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Michigan Supreme Court strikes down controversial ‘dark store’ tax appeal MIBIZ FILE PHOTO

Michigan Supreme Court strikes down controversial ‘dark store’ tax appeal

BY Friday, October 20, 2017 01:39pm

LANSING — The Michigan Supreme Court on Friday denied an appeal from big box retailer Menard Inc., effectively ending the so-called “dark store” practice of property valuation in the state.

In an order handed down today, the state’s Supreme Court denied Menard Inc.’s request for an appeal in its lawsuit against the city of Escanaba because the justices felt they were “not persuaded that the questions presented should be reviewed by this Court.”  

The order upholds a May 2016 ruling by the Michigan Court of Appeals, stating that the Michigan Tax Tribunal erred in its ruling against the city of Escanaba in an appeal of the property tax assessment on a Menards store that was based on the dark store theory.

According to a joint statement by the Michigan Municipal League and the Michigan Townships Association, the Supreme Court order comes as a victory for groups that have been fighting to end the practice that allows retailers to argue that newly built stores should be assessed as though they were closed because they would have little value to other users, as MiBiz previously reported.

“No longer can big box stores obtain unfair and substantial tax reductions based upon unrealistically low artificial values, while our other taxpayers contribute based upon the value of their properties,” Stephanie Simon Morita, a Farmington Hills attorney with Johnson Rosati Schultz & Joppich PC who wrote an amicus brief in the Court of Appeals case, said in a statement. “This order levels the playing field and helps to ensure that all taxpayers, large and small, are treated similarly.”

The Menard store case against Escanaba will head back to the state’s Tax Tribunal for reconsideration and additional evidence, according to a statement. In the past, the Tax Tribunal has largely ruled in favor of retailers in their disputes against municipalities.

Townships and cities across the state argue that the methodology often leaves them having to reimburse significant property taxes and have led to cuts in public services.

Critics of the practice also called on the state Legislature to pass House Bill 4397, legislation sponsored by State Rep. David Maturen, R-Brady Township, which supporters say backs up the Supreme Court’s Friday order.

“Now is the time to clear up any confusion in the minds of businesses and city officials on this issue,” Chris Hackbarth, director of state and federal affairs at the Michigan Municipal League, said in a statement. “Rep. Maturen’s bill does just that, and will add stability to the property tax assessment process.”

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