest in the U.P., could no longer afford to open its doors on Sundays.

Across Michigan, communities – mostly small cities, townships, counties and schools – are losing costly legal battles with large retail stores. The companies behind the stores are successfully arguing to courts that they should be valued not by formulas that consider the cost to build them, but by comparing their worth to big box buildings that have been closed and sit empty; hence, the “dark stores” moniker.

The rulings have slashed property assessments of many retailers by more than half and left cities and townships with sudden gaps in their budgets. In some cases, towns have been forced to refund hundreds of thousands or even millions of dollars in tax revenue to businesses.

Now, other businesses are picking up on the tax-slashing strategy. Since last year, dozens of companies beyond the big-box behemoths have filed hundreds of property tax appeals across the state.

That in turn has prompted a bipartisan group of Upper Peninsula legislators to try to figure out a way to halt the tax breaks. They fear the trend could cripple local budgets that depend on property tax revenue and leave taxpayers across Michigan shelling out more for schools.

Sen. Tom Casperson, (R-Escanaba), is working with Rep. Ed McBroom (R-Vulcan) and Rep. John Kivela (D-Marquette) to counteract the recent court decisions. Casperson said he expects to introduce a bill soon after the fall legislative session begins in September.

A tribunal shapes policy

According to Casperson, the problem stems squarely from the rulings of the Michigan Tax Tribunal, a Governor-appointed panel little known to most Michiganders.

The five-member tribunal is the state’s tax court and has authority over assessment disputes, which mostly involve property taxes.

“Big box stores are starting to create a huge carve out for themselves and the Michigan Tax Tribunal is helping them,” Casperson said. “I get it. They have a chance to take the money so they’re doing it.

Sen. Tom Casperson, (R-Escanaba) is among a group of legislators trying to close the “dark stores” loophole in state law.  Sen. Tom Casperson, (R-Escanaba) is among a group of legislators trying to close the “dark stores” loophole in state law.

“The snowball has started. It’s going to spread, local business are going to say, ‘Why can’t I get the same thing?’”

But some business leaders argue that the state shouldn’t get involved in this issue.

James Hallan, president and CEO of the Michigan Retailers Association, defended the tax tribunal’s interpretation of how to value such properties. What’s important, he said, is for the court to determine “the objective value a property owner could receive in an exchange of property to any new owner.”

In the case of a large retailer like Lowe’s, Hallan and other defenders argue, the later sale of a building would be difficult because large retailers design the structures to fit their unique needs; in essence making them obsolete once the retailer moves out and problematic for resale. The state should reject “proposals that would give assessors more power than they already have,” Hallan wrote in a recent editorial.

Dark stores theory

In Michigan, property is taxed based on its assessed value, or 50 percent of its fair market value.
This is where it gets tricky.

Retailers argue that their buildings are worth far less than half the construction cost because they are built to be disposable, single-use big boxes that suit their business’ specific purpose. They contend that their stores should actually be taxed at the rate of comparable properties, by which they mean empty ones that are closed (or dark).

Critics of the dark stores strategy note that when big box retailers move out of a property, they often put a restriction on the deed that prevents any competitor from moving in. As a result, that property can remain empty (or dark) for long periods and lose yet more taxable value. Retailers point to the decreased value on deed-restricted properties and say that lower tax rate should be the standard for taxing stores that are open.

Menard’s convinced the Tax Tribunal that its Escanaba store – valued at $7.8 million for tax purposes – should instead be taxed as if it was sitting empty. Menard’s pointed to vacant property with restricted deeds as comparable properties for tax purposes. Its taxes on the Escanaba store were cut in half.

Lowe’s made a similar argument and the Michigan Tax Tribunal cut its taxes by about 55 percent at its Marquette Township store.

“It’s a self-imposed reduction of value right off the bat; (businesses) shouldn’t be able to do that,” said Scott Erbisch, administrator for Marquette County, which has paid out more than $1.5 million in property tax refunds this year to a handful of big retail stores.

Erbisch argues that when a taxpayer wins a reduction, it’s a cut to local government’s budgets that extends for years. Considering the Lowe’s example again, the taxes were cut from about $60 per square foot to $25, a rate that could take decades to return to the original level. That’s because under Proposal A, the school funding law passed in 1994, a property’s taxes can only increase by 5 percent a year or the rate of inflation (whichever is less).

