Dianda Says Tax Tribunal Appointment Hurts Locals Fighting Dark Store Tax Cuts

Governor appoints former tribunal judge who ruled against locals
Tuesday, March 1, 2016

LANSING — State Representative Scott Dianda (D-Calumet) said today that Gov. Rick Snyder’s appointment of  Marcus Abood to the Michigan Tax Tribunal will continue to make it virtually impossible for local governments fighting big box stores over property tax reductions that hurt their ability to fund services such as law enforcement, libraries and local road maintenance.

“The Tax Tribunal has ruled for big box stores and against local governments in the past when these stores use the ‘dark store’ argument to get their property taxes substantially reduced. Marcus Abood served as a Tax Tribunal Judge previously and wrote the decision Menards v Escanaba that found in favor of Menards,” said Dianda. “By appointing him to a new position on the tribunal, the governor is showing how completely out of touch he is with local government needs, because our communities will continue to come up short in these fights and there will be less money to cover services that residents, and these stores, rely on.”   

Local property assessors are charged with valuing a property to its “highest and best” use. If it was built for $10 million in one year, then an assessor would value it at close to $10 million the next year. The practice of lowering assessments because stores argue that their store design can’t be used by similar stores — known as the dark store method — has been exceptionally hard on Upper Peninsula communities where lower tax collections hit police, fire, ambulance and library services hard. Corporations also often add deed restrictions against selling that property to another retailer. Because of this, corporations have argued successfully to the state Tax Tribunal that the “highest and best use” of a thriving retail space is for something far less valuable than retail. If the tax tribunal agrees, and it has been agreeing, then the big box store ends up paying less in property tax to the local unit of government.

“My U.P. colleagues and I have sponsored legislation to fix this dark store problem so that our local governments who are already hurting because of the governor’s cuts to revenue sharing can get some relief,” said Dianda. “But our bills haven’t moved and now the governor is going ahead and reappointing someone to the tribunal who’s ruled against our communities in the past. Big box stores need the same police and fire protection that resident need, but they don’t pay their fair share of tax money for these services when the tax tribunal cuts their taxes.”

Dianda is the sponsor of House Bill 4681, which would create a user fee for corporations that use this tactic to cut their property taxes. The purpose of the fee is to recover any revenues lost when a business successfully appeals its tax assessment to the Michigan Tax Tribunal. House Resolution 133, which Dianda sponsored, calls for a statewide impact study that would look at communities that have already lowered large retail property tax assessments and study the impact on local services. Ottawa County has lowered these assessments by $14.8 million. Marquette Township recently had to refund overpaid property tax assessments of $756,000, computed by the dark store tax method.