MARQUETTE — The total taxable value of property in Marquette Township has been reduced by tens of millions of dollars since 2009 due to property valuation assessment appeals to the Michigan Tax Tribunal from big box stores and other entities in Marquette Township, officials said during a discussion of the issue at recent Marquette Township Board meeting.

The discussion centered around the “dark store” theory and how new Michigan Tax Tribunal appeal cases have been brought forth by businesses with property in Marquette Township and throughout the county since 2009.

Marquette Township reported a total taxable valuation reduction of $67 million — with a compounded taxable value reduction of around $74 million when adjusted for inflation — from 2009 to 2020 due to the Michigan Tax Tribunal appeals based on the dark store valuation method, according to data provided by Marquette Township Supervisor Lyn Durant.

The dark store valuation method suggests specialized buildings housing big box stores should be assessed as vacant properties because they generally can’t be used for other retail purposes after they are vacated by the original owner.

However, the reason these buildings can’t be reused is largely due to deed restrictions — which are imposed by the companies that own the stores — that prohibit the building’s use by other big box retailers.

This dark store method has been used in many successful appeals of property valuation to the Michigan Tax Tribunal, which has led to major decreases in taxable value for big box stores across the state.

According to data provided by Durant, the top five largest taxable value losses from Marquette Township businesses due to appeals to the Michigan Tax Tribunal based on dark store theory are:

≤ Lowes, $20,338,020

≤ Menards, $12,358,798

≤ Target, $7,627,200

≤ Kohl’s, $7,378,547

≤ Meijer, $3,883,900

The reductions in taxable value for properties in the township has a major impact on the township’s finances, Durant said.

“This is a lot of money we have had to give back basically to the big box stores through the (tax) tribunal, so we collected these taxes,” she said. “We collected them for the (Iron Ore) Heritage Trail, the school, the county, the fire department, the library, 911.

“And then we have to give it back, and also they can go three years back. It’s not just the 2020 taxes that they paid, it’s 2019 and 2018. So now we have to take this out of our general fund, the library has to take it out of their general fund, 911 does, the fire department, senior center, county transit, vet(erans) affairs, (search and) rescue.

“We all have to give this money back. And again it’s not just for this year, it’s three years in some cases … sometimes it’s one year but more often than not it’s three years.

“Then the other part of this, this is permanent for the life of that property.”

And that’s not the end of the taxable value reductions, township officials said at a July 20 meeting.

“We’ve got two cases that we are right in the midst of ongoing settlement negotiations to see what we can do (in terms of) resolving them, short of going to a hearing in Lansing,” Marquette Township Attorney Roger Zappa told the board during his report at the meeting. “And we’ve got two brand new tax tribunal filings that came in the last few days.”

Trustee John Markes added that he believes there’s an inconsistency in how businesses approach their taxable valuations versus their insurance valuations.

“One argument that I think is outstanding– and I think (the) Legislature ought to be going out of their mind with it is– these entities who argue that their tax by the local communities and local assessors is too high, actually insure those same buildings for a considerable (amount) more then they are willing to accept in tax. Yet the tribunal will not accept that argument.”

Katie Segula can be reached at 906-228-2500, ext. 242. Her email address is ksegula@miningjournal.net.