Rallying the troops
MARQUETTE – State and local officials are offering various means of support to back Marquette and Breitung townships in their battle against the way the Michigan Tax Tribunal has allowed “big box” retailers to assess the true cash value of their stores.
Tribunal decisions have resulted in the loss of thousands of dollars in property tax revenue.
“I think finally people are starting to get it across the state that this is a big deal,” said Marquette Township Supervisor Dennis Liimatta. “We’re not talking about one municipality. We’re talking about everybody across the state. We’re not talking about one big box store.”
Last year, Lowe’s Home Improvement Warehouse in Marquette Township, appealed its property tax assessments for 2010, 2011 and 2012 to the Michigan Tax Tribunal. A hearing was held in November with tribunal Judge Victoria L. Enyart ruling in favor of Lowe’s. The decision dropped the 2012 true cash value for the Lowe’s store from $10.4 million to $3.5 million.
Enyart ordered Marquette Township to refund to Lowe’s from schools, libraries and other local taxing units $138,409 in property tax revenue for 2010 and $146,832 for 2011 – in addition to $8,933 in interest- and taxes and interest totaling $152,902 for 2012.
Marquette Township petitioned its case to the Michigan Court of Appeals in January, which is expected to rule later this year. The township’s case was consolidated with another from Breitung Township, which had a similar ruling filed against it involving a Home Depot store.
The tax tribunal has decided in those two cases – and several others involving other big box retailers across the state – that the operating stores must be valued as though they are vacant and for sale or so-called “dark stores,” which have been converted to some other use.
That idea was based on examples provided by appraisers indicating that when big box stores are sold they are converted to another use, demolished or investors will spend considerable money reconfiguring the space.
Township attorneys argued the stores should be valued considering existing use, present economic income and the land and structures at the time of tax assessment.
“We still expect to prevail in the Court of Appeals, but in order to make it a moot point moving forward, I think there has to be some legislation and legislators are going to have to get involved,” Liimatta said. “I don’t know where the governor’s office comes down on this.”
So far, at least three lawmakers representing the region are interesting in the issue.
State Rep. John Kivela, D-Marquette, said he is looking closely into the situation and strongly considering legislative action.
“It is unfortunate that these large commercial stores are utilizing an apparent loophole in the law to dramatically reduce their taxes in our community and across the state of Michigan. These reductions will have dramatic impacts on our schools and local municipal governments,” Kivela said. “I will be working with my colleagues in the House and Senate, along with other interested parties, on closing this loophole.”
State Sen. Tom Casperson, R-Escanaba, said he intends to address the problem legislatively and is working to determine how best to do that.
“I am very concerned about how these big retailers are seemingly exploiting the law for their own gain at the expense of local stakeholders. Assessing commercial property in the manner that the retailers are arguing is not only unreasonable, but it is unfair to our local communities, especially to the local governments and the schools,” Casperson said. “This truly is a troubling practice that has far-reaching and long-lasting consequences not just to communities in the U.P. but throughout the state. So, I am now working with some colleagues to determine how we can rectify this self-serving practice legislatively and ensure that our communities are protected from such actions going forward.”
State Rep. Ed McBroom, R-Vulcan, is also investigating the issue, according to township officials.
The Marquette County Board recently voted unanimous support of a resolution backing the two townships.
“It’s a pretty concerning trend or development that’s taking place,” Marquette County Administrator Scott Erbisch said.
Commissioner Deborah Pellow suggested the board contact the governor’s office about the issue. Board Chairman Gerald Corkin said the value of the Lowe’s store was greatly decreased. Several other big box stores in the township have filed tax appeals that are in progress, with more expected in the months ahead.
“This is a big issue statewide and one we should zero in on and bring to the forefront,” Corkin said. “This is going to wreak havoc with local units of government and schools.”
Marquette Township Manager Randy Girard said the Michigan Townships Association and the Michigan Municipal League have agreed to support the townships’ appeals with amicus curiae briefs. Girard said the Michigan Association of Counties is in discussions with the townships’ legal team. Attorneys are seeking either financial support, a legal brief or both.
During the first week of May, Girard and two township board members are going to Lansing for the Michigan Townships Association “Legislative Advocacy Day” where they plan to discuss the issue.
“This will be the subject that I’ll be talking with the legislators about,” Girard said.
Township officials said they remain supportive of commercial development and businesses, but need some recourse for the loss of tax revenue, which would be devastating to the community.
“If the tax code is going to be changed, then the state needs to make some other amendments to be able to have the local governments still be able to function as local governments,” Girard said. “You can’t throw everything to the residents. You can’t say we’re going to cut by roughly 50 percent the taxable burden that the businesses have and now we’re going to shift that to the residents.”
John Pepin can be reached at 906-228-2500, ext. 206. His email address is email@example.com