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Maturen Giving ‘Dark Stores’ Another Try; Brandenburg Calls It ‘Money Grab’

March 28, 2017

Rep. Dave MATUREN (R-Brady Twp.) announced Tuesday he’s giving his “dark stores” legislation another try this session after a Senate committee sat on a similar bill last session and appears poised to do it again this term.

Speaking at the Michigan Municipal League’s annual conference, Maturen said this session’s version would be HB 4397. And while he hasn’t started working the issue with new Tax Policy Chair Jim TEDDER (R-Clarkston), Maturen did have the presumed support of nine fellow House members who joined about a dozen local officials on stage with him at Tuesday’s press conference. All told, 54 House members support his bill, he said.

“We’ll take this fight as far as we need to go,” said Meridian Township Manager Frank WALSH. “It’s not just about funding. It’s about what is right and what is fair.”

The bill would specifically detail how local units of governments could assess large commercial operations like Home Depot, Walmart and other large box stores. Currently, the Michigan Tax Tribunal allows such buildings to be assessed on its minimal value when it’s vacant.

This creates situations where, for example, a Costco would pay property taxes based on the presumption it’s building is worth $4 million despite having purchased property for $5.5 million and spent $12 million in constructing the building. Local government leaders are agitated because they feel these box stores are utilizing local services but not “paying their fair share” of taxes.

Large commercial outlets end up paying between $50 to $70 per square foot in other states, but between $20 to $25 per square foot in Michigan, as a result, Walsh said.

Maturen said he’s plowing ahead with his bill despite the Court of Appeals ruling last May that the Michigan Tax Tribunal’s logic in allowing for so-called “dark stores” to lower their property taxes is “based on an error of law.”

The state Supreme Court said on Feb. 1 in Menard v. Escanaba that it would take oral arguments on whether to grant the appeal or if it should take any action. In the meantime, as many as 36 different municipalities have gotten together to support the penning of an amicus brief in support of the Court of Appeals ruling.

Maturen said even if the Supreme Court denies to take the case, or ends up ruling in favor of the city, he believes it’s important to lay out the specific evaluation principles of assessing property at it’s “highest and best use” moving forward.

The bigger hurdle for Maturen will be Senate Finance Committee Chair Jack BRANDENBURG (R-Harrison Twp.), who declined to take up the bill last session. He said Tuesday he’s not likely to take it up again this session, if it gets to him, because he sees it as a “money grab” for locals and an “attack on business.”

“I thought this was a dead issue, but it’s a free country,” Brandenburg said. “If someone wants to put in a bill, they are free to do so.”

The business community, led by the Michigan Retailers Association, argue the measure would increase the cost and length of commercial property tax appeals by requiring additional detailed studies and use of experts. Those additional costs would be “prohibitive” for a smaller business.

The Retailers argue the Maturen bill would turn the appeals process “on its head and drive up taxes.”

“While the legislation hasn’t been introduced yet and isn’t available to review, retailers continue to have concerns about legislation that would slant the appeals process against taxpayers,” said Amy DRUMM of the Michigan Retailers Association. “Property owners have the right to appeal if they believe they’ve been over-assessed. The state should not intentionally discourage property owners from exercising that right.

“In Michigan, all real property is valued based on the usual selling price of similar properties. If one property owner has a successful appeal, his neighbor’s property taxes won’t, and frankly can’t, increase. That’s simply not how properties are assessed or how taxes are implemented in Michigan.”

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