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Tuesday, July 07, 2015

Ind. Gov't. - Appraisal/assessment of big box stores remains a big issue

The ILB's first major post on this issue was on Jan. 18th, and quoted the IBJ, the FWJG and the LCJ, as well as linked to both the Meijer and Kohl opinions. This was followed by about half-a-dozen subsequent posts, the most recent a brief post on May 5th pointing to 2015 amendments that, I wrote: "[N]ow address the issue. They are retroactive to March 1, 2014. As for exactly what they do ..."?

Yesterday an important $$ story by Megan Banta in the Bloomington Herald-Times addressed the question. Some quotes, but it really needs to be read in full:

Tax refunds and a steep decline in the property tax base are at stake as counties across the state and the country, including Monroe County, battle a new tactic that big retailers are using to slash their property taxes.

County assessors value real estate based on the current condition of the business, but big-box chains across the country are pushing to have their buildings compared to others that have been vacated and sold. Appraisers across the nation refer to this tactic as the "dark store" method.

The county currently is battling at the state level with Lowe's over the assessment of the company's store in Whitehall Crossing on Bloomington's west side after the national retailer appealed its assessment in June 2014.

Monroe County Assessor Judy Sharp called the case "the one that broke my back." * * *

Tax refunds and a steep decline in the property tax base are at stake as counties across the state and the country, including Monroe County, battle a new tactic that big retailers are using to slash their property taxes.

County assessors value real estate based on the current condition of the business, but big-box chains across the country are pushing to have their buildings compared to others that have been vacated and sold. Appraisers across the nation refer to this tactic as the "dark store" method.

The county currently is battling at the state level with Lowe's over the assessment of the company's store in Whitehall Crossing on Bloomington's west side after the national retailer appealed its assessment in June 2014.

Monroe County Assessor Judy Sharp called the case "the one that broke my back." * * *

If the dark store method were to become the norm in the state, the value of more than 17,000 commercial properties would drop by $3.5 billion, according to a study commissioned by Indiana county officials. Their big-box retail owners would shift a tax burden of $120 million onto other types of taxpayers, such as locally owned stores and working families.

All that because corporations, mostly from out of state, found a way to use "a loophole in bad laws" to save money on their tax bills, Sharp said.

That's why local governments and the state need to respond, she said. As president of the Indiana County Assessors Association, Sharp pushed for legislation that passed during the most recent session of the Indiana General Assembly following a ruling that slashed the assessment for a Meijer store in Marion County from $83 per square foot to $30 per square foot.

The new law was signed in May; it states that new properties and properties less than 10 years old should be valued using what's known as the cost approach, where appraisers use the cost of land and construction, less depreciation. It also requires that in cases where comparable sales are used, the properties cannot have been sitting vacant for more than one year or have deed restrictions. The law is not retroactive to appeals filed before its enactment.

Today the Herald-Times has an editorial headed "Confusion, mistrust of local government create knotty tax problems for county." A few quotes:
The push for a change to dark box assessments started in other states, but has made its way to Indiana, with a Meijer’s in Indianapolis reducing its assessment from $83 to $30 a square foot, based on the dark box method.

That reduction pushed the Indiana Legislature to pass a new law that addresses the issue, but according to [Monroe County Assessor Judy] Sharp, who’s president of the Indiana County Assessors Association, that law is so garbled and confused that no one on either side of the battle lines can figure out where to go with it.

Such confusion, along with its general distrust of local government that leads to such messes, is the part of the production the Legislature owns.

If the Lowe’s appeal to state regulators holds up, the hit on other taxpayers and ultimately on local government services will definitely be felt, Sharp says.

And there remains the unanswered question: If big box stores, which open their doors to customers every day, can use dark box assessment, why should any other company not be able to claim the same thing for their places of business?

The solution?

Sharp thinks it has to come from the legislature, and Indiana State Rep. Matt Pierce, D-Bloomington, agrees.

Pierce thinks majority Republican legislators realize the problem and want to fix it. “I think they understand a fix is needed,” he says. But having observed the battles among lobbyists and the amount of confusion generated with this past session’s attempted patch job, he’s unsure of whether that can happen.

Posted by Marcia Oddi on July 7, 2015 10:08 AM
Posted to Indiana Government