Big box stores in Michigan can have their property taxes assessed on their value as an empty building

Having a vacant big box store in a community can be a big problem. But, what if the store if in business and generating revenue and it is being assessed for property tax purposes at a value closer to its value as an empty property? Such is the case in Michigan:

Photo by Craig Adderley on

The dark store theory was born, in part, out of the 2008 recession.

Big box stores closed. The massive buildings that housed them had few other obvious uses and, in some cases, restrictions on selling the buildings to competitors put in place by the companies themselves reduced the pool of potential buyers. They often sold for far less than they’d cost to build.

Michigan law allows assessors to determine the value of a property in three ways: based on replacement cost minus depreciation, based on the income a property generates and based on the sales of similar properties.

Retailers began to argue that sales of empty stores were the best indicator of what their properties were worth. The Michigan Tax Tribunal generally agreed…

Of the 110 cases brought before the tribunal by Walmart and its subsidiaries since 2018, 93 have resulted in lower taxable values, often millions of dollars lower. All but one was a negotiated settlement. Eleven of the 110 cases are ongoing.

Two factors may be at play here. Retailers and businesses want tax breaks. They want to pay fewer taxes and boost their profits. If communities are willing to offer tax breaks like this (or others), why not ask for them and utilize them?

On the other side, communities want to bring in businesses and jobs. These retailers still provide some work for local residents and they are still generating some tax revenue. Even if they do not pay in taxes what they might, would a community be willing for a big box store to move to a nearby community and the money go elsewhere? Some development or even bad development might be preferable to no development or an empty building.

The news story quoted above details how this may change in Michigan due to a court case. If these large corporations do have to pay more in property taxes, will they change their operations at all? And how might communities make use of the extra revenue to improve local lives?

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