That huge, collective sigh of relief around Michigan this weekend is emanating from the bean counters in cities, townships, villages, counties and any other form of taxing unit that has felt under siege in recent years by the parade of big box stores appearing before tax tribunals arguing for lower property tax rates.
Until Friday, many of those same stores were getting that relief much to the consternation of the local governments who felt as if they were under a full-tilt attack and losing millions of dollars in lost arguments over the real estate values of big box stores both empty and active all around the state. The tide shifted dramatically yesterday when the Michigan Supreme Court rejected an appeal by one of those big box retailers in a tax battle in the Upper Peninsula.
Local municipalities where the sprawling retail stores have dropped anchor had come under an ever-increasing barrage from the stores who were successfully reducing their tax bills after appealing to the Michigan Tax Tribunal. The resulting budget cuts reverberated across many local departments from police and fire to public works and beyond.
Arguments laid out before the Michigan Supreme Court in recent days came from both sides of the suit. Lawyers for both Menards and the City of Escanaba sought a high court solution beyond one last year by an appeals court which sided with Escanaba.
It only took two sentences from the Michigan Supreme Court to end the fight, when they essentially declined to take the case, electing instead to let the Michigan Court of Appeals’ ruling stand.
While Friday’s decision is not necessarily the final word on the matter — we all know how cases can drag on through additional appeals processes and the like — it is a moral victory for local units of government. The case actually will return to the Michigan Tax Tribunal, because the appellate court had left the door open for both sides to present additional evidence in arriving at new property values.
Stephanie Simon Morita is an attorney who had written a brief on behalf of the Michigan Municipal League in the case. She told the Detroit Free Press, “No longer can big-box stores obtain unfair and substantial tax reductions based upon unrealistically low artificial values, while our other taxpayers contribute based upon the value of their properties.”
In the Upper Peninsula case under review, Menards executives claimed the taxable value of their property there was $3.3-million, while Escanaba authorities claimed the property to be worth $7.8 to $8.2-million back in a three year stretch from 2012 to 2014.
One major factor in how the ruling plays out is that while it may resolve current Tax Tribunal issues and those going forward, the money lost by local units of government over the tribunal actions over the years is not recoverable. They will not get back money lost to the tribunal decisions, it only affects tax rates in the future.
Documents from the Berrien County Treasurer’s office indicate that Michigan Tax Tribunal rulings in 2015 decreased taxable values by $2-million and last year that impact soared to $6.5-million.
While all of the legal wrangling has been ongoing, there is finally a move afoot in the Michigan Legislature to introduce legislation creating a better balance between local government evaluations and Tax Tribunal rulings. Stay tuned.
The photo of Lowes in Benton Harbor is for purely illustrative purposes, designed to depict big box enterprises such as those who have argued for tax relief in Michigan in recent years.
