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dark stores

An empty big box store - a former K-Mart in Grand Blanc Michigan
Michigan Municipal League

Local governments in Michigan have won a major victory in a property tax fight with big box stores.

Millions of dollars in revenue for local governments – or tax savings for big box stores – are at stake.

In this case, now three years old, the retailer Menards wanted a property it had vacated in Escanaba to be taxed as closed and empty. But Menard’s property deed says it cannot be sold for a similar use, making it nearly impossible to redevelop.

The city said that’s not fair, and wants to tax it for its most-valuable use, including retail.

An empty big box store - a former K-Mart in Grand Blanc Michigan
Michigan Municipal League

A bipartisan group of state lawmakers and local officials will try again this year to shut down a tax break that’s allowed big box stores to cut their property taxes.

 

The so-called “dark store” loophole allows open and functioning big-box stores to base their property taxes on the value of stores that have been shut down. The value of the empty stores can be further reduced by restrictions on who can buy them.

An empty big box store - a former K-Mart in Grand Blanc Michigan
Michigan Municipal League

The city of Escanaba is taking on big box stores in the Michigan Supreme Court. The city says the home improvement store Menards is dodging taxes.

It’s called the “dark store” loophole, and it’s been used more often in recent years by the Michigan Tax Tribunal when assessing property taxes. It determines property taxes for fully-functioning retailers like Target and Wal-Mart based on nearby empty stores.