LANSING — Michigan legislators hope to make another go with a bill aimed at curbing a tax loophole popular with large retailers.
Kalamazoo County state representative David Maturen, R-Brady Township, is again the lead sponsor of a bill aimed at closing the so-called “dark store” property tax loophole used by many big-box stores to reduce their property tax obligations around the state.
Maturen’s House Bill 4397 is a reintroduction of legislation he sponsored last May that easily passed the House but failed to gain any significant traction in the Senate.
Introduced yesterday, Maturen’s bill has a bipartisan mix of more than 50 co-sponsors and support from statewide organizations such as the Ann Arbor-based Michigan Municipal League, the Michigan Townships Association and the Michigan Association of Counties.
At a news conference yesterday, Maturen and other bill proponents said that the legislation is largely a “fairness issue,” and that big box stores are exploiting a loophole that has costed municipalities around the state millions of dollars and led to the cutting of basic services, such as libraries in some instances.
Rather than peg their properties’ assessed values to the cost of construction to calculate property tax bills, the retailers argue their assessments should be based on those of comparable stores, oftentimes vacated, empty properties. The reasoning: Retailers build stores with their own unique design features, rendering them functionally obsolete when they open — thus the comparison to so-called dark stores with lower assessments, as MiBiz has previously reported.
Maturen specifically pointed to a newer Costco store that opened recently in the Kalamazoo area, saying that the total project cost was $17.5 million, however the company argued that the property had negative value upon opening.
“We appreciate Rep. Maturen's leadership and expertise on this assessment issue,” Chris Hackbarth, director of state and federal affairs for the Michigan Municipal League (MML), said in a statement. “This bill is a fair and equitable solution to a complex issue facing our communities.”
While Maturen and other proponents of the dark store legislation tout companies like Costco, Target Inc. and Home Depot Inc. as among the major beneficiaries of the state’s inability to close the loophole, a major local player was absent from their statements yesterday.
Walker-based Meijer Inc. has found success with the dark store argument in stores around Michigan as well as in other states.
“Meijer reviews each store’s assessment and appeals the tax valuations of our stores when we believe the values are overstated,” wrote Frank Guglielmi, senior director of communications at Meijer, in an email to MiBiz in 2015. “Our customers expect us to keep prices as low as possible and one way we do this is by managing our costs in the most effective way, which includes paying a fair and equitable level of property tax for our stores and facilities.”
There’s also a case pending on the dark store issue before the Michigan Supreme Court, according to news reports.