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Escanaba seeks funds for dark store dispute

Jordan Patrick

MARQUETTE — Local units of government, as well as municipal organizations, are continuing to step up and offer their assistance to Escanaba’s fight against dark stores, or active big box retail properties that are assessed as if they stand completely empty and vacant, which substantially reduces their taxable values.

However, the city still needs contributions for the costly fight, said Escanaba City Manager Patrick Jordan. This is due to the significant costs of preparing for the upcoming Michigan Tax Tribunal hearing on the issue that will “determine, once and for all, the treatment of big box appeals in Michigan,” according to a letter from Jordan sent to all Michigan municipalities in June.

“This is going to set the stage for the next two to three decades and it’s important that we fight it out,” Jordan said, noting the upcoming hearing is for the Escanaba v. Menards case.

The legal costs are extensive, Jordan said, and on top of the “hundreds of thousands of dollars” lost to the very issue they are fighting, Escanaba has been left in a situation where it needs assistance from other municipalities.

The city has been hoping to obtain $200,000 in contributions, as it will need about $400,000 to hire expert witnesses for the hearing. The Michigan Department of Treasury will provide a matching donation of up to $200,000 for the fight.

Gerald Corkin

Jordan said Monday that around $171,000 has been raised so far.

“I’m very pleased that so many people and so many municipalities and organizations recognize what this fight is about and it’s for all of them too,” Jordan said.

The city of Escanaba has already spent a quarter-million dollars on past court battles, and if it doesn’t meet the $200,000 goal through contributions, the city will need to put in more of its own money in order for the state treasury to provide its share.

Meanwhile, that $400,000 is just for the expert witnesses who have been hired, Jordan said, noting that anything above and beyond that will be the city’s responsibility.

“I think some cities, townships, communities are waiting to see what happens and what everybody else does,” Jordan said. “We’re just saying, please don’t wait if you’re considering doing it.”

Because the dark store issue has led to a reduced tax base in many municipalities, the outcome will impact local units of government across the state, Jordan said.

“When commercials like this are able to, through this argument, lower their taxable valuation, it doesn’t lessen the level of services that we need to provide to our residents, to our community,” Jordan said.

Marquette County itself has lost in “excess of half a million dollars in revenue from these dark store issues,” said Marquette County Board Chairman Gerald Corkin. It will be an ongoing issue if the hearing does not have the desired outcome, Corkin said, because “it’s not a static figure, it’s going to keep growing over time.”

Due to the statewide impacts of the hearing, Corkin said Marquette County contributed $10,000 to the cause earlier this summer and has been “encouraging other counties to help.”

Furthermore, Corkin said he approached the Michigan Association of Counties and the Upper Peninsula Association of County Commissioners about donating funds in support of Escanaba, securing contributions of $10,000 from each organization.

“This decision is important for all 83 counties, not just one county,” Corkin said. “The decision will set the precedent for valuations for these dark stores throughout the state.”

Because the upcoming tax tribunal hearing is “an opportunity that will likely never reoccur for any local unit litigating against a big box or similar property,” the letter from Jordan states, Escanaba is carefully considering what the implications for contributing local units might be if a settlement is offered.

“Other local units would then be forced to litigate the meaning of the Menards decision without the benefit of precedent in the tribunal that the forthcoming remand hearing could have established,” the letter states. “Because of the impact of a settlement on other local units, the city will refund all contributions if it settles this case.”

Jordan looks forward to the hearing, tentatively scheduled for January, but acknowledges that even if Escanaba gets the desired outcome, the fight still may not be over.

“I’ll be looking forward to seeing it reach its fruition, but it’s going to be awhile,” he said. “Whoever wins at the tax tribunal, the other side is going to appeal it to the court of appeals, so it’s going to be a long fight.”

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