Attorney Jack Van Coevering, former Chief Judge and Chairman of the Michigan Tax Tribunal, filed an appeal on behalf of Escanaba in the Menard’s case, arguing that when businesses are allowed to use properties with restricted deeds as comparables, they are gaming the system for avoid their fair share of taxes.

“There needs to be a uniform method” for assessing property, he said. “The Michigan Tax Tribunal is giving up a lot of money and I don’t think people realize it.

“This is largely a giveaway to out-of-state retail chains. Local businesses will pay more and when a big box decides to appeal and not to pay the state education tax, everyone else will pick up the tab.”

The impact on education

A portion of property taxes goes to the state education tax and when a taxpayer wins a property tax reduction, they pay less in state education tax. As a result, the state has to find somewhere else in the budget to backfill the state education tax revenue that is lost in these appeals so schools are not punished.

Denny Olson, supervisor in Breitung Township, an Upper Peninsula town in Dickinson County that lost a tax appeal to Home Depot last year, said he hopes the pinch to education will get people across Michigan to pay more attention to the dark stores issue.

“These big box stores or other corporate types of businesses come in and it’s to heck with everybody that’s been here 50 or 100 years paying taxes,” he said.

“They are able with their muscle to put our little business out of business and then come at the local unit of government and go for these big tax breaks. That is very unfair.”

Also in Dickinson County, the Quinnesec paper mill ‒ one of the largest taxpayers in the area ‒ filed for a tax appeal this year.

The mill has been located in the area for 30 years and employs about 400 workers. Mark Pontti, a spokesman for the mill’s owner, Verso Corp., said the paper mill’s tax appeal was not inspired by Home Depot’s successful appeal.

“We’re only seeking a fair and equitable valuation,” he said.

Rolling in the dark

Fair or not, these tax appeals are spreading.

Honigman, Miller, Schwartz and Cohn, the Detroit-based law firm that won the Lowe’s case in Marquette last year, has filed hundreds of new appeals on behalf of several big retailers statewide since 2014. The firm’s clients include Target, Walgreens and Home Depot filing appeals against such southeast Michigan communities as Southfield, Birmingham and White Lake Township.

Honigman spokeswoman Sue Sherbow, declined to comment on the appeals.

The volume and success rate in these appeals are sparking fears that copy cat cases will drain untold millions in property tax revenue from communities and schools.

The hundreds of appeals recently filed with the Michigan Tax Tribunal don’t include untold numbers of appeals filed with the local governments or settled before they get to the state level, said Randy Girard, manager for Marquette Township.

Small local governments often don’t have the money to pony up lawyer’s fees to fight an appeal from a big name retailer, Girard said, so they often negotiate a settlement.

“These businesses come in and reach agreement, they build and then all of a sudden, they want to reduce their taxes,” Girard said.

Fix the law, fix the problem?

Towns and counties could pass local ordinances to fight this phenomenon. They could prohibit the use of restricted deeds, or require that any new commercial buildings are constructed for multi-use or reuse. But state legislation would make Michigan’s tax policy more consistent statewide, say supporters of such a measure.

In Michigan, the dark stores appeals have mostly bedeviled small townships. But the fear of a wider application of this tax-cutting strategy has prompted other states, such as Indiana, to craft legislation aimed squarely at stopping a “dark store” stampede.

Indiana passed a law this year that requires tax assessments be based on the “cost approach,” or the cost of the building less depreciation and obsolescence. The law also forbids the assessment from being based on comparable properties that have been vacant for more than a year or have restricted deeds.

Indiana made the change after a study by the Association of Indiana Counties estimated that two big box property tax appeals in that state set the stage for assessed property values in Indiana to be decreased by more than $3.5 billion. That could have shifted $50 million in tax payments to other taxpayers, and cost governments and schools more than $68 million.

The Michigan Association of Counties said it did not have any such estimates for lost revenue on dark store tax appeals in Michigan.

Rep. Scott Dianda (D-Calumet), proposed a bill that would create a fee to recoup the amount of a taxes that companies have won in their property tax appeals.

Girard, manager of Marquette Township, said the current law is not the problem. The problem is the Michigan Tax Tribunal is refusing to adhere to current law and instead is allowing businesses to be taxed as if they are vacant, he said

At the same time, Girard said he is still a fan of the Dianda bill because it seeks to return the refunds to cities, townships and counties that have already lost tax revenue in these appeals.

