Garrett Neese/Daily Mining Gazette Residents hold signs protesting Walmart’s attempt to lower its property taxes Wednesday afternoon.

HOUGHTON — As a stream of cars drove in and out of the Walmart parking lot Wednesday afternoon, residents and local officials held signs protesting the company’s push for lower property taxes on the Houghton store.

Walmart has a case pending with the Michigan Tax Tribunal for a 60% reduction in its taxable property value. A hearing is scheduled for June.

Walmart is seeking to have its property revalued under the “dark store” theory, which holds that their property should be taxed at the value it would have if the business were trying to resell the empty building.

“It’s just devastating in terms of tax revenues for these local communities,” said resident Marcia Goodrich. “I just think that’s unconscionable. I’ve got nothing against the Walmart store here or the people who run it. I think the store itself is a great addition to the community. But who could manage to do something like this to a little town like Houghton? What a bunch of bullies.”

If the tribunal rules for Walmart over Houghton, Walmart would receive a $1.2 million refund in back taxes.

Local officials said the property tax reduction would affect not just the city, but agencies, municipalities and schools throughout the county. The effect is even felt at the state level.

“Half of the taxes go to the state education fund for Michigan, paying for K-12 education,” said County Commissioner Glenn Anderson, whose district includes part of Houghton. “So the state itself is losing a significant amount of money every time they allow a case to be heard and then rule in their favor.”

“They’re the most profitable retail business in the history of Houghton County, and of all people, they don’t want to pay,” Anderson said, gesturing to the mostly full parking lot across the street. “If they were losing business or struggling, that’s one thing. But you can see by the parking lot, they’re not struggling.”

In a statement Wednesday, Walmart said it remained committed to the city, and that they believe their property should be valued “just like everyone else’s.”

“When we get a property tax bill, it should reflect the value of the land, brick, and mortar rather than the value of our business operations,” the statement said. “It is disappointing the city would take this action in front of our store when we have reached out to Houghton representatives several times to discuss this situation and remain open to continuing discussions.”

Megowen, who owns the Douglass House building in downtown Houghton, said while he and other property owners don’t enjoy paying taxes, they do it twice a year to feed into the system for police, public works and schools.

“I have a rather large building in downtown Houghton, and I’d love not to pay taxes on it,” he said. “The size of what I pay every year, I’m glad to because of schools, fire and police. Why should they get away with not having to pay taxes?”

Tuesday night, Houghton County joined other municipalities in backing proposed legislation by State Sen. Ed McBroom that would close the dark store loophole. The bills would create a new standard for valuing properties at their “highest and best use,” and would also send cases involving properties over $600,000 to a new county-level board instead of the state tax tribunal.

Anderson said McBroom’s bills would bring Michigan into line with neighboring states such as Wisconsin and Indiana, which have placed base square footage values on big-box stores that would prevent the kinds of reductions being sought by Walmart.

“The same Walmart store in Wisconsin is paying more taxes, and they’re happy for it, because that’s the policy in Wisconsin,” he said.

Houghton is also suing Walmart in federal court, alleging Walmart’s actions violate an agreement made in the 2000s when Walmart expanded the Houghton store to a Supercenter. In that agreement, Houghton transferred property to Walmart and made a series of infrastructure improvements, including wetlands mitigation work and creating a public roadway.

City attorneys have not been able to find an expiration date for the agreement, City Manager Eric Waara said last month.

“It’s so outrageous that Walmart is basically ripping off the community,” Houghton City Councilor Craig Waddell said. “They have a contractual obligation … You won’t see me in a Walmart here or anywhere else in the country until they resolve this in a way that meets their obligations.”

Beyond the agreement, the city also provides routine daily services for Walmart, Megowen said.

“Twenty-five percent of the calls for our police department come to Walmart, which is pretty amazing,” he said.

Greta Peck of Hancock was considering suggesting a 24-hour boycott of the Houghton store.

“It’s letting them know that this is a community you made certain commitments to, and now you’re trying to back out of them… we notice you’re trying to do that, and we don’t like it,” she said. “And you know what? I can probably buy stuff other places.”