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Interviews with news makers and discussion of topics important to Southwest Michigan. Subscribe to the podcast through Apple itunes and Google. Segments of interview are heard in WestSouthwest Brief during Morning Edition and All Things Considered

WSW: How the "Dark Store" Theory Leads to Lower Property Tax Bills

Menard's Marion, Il, Wikimedia Commons

Some “big box” retailers are using something called the “dark store” theory in an effort to win appeals of property tax assessments from local units of government. 

MiBiz Staff Writer Nick Manesrecently wrote about the practice. He told WMUK’s Gordon Evans that it’s been used in other states, but stores like Meijer, Menard's, WalMart and Home Depot have been trying the tactic more often in Michigan.

Manes says they claim that their stores are designed in such a way that they cannot be used by a competitor. The retailers say the buildings should not be assessed by the cost of construction. Many of the stores they compare to are closed, so the retailers are asking the State Tax Tribunal to compare their property to vacant stores.

But many of those properties have deed restrictions so Manes says it’s hard to prove if the stores can’t be used by any other retailer. Manes says that’s a source of frustration for local government officials on the losing end of many rulings from the tax tribunal. The Michigan Tax Tribunal oversees appeals for property tax assessments. Manes says often a municipality will settle rather than take the case to the Tribunal. He says the Tribunal has largely accepted the “dark store” theory. The Court of Appeals has usually upheld any rulings by the Tax Tribunal. 

"There's definitely real money at stake here."

Asked what local governments can lose in a property tax appeal, Manes says “there’s definitely real money at stake here.” Marquette had to scale back library hours because it lost a property tax appeal. Manes says lawmakers in Michigan are examining legislation passed in Indiana that limits some appeals by “big box” retailers. The law in Indiana eliminates the practice of comparing an open vibrant store to a vacant, closed store.

Meijer declined an interview with MiBiz. But did e-mail a statement to Manes saying they seek ways to keep prices low, and that includes trying to reduce its tax burden. Stores tend to serve a large area and employ a couple of hundred people. Manes says local officials have to weigh that against the loss of tax revenue that may come when a retailer takes its appeal to the Michigan Tax Tribunal.

Image from Wikimedia Commons

Gordon Evans became WMUK's Content Director in 2019 after more than 20 years as an anchor, host and reporter. A 1990 graduate of Michigan State, he began work at WMUK in 1996.