“I don’t hold the businesses in a negative light,” he said. “I would’ve done same thing if the Tax Tribunal offered me that option.”

Rep. McBroom, however, said he believes Dianda’s bill is tantamount to a new tax and therefore is not likely to get any tractions in the Republican-led legislature.

A larger problem

At the end of the debate, elected and business officials agree, these tax appeals expose the flaws in the way local governments are funded in Michigan.

The state needs to look at municipal finance reform, said Robert Mahaney, president of the Veridea Group, which owns two retail shopping centers and a motel in Marquette Township, and supports the tax tribunal’s recent rulings.

Local units of government rely too heavily on property tax revenues and therefore some places are overtaxing businesses because it is their only source of new revenue, he said.

A few of his tenants, smaller mom and pop shops, have closed their doors in large part because they could not afford the taxes, he said.

For example, he said the Country Inn and Suites his company owns in Marquette is taxed at nearly double the rate per room as a similar hotel it owns in Houghton. “It’s supposed to be a property tax, not a profit tax,” Mahaney said.

Casperson disagrees that Michigan expects successful big box or other companies to pay more than is rightfully due in property taxes.

“They’re involved in the devaluation through their own actions (restricting deeds),” he argues. “Where does it stop? I would say it’s not going to stop. I think our tax tribunal has made it easier for them. We’ve got to make the assessment (process) very clear so there’s not a lot of wiggle room when it goes to the tax tribunal.”

About The Author

Chastity Pratt Dawsey

Chastity Pratt Dawsey is a Bridge staff writer, concentrating mainly on Detroit issues. She can be reached at cpratt@bridgemi.com

