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Friday, June 03, 2016

Ind. Gov't. - Big box/dark box issue solved?

Updating a long list of earlier ILB "big box/dark box" posts, according to an editorial today in the Fort Wayne Journal Gazette, the problem in Indiana has been solved.

The headline to the article is "'Their fair share' Big-box store ruling will benefit all taxpayers." However, the piece is not about a ruling, but about legislation passed in the 2016 session. Some quotes:

There’s a ray of light in the “dark store” property tax assessment saga. New assessment guidelines mean big-box retailers no longer can point to vacant or abandoned stores as a sales comparison for determining the value of their properties. When they pay a fair and equitable share of taxes, all taxpayers will benefit.

The relief comes from a provision in House Enrolled Act 1290 requiring new guidelines for assessing big-box stores. Following the lead of businesses in other states, big-box retailers increasingly are appealing tax assessments based on the argument that their businesses should be assessed as if they were vacant – hence, “dark stores” – because the buildings – not the value of their sales operations – create the properties’ value.

The new law should clear up confusion created by the General Assembly’s first, well-intended fix in 2015.

“Market segmentation is simply narrowing the scope of comparables that can be used during the appeals process,” explained Allen County Assessor Stacey O’Day. “The (Department of Local Government Finance) is supposed to set examples of what the market segments will be. It will break down sales comparisons to different markets, so an auto assembly plant will be compared to another auto assembly plant, for example. A big-box store will be compared to another operating store, not to a vacated building.”

Here is HEA 1290 from 2016. Here is the relevant description from the digest of the omnibus bill:
Repeals provisions enacted in 2015 concerning the assessment of: (1) certain limited market or special purpose property; and (2) commercial nonincome producing real property. Provides that in addition to the factors under current law, the DLGF shall also provide for the classification of improvements on the basis of market segmentation.
Here is the final text of HEA 1290. The relevant language is at pp. 29-31. SECTION 13 amends IC 6-1.1-31-6, retroactively to Jan. 1, 2016. The wording references in the editorial is at subsection (f) on p. 31:
(f) Subject to this article, true tax value shall be determined under the rules of the department of local government finance. The department's rules may include examples to illustrate true tax value.
The ILB does not know if the new rules are yet available. The ILB also does not know how the new legislation and rules would impact appeals currently pending, including two for which the Indiana Tax Court has heard oral argument earlier this year (see the last line of this earlier post).

Posted by Marcia Oddi on June 3, 2016 12:21 PM
Posted to Indiana Government