LANSING – A loophole that allows big box stores such as Lowe’s or Home Depot to lower their property taxes would be closed by legislation introduced Thursday by State Rep. John Kivela of Marquette and State Sen. Tom Casperson of Escanaba.
The bills would amend a property tax law that has been the subject of controversy across the state and has resulted in the loss of hundreds of thousands of dollars to Michigan communities. Recently, large retailers such as Lowe’s in Marquette and Home Depot in Iron Mountain have appealed to the Michigan Tax Tribunal regarding the property tax assessments and the “true cash value” of their properties. Because of the ambiguity in the statutory language, the tribunal has ruled in favor of the corporations – and in the case of Marquette Township, property taxes have been reduced by roughly 63 percent of what they were originally paying.
“The reduction in property tax revenue is causing major economic problems for local governments and stripping precious dollars away from our schools,” said Kivela. “With the current state of education funding, it is more important than ever to make sure corporations are paying their fair share of property taxes, and our schools are getting the revenue they need to stay open. The bill I am working on would tighten up the law and make sure corporations are unable to exploit it at the expense of local residents.”
Denny Olson, president of the Michigan Townships Association and Beitung Charter Township Supervisor, also weighed in on the issue, saying, “Big box stores are being taxed at the value they would have if the store was out of business and the building shuttered and vacant. Homes aren’t valued at their abandonment worth, so this special tax treatment allows these businesses to avoid paying for the public services that protect these properties and for the schools that train their employees. This is crucial to the entire state and MTA appreciates the efforts of Rep. Kivela and Sen. Casperson in addressing this issue.”
Don Wotruba , deputy director of government relations for the Michigan Association of School Boards, stressed that this is a problem that will affect the entire state, saying, “Because all of these appealed assessments reduce the total revenues going into the School Aid Fund, each decision impacts every Michigan student. Whether the store is in your community or not, these rulings will hurt every student in the state and jeopardize their educational future.”
Because of the precedent set by the recent hearings, many local units of government are being forced to lower their assessments on “big box stores” without a fight, as they lack the necessary funds to battle major corporations in the courtroom. The bills being introduced by Kivela and Casperson will address this problem by adjusting the way tax assessments are completed on large commercial properties.
Marquette Charter Township Manager Randy Girard addressed the situation, saying, “Due to the Michigan Tax Tribunal’s rulings, the issue is now spreading to other businesses looking to exploit the same loopholes. There is a desperate need for clarification, and we appreciate Rep. Kivela and Sen. Casperson working to provide clear guidelines for our local assessors and the tax tribunal through legislation.”
Casperson will introduce a bill identical to Kivela’s in the state Senate and recently expressed his appreciation toward Kivela for working in a bipartisan fashion to tackle the local issue.
“I am very concerned how these big retailers are seemingly exploiting the law for their own gain at the expense of local stakeholders. Assessing commercial property in the manner that the retailers are arguing is not only unreasonable, it is unfair to our local communities — especially to the local governments and the schools,” Casperson said. “This truly is a troubling practice that has far-reaching and long-lasting consequences, not just to communities in the UP, but throughout the state. Therefore, I look forward to working with Rep. Kivela to use some good, old-fashioned, UP common sense to bring about a legislative solution that rectifies this practice and ensures that our communities are protected from such actions going forward.”
Kent County Administrator/Controller Daryl Delabbio said, “This issue is significant to local units of government and is currently the subject of litigation around the state. As local officials, we take pride in the success of our business partners and support them. We also support the accurate application of valuation methods to determine assessed values and applaud any effort on the part of the Legislature to develop clear and fair standards that govern our property tax system.”
Michigan Municipal League Board President and Linden Mayor David Lossing also noted appreciation for the legislation, saying, “We appreciate Sen. Casperson and Rep. Kivela taking the lead on this important issue. Local units of government have been hit hard by property tax decline and state revenue sharing cuts, and this legislation is critical in ensuring local units can afford to provide services to businesses and residents in the community.”
Tim McGuire, executive director of Michigan Association of Counties, said, “We are grateful to have legislators like Senator Casperson and Representative Kivela who are willing to tackle the tough issue of inconsistent and inequitable valuation of commercial properties in our communities. As the provider of vital services, we rely on the integrity of a fair tax system to provide the necessary revenue for the delivery of these services.”