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Comments

Jack
Tue, 08/11/2015 - 8:59am
If these buildings are so obsolete and unfit for resale when they are vacated it should be stipulated in the original approval from the city or township that the building and parking areas shall be torn out and revegetated at the owners expense.
LP
Tue, 08/11/2015 - 9:07am
“They’re involved in the devaluation through their own actions (restricting deeds)" EXACTLY!
Al
Tue, 08/11/2015 - 9:44am
Another example of big business moving in, taking what they can take while giving very little back, then moving out and leaving gaping holes in small, local communities. A word to the citizens of these local communities-avoid giving these big businesses your patronage. Shop local. Stay away from the big box stores. Hit them where it hirts; at the cash register. Otherwise they will take every advantage they can and if they harm local economies so be it. In the end they walk away the winner and the poor folk in small communities sit befuddled because they have to reassemble the pieces at a rate higher than before the retail moguls came onto their scene. Avoid big box enterprises like the plague they are. Shop small. Shop local. Keep your hard earned money in the community.
RS
Tue, 08/11/2015 - 9:51am
Meijer has been taking advantage of this for several years. It has hurt our township and our DDA.
John Q. Public
Tue, 08/11/2015 - 9:30pm
If it's hurting your DDA, that's a good thing. What township has a real "downtown" anyway? Is it like downtown Lansing Township--built on a field of weeds and the proud custodian of a rich fifteen year history?
Jane Q Public
Thu, 05/12/2016 - 3:40pm
Cities probably gave huge tax incentives for them to build while the small stores pay all the taxes. You think your saving money at the big box stores when you are actually buying inferior products.
John
Tue, 08/11/2015 - 9:57am
By that standard, Menard's and Lowes should only be paying their CEOs what they'll be worth after they retire.
Tue, 08/18/2015 - 1:59pm
Or better yet, we should all get at least a 50% discount on any product that we purchase from the store since the lumber, saw, drill, ceiling fan, etc clearly won't be worth anything on the day after it is used or purchased and must clearly only be worth the same as any 20 or 30 year old tools or building materials.
Diana Menhennick
Tue, 08/11/2015 - 10:04am
Thank you for writing this snowballing policy problem. This is is a immoral hijacking of a legal path that is available for those with real legal issues. Mr. Mahaney may feel that municipal finance reform is needed but how soon he forgets that his big developer company Verida group is getting millions of dollars in tax abatement's from the City of Marquette for an ongoing project Liberty Way. Developers do not make a profit unless they can recoup what was invested so to regain dollars the profits are being taken from local communities and the property tax payers will end up paying more.
Tue, 08/11/2015 - 10:15am
It's noteworthy that the Governor appoints the tax tribunal and they have systematically been allowing businesses to defund our local governments and schools through this measure. Billions of tax dollars taken away from local governments and given back to big businesses. Decades to recover the lost value because of proposal A.
Dennis Lynch
Wed, 08/12/2015 - 10:58am
Tax Tribunal appointments are made by the governor with the advice and consent of the Michigan State Senate. Where were the complaints in a very business-friendly senate, with its 27 Republican to 11 Democrat advantage, when these officials were approved?
Angela Wilson
Tue, 08/11/2015 - 10:27am
This is a problem throughout Michigan and in all communities big, small and in-between. What the article didn't say is that when the Michigan Tax Tribunal makes their rulings in favor of treating successful businesses as if they are "dark stores" they make the lower tax rate retroactive for several years, and local government and school districts then need to refund the thousands to hundreds of thousands of dollars from their general fund. This is money that has already been budgeted for roads and books. It is shameful and I'm happy to see that the people that make the rules are starting to understand the problem with their laws and I hope they fix it soon.
James moulds
Fri, 03/25/2016 - 3:13pm
If they have so much money as to pay hundreds of thousand dollars back, why do they keep asking for more mills on elections. They come up with the money for attorney fees
Mpchael P
Tue, 08/11/2015 - 10:30am
Let's see....the Governor appointed tax tribunal is ruling in favor of Big Box (Big Business), the locals lose tax revenue after already losing revenue sharing during the previous tax cuts ($ 2 billion plus) to Big Business. Locals are then left to attempt to pass local local tax initiatives for roads and education. Sounds like a huge tax shift ("the old shift and shaft") to me. When will voters wise up and elect representatives of the people not corporations.
Jim
Thu, 08/13/2015 - 10:23am
The Tax Tribunal has been ruling in favor of special use properties such as these big box stores, sports arena's, golf courses and even Rouge Steel for decades - including when the State was dominated by Democratic leadership. Take your conspiracy theory hats off. The law is market value based - and so far, the appraisers, and agents on the side of these businesses have been more persuasive to the courts in their arguments that the recession, and availability of dark/vacant similar properties has a downward pressure on the market value of the occupied entities. -a retired Michigan Assessor
Current Assessor
Thu, 08/20/2015 - 9:30am
