City officials worry Costco might seek 'dark store' tax assessment

Apr 26, 2016

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Officials in Traverse City are concerned that if Costco comes to town, it will take advantage of so-called “dark store” tax assessments. That’s when businesses argue for lower tax rates based on what their stores would be worth empty – or “dark.”

Retailers like Target, Meijer and Costco have appealed their assessments in Michigan, hoping to pay less money in taxes. They say if they turned around and tried to sell their stores, not many companies would want to buy them. The Michigan Tax Tribunal, which decides tax appeals, has been ruling in favor of retailers.

During a Monday night debate over whether to allow Costco to move onto airport property, several city commissioners expressed concerns about the assessments.

City Commissioner Richard Lewis says the city should support a bill in Lansing that would end “dark store” assessments.

"I think the best thing we can do right now is put our support, by resolution, that we support this," says Lewis. "We’ve got to be on top of our legislators, but it’s a bigger statewide problem. We can’t fix it locally. We can only fix it on a statewide level."

Kent Wood, director of government relations for the Traverse City Area Chamber of Commerce, says the chamber supports the bill, which would force the Michigan Tax Tribunal to use more rigorous methods to decide tax appeals.

"The chamber had come up with a number of principles ... a lot of which appear to be reflected in this legislation," says Wood. "[We] would urge the city commission, as well, to look at doing some sort of resolution."

The bill is due for its first hearing Wednesday before the House Tax Policy Committee.