Big box stores across Michigan are gaming the system on property taxes — threatening the core fiscal stability of townships in every corner of the state. Like the archetypal playground bully, major retailers are demanding tax refunds from some of Michigan’s most vulnerable communities, and they’re getting away with it under the tacit approval of the Snyder Administration.

Target, Home Depot, Lowes, Wal-Mart, Meijer, and Menards are just a few of the corporate bullies cheating municipalities and school districts out of revenues, a feat accomplished with the help of the governor’s hand-picked five-member Michigan Tax Tribunal. And, this evil has metastasized across the state — taking hold among smaller corporations who are now arguing that they too deserve the same special treatment.

The mechanics of the scheme

Retailers are employing the “dark store” argument to reduce their taxes. Here’s how the scam works: 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 plans are approved, the boxes are built, and before the paint is dry on the LaGuardia tarmac proportioned parking lots — Bam! — the mega-retailers file suit to have their taxes reduced to a level similar to that of abandoned structures in the community. The tax tribunal rubber-stamps the grievance, and carte blanche, grants their wish. Scam complete.

Rationale? They claim that their buildings are meant to be ephemeral, and therefore are depreciating at an accelerated rate. Worse than driving a shiny new car off the lot — these corporate thugs are demanding to be taxed as if they were already headed to the junk yard.

The negative impact on Michigan’s communities is deep and lasting. In 2013, a Meijer store in Okemos won a tax settlement from Meridian Township. The municipality was nicked for $320,165 by the megastore. The bulk of the money was pilfered from the Okemos Public School budget.

It’s not just Okemos though. Here’s a map showing some of Meijer’s other recent tax appeals:

And, it’s not just Meijer. The Lansing State Journal recently reported that Home Depot and Lowes got in on the action alongside Meijer, and their combined reassessments are costing Mason County $300,000 in lost revenues, and Ottawa County is losing $745,000, with an additional $612,000 at risk. As reported in Bridge, Menards tagged the City of Escanaba for a $121,000 refund, and Lowes took Marquette Township to the cleaners for a $755,000 refund — an amount so significant to the function of their community, that the local library had to cut its hours

A legislative remedy on the way?

Sen. Tom Casperson (R-38), Rep. Ed McBroom (R-108), and Rep. John Kivela (D-109) are poised to introduce legislation to rein in the excesses of the big box bullies facilitated through the continued acquiescence of the state tax tribunal. As it stands, few of the thousands of municipalities in harm’s way have taken preventative measures at the local level. Some have made modest changes to their codes, and others have additionally written into the permitting process a requirement for developers to demolish abandoned structures in a timely manner and make the property whole again.

That is why it falls on state lawmakers to remediate the problem. Kivela spoke strongly in a recent interview about his upcoming legislation. Having worked hard on closing the tax loophole for two years now, he described the opposition thus:

“The Michigan Chamber has been very vocal, they view this as a tax increase.”

And his take on the scope of the tax scam in Michigan:

“Some of the things that are happening are just so egregious. Menards, whose home state is Wisconsin, gladly pay $69 a square foot in valuation in Wisconsin, but they seem to think their stores in Michigan are only worth $25 a square foot.”

“It’s gotta be fair, because if Target is paying less, Menards and Lowes are paying less, that means mom and pops at home have to pay more.”

The real cost to Michigan’s communities

The repercussions of continued inaction at the state level will further put Michigan’s already fiscally distressed communities into untenable positions — contributing to the possibility of more shuttered schools, municipal bankruptcies and/or emergency management, worsening roads, decaying downtowns, and eventually creating more impoverished, high crime, low employment, food deserts.

It’s simply cheaper for these mega-retailers to walk away from a property and build elsewhere than to rework existing facilities. During the 2007 Walmart push to upgrade their stores, doubling their size to “supercenters”, they shuttered millions of square feet nationally, with Michigan being among the hardest hit — host to between 800,000 and 1,300,000 in square footage of ghost stores.

The Institute for Local Self-Reliance cites some of the associated costs of dark stores to communities:

• they become magnets for crime and vandalism;
• lower property values nearby;
• undermine the vitality of nearby businesses;
• create a negative image of the town that deters new businesses and investment.

The organization has prepared a “toolkit” for local government officials intended to assist communities with actions they can take to avoid the dark store blight. Among their recommendations are:

• 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.

All excellent suggestions for municipalities looking forward, but many communities in Michigan are already overwhelmed with shuttered stores. The Flint-area township of Mt. Morris is suffering a rash of big box and grocery store closures, leaving many members of that community of color unemployed and worried about where they will get their food. In the wake of both Kroger and Meijer shutting down their stores, residents are now faced with substantial commutes for basic needs and groceries.

It’s time for Michigan lawmakers to put a stop to the big box dark store menace.