Democracy Tree: Are big box stores ripping off communities?

Those who supported the project, often from surrounding areas, cited the jobs it would create, along with the increased tax revenues, as compelling reasons to welcome the big box store. The new facility did generate 200 new jobs of varying pay scales. But proponents and public officials whotouted the tax benefits, should keep a wary eye on the sustainability of that revenue stream.

Meijer, along with numerous other major retailers, has a storied history of exploiting the “dark stores” loophole in Michigan’s tax law.

Here’s how the scam works:

• Step One: Developers propose construction projects that often include plans for multiple super-sized stores. Part of the pitch to local officials includes the enticement of increased revenues due to the development. Subsequently, the mega-retailers file suit to have their taxes reduced to a level similar to that of abandoned structures in the community. The Michigan Tax Tribunal  (MTT) has consistently sided with the retailers, granting the abatements.

• Step Two: When these big box retailers inevitably relocate to newer facilities, they place deed restrictions on the old property thereby preventing competing retailers from operating there — creating a win-win for the seller — no competition, and a ready example of an abandoned structure to bolster their “dark store” argument with the MTT. For the community however, it’s a lose-lose — leaving them suffering from blighted buildings and the loss of tax revenues.

Earlier this fall, a bipartisan group of lawmakers proposed legislation to close the two loopholes. Both HB 4909 and SB 524 remain in committee with no action as yet taken.

The Michigan Township Association has come out strongly in favor of a legislative remedy, saying of the “dark store” tax scam:

“The MTT has upheld this theory and cut property tax assessments by as much as 50 percent. As a result, townships and local units are losing millions of dollars, impacting services to their residents.”

The Acme Meijer is a new retailer to the community, but that doesn’t mean they can’t or won’t apply for a tax break, as their nearby Traverse City location has done.

Less than a mile west of the Acme superstore are two vacant structures. One mid-sized building which previously housed a cinema, was then shuttered for decades before a dinner theater occupied the space for a short time. Empty again, there are plans for a food co-op to move into the building in 2016 — provided funding becomes available. A short distance further along is a smaller structure that similarly has had trouble maintaining occupancy.

The impact of big box stores additionally stresses the surrounding retail environment, often leading to more shuttered businesses, and more blight.

Just past these two empty buildings lies a local grocery store that has served the community for several decades. Tom’s Market, a family-owned chain of a half-dozen stores in the Grand Traverse region has enjoyed continued success at its Acme location — it being consistently one of the more profitable stores, particularly through their produce department. Sunday afternoons, after services at two nearby churches, the aisles of the market would be bustling with shoppers. More than a market, it was an important part of the social structure of Acme. A recent Sunday revealed the impact of the new superstore on Tom’s Market — there were more cars in the employee parking area than customer vehicles. The cart corral was mostly full, the aisles mostly empty, and the checkout lanes rather idle.

Sharing a parking lot with Tom’s is a Kmart store facing the same lack of customers. Is it only a matter of time for these two enterprises to fold? How many jobs could be lost?

Whether Lansing acts to shut down this corporate scam or not, Michigan’s municipalities would be well advised to gird their loins. The Institute for Local Self-Reliance prepared a “toolkit” for local government officials designed to offer some protections from big box blight:

• limit retail development zoning;
• adopt a store size cap;
• insist on multi-story, mixed use buildings;
• create an economic impact review standard;
• require developers to post a demolition bond;
• adopt a dark store ordinance.

Acme Township officials struggled to put these protections in place over the years, meeting with mixed success in the face of strong opposition from developers and pro-growth supporters. Across Michigan, Target, Home Depot, Lowe’s, Wal-Mart, Meijer, and Menards are just a few of the corporate bullies cheating municipalities and school districts out of revenues. Since 2011, GOP lawmakers have routinely pointed to local units of government and school districts, claiming their financial woes were largely due to their own fiscal irresponsibility. Not necessarily so, and Republicans are slowly beginning to figure that one out.

It’s high time for Lansing to put communities’ needs over that of serving corporate greed.