The first principle of appraising and assessing is what is highest and best use. Is the highest and best use of any property ever to be vacant and neglected? Can the average citizen claim that if their house were to be put up for sale it would sit empty for several years or need to be torn down? Why are big businesses being treated differently than home owners or small businesses? Especially when we have three different ways of to value property: Income, Cost and Sales approaches? The sales approach uses comparable properties that have sold. If the building is occupied why are we using vacant, run down properties as comparables? What happened to corporate stewardship? Corporations only care about profits and not the local communities or people living in those communities. These corporations are diminishing the value of their own real estate in an effort to prevent competition and we are rewarding them with lower tax bills and big refunds. MCL 211.34c defines how a property is to be classified. Property is classified according to its current use. The highest and best use of the property has been, and continues to be, the standard upon which an assessor values property (except in the case of a large corporation's big box store)
Ken
Tue, 08/11/2015 - 11:13am
The logic that brand new, custom built, fully-operational buildings should be taxed the same as deteriorated, obsolete, deed-restricted, vacant buildings is nonsense. How do I get on this bandwagon? I know businesses need to make a profit (and reward investors) to stay in business but smaller businesses can't afford to pay the higher property taxes or the tax attorneys to fight through the appeal process.
ArtZ
Tue, 08/11/2015 - 11:16am
Based upon this article without doubt action is required now not tomorrow. What is niggling in my mind is my experience after a major industrial park expansion in small community gave birth school districts consolidating schools resulting in new school construction with indoor swimming pools, larger sport facilities and residential properties retained old assessments and the increased tax revenues to meet the debt service was paid by you know whom. The appeals and law suits began with no winners - the losers retirees on fixed income. I trust this not left of the examples of what prompted the appeals.
Bob Moreillon
Tue, 08/11/2015 - 11:47am
Bridge quote "Menard’s convinced the Tax Tribunal that its Escanaba store – valued at $7.8 million for tax purposes – should instead be taxed as if it was sitting empty. Menard’s pointed to vacant property with restricted deeds as comparable properties for tax purposes. Its taxes on the Escanaba store were cut in half." What is the real value of the store Menard's bought? (See below) WHAT THEY PAID FOR IT, right? That's the real value now. Next year, after they have improved it, then tax it on what it's worth at that time.
Robert
Tue, 08/11/2015 - 11:57am
It's an interesting issue. May a property owner, through their own action, essentially depress the value of their property? The other side of this coin are conservation easements. But in that instance, there is a recognized community and societal value to the diminution in value. Also, aren't the "deed restrictions" somewhat illusory? The property owner, whether it be Lowe's, Menards etc. has the ability to waive the restriction. However, even without the deed restrictions, these behemoths are essentially single use structures. And the reason their dark is because the market will not support whatever it is their selling, a predicament most likely shared by a subsequent tenant or owner. Perhaps the solution is in zoning. Ok, we'll let you build this structure, but you must post with us a bond equal to the cost of demolition which will be triggered if the structure is not re-purposed within 24 months of your departure.
ZonerMan
Fri, 09/04/2015 - 2:01pm
ZONING - YES! That is the answer ... problem is, the community doesn't want to place too many restrictions for fear of losing the business that will soon damn them - viscious cycle, huh?
David L Richards
Tue, 08/11/2015 - 12:20pm
I can understand the argument that the valuation of properties for tax purposes should be based on market value rather than cost, but I cannot even guess at the rationale for using deed-restricted properties as comparables. When you prevent the most likely buyers from making an offer, you are going to get an artificially reduced price if you attempt to sell the property. Market value is what a willing buyer and willing seller would agree to, but when the seller places a deed restriction on the property eliminating its value to competitors, the seller is not a fully willing seller.
Duane
Tue, 08/11/2015 - 12:38pm
This is simply a grab for money and the politicians are only smart enough to take when it in small amounts, like from individual residence. In my town the politicians blame the voters for being too stupid or vengenful to give them the money they want. Maybe the politicians should learn something from the 'big box' owners and focus on costs and cut where they can. Maybe we should be talking about spending smarter. Can anyone tell me when a poltician held any of the programs accountable for spending, for results, for anything? In my town the property taxes will fall sharpely next year when the power plant closes and is torn down. Think of the millions and millions of taxes gone as 9 of those power plants close and disappear with nothing but wishfull thinking there to replace them.
KG-1
Tue, 08/11/2015 - 1:07pm
Sorry, but I'm not buying it. If these 'dark stores" are such a problem, then local municipalities should simply sic their code enforcement on them in order to increase the value of these properties. Problem solved. I am also a little miffed because I tried to use a similar argument when I appealed the tax assessment on my property over several years by citing the value of comparable foreclosed homes in the area. So why can businesses use this argument, but an individual cannot?
Jim
Thu, 08/13/2015 - 10:31am
