Officials pleased with recent ‘dark store’ decision

A decision last week from the Michigan Supreme Court has officials with local units of government voicing pleasure because of the ruling’s fiscal ramifications.

Justices Friday rejected an appeal from big box retailer Menards in a tax dispute with the city of Escanaba which has wore on for several years. It was the latest round in what’s known as the dark store dispute, where retailers appealed annual tax assessments to the Michigan Tax Tribunal.

The Escanaba Daily Press and Associated Press reported that big-box stores have been reducing their tax bills for years by convincing the Michigan Tax Tribunal that their stores are so large and unique that they should be assessed at much less than the cost of construction. The loss of revenue has led to budget cuts in many communities.The assessments were reduced, adversely impacting revenue streams received by local units of government.

In the Escanaba case, Menards, which first appealed its property assessment in 2014, claims the store’s value should be based on a closed and empty building — or a dark store. The Daily Press and AP also reported the city continued to fight the dark store tax loophole as additional property owners filed petitions to have their property assessments lowered.

Many stores in this neck of the woods did the same thing.

Following an appeals court’s reversal of the tax tribunal’s ruling, Menards filed a request to have the case heard before the Michigan Supreme Court, which heard arguments last week.

“We were pretty confident leaving the courtroom last week, just because of the interaction between the attorneys and the Justices,” Escanaba City Manager Patrick Jordan told the Daily Press Friday.

Because the high court referred the matter back to the tribunal, take it to the bank that this isn’t the final chapter in this situation. Too much money is at stake for Menards to simply walk away from it all.

That said, local officials who have seen their local revenue streams impacted, have cause to celebrate — at least for now.