Article courtesy of MIRS News Service
The Michigan Supreme Court decided not to hear Menard Inc.’s appeal challenging a lower court’s rejection of the Tax Tribunal’s “dark stores” method when assessing the big box store’s Escanaba property.
The decision lets stand a Michigan Court of Appeals ruling overturning the state’s Tax Tribunal’s decision the property was worth $3.3 million – about 60 percent less than the $8 million the city of Escanaba levied.
In a two-sentence statement released Friday, the state’s highest court said it was not persuaded the questions presented should be reviewed. The case returns to the Tax Tribunal for further proceedings.
Menards Inc.’s attorney, John Pirich of Honigman Miller Schwartz & Cohn, was not immediately available for comment Friday.
Pirich asked the state’s highest court on Oct. 12 to find the Court of Appeals erred when it overturned the Tax Tribunal’s decision that it owed less taxes than the city of Escanaba levied.
Pirich argued the appeals court exceeded its scope of review by “substituting its own views regarding the weight to be accorded to the evidence … and the credibility of the witnesses.”
The case originated when Escanaba valued Menards’ freestanding “big box” retail store’s “true cash value” for property tax assessment at $8 million, based on a cost approach.
Menards challenged the assessment, presenting an expert appraiser who valued the property at about $3.3 million, based largely on a sales-comparison approach and on what the building would be worth if it were empty.
The Tax Tribunal in 2014 rejected the city’s valuation, prompting the city of Escanaba to appeal.
The Michigan Municipal League (MML) and Michigan Townships Association (MTA) said the decision restores fairness to the assessing process, but the Michigan Retailers Association disagreed.
“All we’re asking for is fairness,” Meegan Holland, vice president for communications and marketing of the Michigan Retailers Association, said Friday. “We just want the courts to follow Michigan’s general property tax act and we felt the Court of Appeals’ decision did not do that.”
Stephanie Simon Morita, a municipal law attorney with Johnson, Rosati, Schultz & Joppich, who wrote the amicus brief the appeals court used in making its decision, called it a “major victory for local governments and their residents.”
She said the decision means big box stores can no longer obtain “unfair and substantial tax reductions based upon unrealistically low artificial values.”
The Michigan Municipal League called on the Legislature to move HB 4397, sponsored by Rep. David Maturen (R-Vicksburg), to “codify the issues the Supreme Court has said should be considered in property assessments.”
“Now is the time to clear up any confusion in the minds of businesses and city officials on this issue,” said Chris Hackbarth, the League’s director of state and federal affairs. “Rep. Maturen’s bill does just that, and will add stability to the property tax assessment process.”
In a prepared statement, Maturen called the Supreme Court’s decision “a clear victory for small business and local communities.”
He said the decision “mirrors” his legislation, which “ensures that the tax assessment process is fair for local retailers and communities.”
Both the MML and MTA said the Tax Tribunal has “reduced so many valuations” of big box properties under the dark stores method that local revenues to provide public services has “reduced by at least $100 million since 2013.”
In other news from the high court Friday, the Michigan Supreme Court declined to hear an appeal in NL Ventures VI v. Farmington LLC.
Ventures asked the state’s highest court to overturn a December 2015 appeals court decision and reinstate the trial court’s 2014 order granting Ventures summary disposition on a count to invalidate tax liens.
Court documents show Ventures leased property to a company that later went bankrupt. The City of Livonia placed an estimated $900,000 tax lien against Ventures for the bankrupt company’s unpaid water and sewer charges.
Ventures sued the city, alleging the liens were unenforceable because the city failed to comply with its own water rate ordinance. The trial court agreed and ordered the city to remove the lien, but the appeals court reversed that decision.