You simply weren't persuasive enough with your arguments. There's also a greater probability that there were also non-foreclosed properties available to analyze and consider when attempting to establish a fair market value for your home. After roughly 18 months of the big recession, even the lenders were requiring more than the typical 3 comp sales comparison approach and were forcing appraisers to consider the impact on foreclosed homes in the market. Similarly, the State Tax Commission offered guidance to Assessors through bulletins on the subject matter. If in your pleadings you (or your appraiser) so obviously skewed the results by utilizing only foreclosed properties, and/or the condition of those properties was not persuasively similar enough then the hearing referee, or judge would have had to draw their own conclusions. In the case of these special use properties (big box retail aren't the only ones prevailing at the Tribunal) it is often the case that the dark stores are the ONLY comparable properties in the market or sub market to use in a sales comparison approach. and further, they also often augment that sales comparison approach with an income approach based on competing income producing properties. the days of a spec builder putting up a large special use property and demanding $20.00/SF in NNN Annual rent are long gone. It's not at all unusual to see large former name brand retail rent for well under $7.00/SF NNN as an example. when market rents drop, so to does market values for property that trades based on its income producing potential...
Darth Store
Wed, 08/19/2015 - 9:31am
Real estate tax is a tax on the market value of real estate. Real estate is the land and building (i.e., improvements). A sale of land and buildings on the open market is the BEST evidence of the market value of land and buildings (duh!). "Dark stores" is just boogey man terminology propped-up by assessors for shock value. They borrowed it from Indiana assessors. MI already taxes the value of the business in a number of other ways -- income taxes, sales taxes, etc. This is an attempt to over-assess these land/buildings and double tax the business value. How is that fair? Blame the over-reaching assessor for the refund check. Those refund dollars were ill-gotten gains that never belonged to the city in the first place. The assessor's job is to determine market value, not raise funds for the schools, etc. The Michigan Tax Tribunal had to be the adult in the room and do the right thing. Kudos to the MTT.
Doug Curry
Tue, 08/11/2015 - 2:55pm
Isn't about time that the scale stops tipping toward business in Michigan. There is a fairness doctrine somewhere that says that each should pay their fair share and that each of us should share fairly in their responsibility for the common welfare of all.
Zygmunt Dorzecki
Tue, 08/11/2015 - 3:21pm
All these Big Box Stores are squeezing the local units of government from getting taxable dollars while putting a large burden on the taxpayers. Many of these so-called stores have restrictions of other businesses coming into the area to stifle competition and if they leave the building vacant, the local government is not allowed to have a similar business obtain the building and it sits vacant for years. Therefore, the tax revenue for the property is in the toilet...
Charles Richards
Tue, 08/11/2015 - 4:31pm
"In Michigan, property is taxed based on its assessed value, or 50 percent of its fair market value." Fair enough. But obviously, the "fair market" value of a newly constructed big box store is its construction cost. The retailer obviously could not find a structure, dark or otherwise, that served their needs. They freely paid a developer to build the building for them, therefore they believed that was their lowest cost option. It is not reasonable to then assert that their new building is comparable to other available structures. And it is absolutely absurd to allow companies to put deed restrictions on a building they no longer want. That is an anti-competitive practice that local governments should not allow.
Clifford S
Tue, 08/11/2015 - 4:36pm
Big money always wins! Politicians are courted by big money and their reward lies in their future if their votes benefit those big businesses! It is reality in these United States of America. Why not create a tax on those big box, restricted deed stores on their monthly sales receipts above any sales tax they now pay? Set that tax to make sure they'll be paying their fair share to the local communities for the services they expect by building in those communities. Never will happen!
Barbara
Tue, 08/11/2015 - 4:57pm
Dickinson County stands to lose $220,000+ if the Verso filing succeeds. This is money we budgeted for other activities and services THIS YEAR. Now we have to close the funding gap by the end of the year to meet the balanced budget requirements. That means many non-mandated services and activities are going to be cancelled. This isn't the first time this has happened to us. Our citizens are having difficulty grasping the seriousness of the situation. Some view our actions as "punishing" them. That is the farthest thing from the truth! Our County government has no control over the Tribunal's decisions. We just have to keep cutting services. What happens when there is nothing left?
Tue, 08/11/2015 - 5:52pm
Thanks for the great in depth article...We have been following this issue in Marquette, MI for some time. We have gathered lots of information our our website: http://closemichiganloopholes.org/. We think there is a better way to conduct business in a community at the same time fostering support and consideration for that community. Unfortunately along with the Michigan Retailers Association, the Detroit-based law firm of Honigman, Miller, Schwartz and Cohn, are looking to create and develop this strategy as a model not only for Michigan but across the country. Last January they published an article in Rebusiness Online explaining that local municipal assessors have much to learn and they are going to show them the way: “Owners of big box retail buildings can take lessons from Michigan on the proper way to value these large, free-standing stores for property tax purposes. The state’s well-developed tax law offers a clear model that is applicable in any state that bases its property tax valuation assessments on the fee simple, value-in-exchange standard.” Really? What people are also beginning to learn is that true community stewardship starts at home with those that see the need to pay their fair share to the communities that support them.
