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Big box tax appeal in line for county support

September 28, 2013
The Mining Journal

By JOHN PEPIN

Journal Staff Writer

MARQUETTE - Marquette County Administrator Scott Erbisch is recommending the county board provide up to $12,000 to Marquette Township to help fund legal and appraisal costs involved with battling how "big box" retailers assess the true cash value of their stores.

Article Photos

Lowe’s Home Improvement Warehouse in Marquette Township prevailed in a previous tax assessment challenge before the Michigan Tax Tribunal resulting in Marquette Township refunding nearly $450,000 in tax revenue and interest for 2010-2012. The township is appealing the case to the Michigan Court of Appeals. (Journal photo by John Pepin)

Marquette and Breitung townships are jointly appealing Michigan Tax Tribunal decisions to the Court of Appeals in a case expected to be heard within the next few months. The outcome will affect communities across Michigan that are also facing potential tax revenue losses from big box tax tribunal challenges.

The tribunal previously ruled against Marquette Township in favor of Lowe's Home Improvement Warehouse and against Breitung Township in favor of Home Depot.

The tax tribunal decided in those two cases - and several others involving other big box retailers across the state - that the operating stores must be valued as though they are vacant and for sale or so-called "dark stores" that have been converted to some other use.

That idea was based on examples from southeast Michigan provided by appraisers indicating that when big box stores are sold they are converted to another use, demolished or investors will spend considerable money reconfiguring the space.

Township attorneys argued the stores should be valued considering existing use, present economic income and the land and structures at the time of tax assessment.

This week, Marquette Township Supervisor Dennis Liimatta updated the Marquette County Board on the appeal and asked for help with defraying costs of the defense.

"When you look at a store that's built, that cost over $9 million to build between the lot and the physical structure, and then we're supposed to take and value that at $3 million immediately and moving forward, it's ludicrous," Liimatta said. "I think from a commonsense approach, it doesn't pass the smell test. It stinks. Nobody could argue that case. I think we'll have a great chance or we wouldn't have pursued it. But in the meantime, it's been very costly."

Since the Lowe's ruling, several retailers in Marquette Township - including Walmart, Gander Mountain, Target and others - have all filed similar appeals to the tribunal. Probuild and 41 Lumber have not challenged their assessments as was reported in a Thursday Mining Journal story.

If Marquette Township loses its court case, and assessed values of all the other big box stores in the township are also dropped to $25 per square foot, a total of $641,579 in tax revenue would be lost, including $109,520 from Marquette County operations, transit and special programs.

Marquette Township would lose $71,470 in operating revenue and another $36,427 for fire protection.

This week, the county board voted to have county administrative staff determine how much the panel might contribute to help the township. Erbisch has since recommended up to $12,000 be contributed.

The board will consider the recommendation when it meets at 6 p.m. Tuesday.

"Given the broad-reaching impacts that an unsuccessful appeal may have on not only Marquette Township but the entire county and the state of Michigan, staff recommends financially supporting the township's appeal to the Michigan Court of Appeals," Erbisch wrote in a memo to the board. "Staff has reviewed the 2013 budget and is recommending an amount not to exceed $12,000 from the general fund legal fees line item be used to support the township's effort."

Erbisch said the county can continue to evaluate its level of participation beyond the recommendation as the appeal process moves forward. In a letter, Liimatta said the township has spent $213,588 on appraisals and legal fees over the past two years defending tax tribunal challenges.

A similar financial support request was expected to be made of the Dickinson County Board by Breitung Township.

John Pepin can be reached at 906-228-2500, ext. 206. His email address is jpepin@miningjournal.net

 
 

 

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