Brighton Contributes $2,000 in Legal Effort vs. Big-Box Chains' Tax Strategy
October 8, 2018
Many communities across the state have banded together in a tax appeal case that will have repercussions for them as they strive to offset declining tax revenues. One of them is the city of Brighton. The City Council Thursday night approved a $2,000 donation toward the legal fight by the city of Escanaba against the Michigan Tax Tribunal, with the money going to the Michigan Municipal League’s Legal Defense Fund.
The MML is representing Escanaba in the appeal of a determination by the state tax tribunal that greatly reduced the amount of taxes Menard’s pays to the city. The city appealed and the case went to the Michigan Court of Appeals, which ruled in favor of Escanaba, tossing the case back into the lap of the tax tribunal.
The big-box chain stores have been employing the “Dark Store” theory of property, in which the valuation of a store in one location is based on the market value of another store in the chain that is closed and vacant – and may not even be in Michigan. As a result, Menards, and Target - which has a store in Brighton - are valued at about $25 per square foot. However, in Menard’s home state of Wisconsin, the stores are valued at $61 per square foot.
Brighton City Manager Nate Geinzer told council that numerous municipalities across the state have contributed financially to the cause, including nearby Hartland Township. Brighton City Attorney Paul Burns told council that “Dark Store” cases involving the city of Brighton in the last decade or so have resulted in the loss of “hundreds of thousands” of dollars in tax revenue. Burns said Brighton has already been negatively impacted by such cases, such as in the case of Home Depot. However, frequent council critic Susan Bakhaus said the money should be used instead for the residents of Brighton, who expect their taxes to be used for local improvements. (TT)