Jon Blakey
Tue, 08/11/2015 - 7:06pm
I don't see what all the hand wringing is about. Have we not been told by our political leaders that reducing taxes on businesses will increase their ability to hire more employees and/or pay them higher wages, which will then be spent in the local communities? Aren't these communities benefiting from all the low wage jobs being created when they allow these big-box stores to locate within them, build single use buildings, and then leave them vacant when they go out of business due to their own ineptness? I am all for capitalism, but if the current trends continue, there will be no decent communities left to live in, no quality schools to prepare our children for the 21st century, and no workers left who can afford to buy anyone's products. Given what I have seen over the last several years, I suspect few of our politicians care as long as they keep getting re-elected in their gerrymandered districts by 40% or less of the voting public.
John Q. Public
Tue, 08/11/2015 - 9:53pm
The solution is far easier: get rid of ad valorem property taxation. We'd need multiple constitutional amendments to make it work, but this garbage would cease. A tax on the square footage and permeability of the land, and cubic footage of the building, eliminates the need for the valuation bureaucracy completely, and the only tool the assessor needs is a tape measure. Different rates for only three classes--unimproved, improved residential, and improved non-residential. That would give the taxing bodies revenue certainty, with gains achievable only through construction or rate increases. Taxpayers would also have certainty, with a fixed tax bill unless a rate increase was passed or they increased the size of their buildings. If a government needs more money, they'd have to get the voters to agree. Meijer, Wal-Mart, Lowe's and Menard's can abandon the stores if they want--unless they demolish them and tear up the parking lot, they're paying the same tax whether it's occupied or not, no matter what it's worth. And if the rates are equal, your 1,000 square foot bungalow on a 1/3 acre lot will have the same tax whether it's on the shores of Lake Michigan or at Outer Drive and Fenkell.
John S.
Tue, 08/11/2015 - 10:41pm
Well, they are not comparable properties, whatever the members of the Tax Tribunal might think. The issue here is the thin market. If there's a Lowe's serving a small community, the value of the empty building that would be suitable location for a Home Depot isn't much. Home Depot won't want to compete in such a small market. The building occupied by Lowe's is worth a lot; the empty building isn't comparable and isn't worth much since there are no sensible competitors out there who would purchase the building and enter the market.
Randy S.
Wed, 08/12/2015 - 11:07am
Appraisers use 3 methods to value property: (1) Comparable sales; (2) Cost of Construction; and (3) Income Approach. Limiting assessors to using only the first is wrong. The value of the property to the owner is not its resale value--they make that clear. Instead it is the income that the owner generates from the building. Big Box retailers don't own their properties to resell them but to operate their retail businesses. The boxes may not bring much on a sale but without them their owners would have no income.
John
Thu, 08/13/2015 - 8:15pm
Hats off to Senator Casperson, as well as Reps, Dianda, Kivela, and McBroom for addressing this issue. Fixing the problem may take an approach that not only prevents the STC from adjusting the value of these "Big Box Stores" downward but allows local units to impose fees if the structures are vacated. Frequently, the development of these large stores force small communities to invest in added infrastructure such as expansion of existing roads, water, sewer, and storm water facilities. Heavier traffic patterns to and from their locations have to be addressed which oftentimes expand well outside of the development footprint. In locations where the large structures are vacated, although they may not meet the traditional definition of "blighted" they certainly do negatively impact the stores immediately around them.
TW Seed
Wed, 12/16/2015 - 4:38pm
If you agree with a judge then you believe that the court is applying black letter law. When you disagree then you believe that there are "activist judges" and they are not applying the law correctly. This issue has made its way through the state courts and the higher courts have agreed with the tribunal or declined the case. It is more than just the tax tribunal as a scapegoat and object of attack for the torches and pitchforks crowd. As for the misapplication of the law, see Kohl's v Fremont Twp to understand the chief tribunal judge's reasoning that, in his opinion, explains how the legislature tweaked the law over years to get us to the present position. In other words, despite contradictory assertions, he believes that he applied the law as the legislatures that were voted in by the people intended. The other element for consideration is corporate greed versus government waste and gluttony. Whether you look at the amount that the taxpayers are asked to supplement public employees' health insurance (many retired teachers pay less than $100 a month) while they go without or have minimal coverage, or you examine public sector's retirement plans that cost us more jobs and services, there is enough reason for taxpayer revolt at any level.
James Moulds
Fri, 03/25/2016 - 3:00pm
I own personal property. The appraisal is three homes that sold to base the value of my home. Three empty homes, wouldn't that be like the dark store? If those homes sold for less than they are worth for owners to get from under them, what do you think that would do to the value of my home. In reality, I'm paying taxes for more than its worth. So, I don't blame big box stores for what they are doing