Dark Stores

Posted by – Steve Cohen, Director of Community Development

“Dark Stores” … it sounds ominous.

A Dark Store is not a weapon Darth Vader used in Star Wars, but it’s beginning to loom over many municipalities like the menacing Death Star.


What is it?  Well, it’s a big problem.  In recent years, big box stores – like Meijer, Home Depot, Lowe’s, and Target – have appealed their property tax assessments to the Michigan Tax Tribunal, arguing that the fair market value of their operating store should be based on the sales of similar sized properties that are vacant and abandoned.  What?  Are you serious?  An occupied retail store should be valued the same as an abandoned one?  These corporations argue that they should be paying taxes on a lesser property valuation because their buildings are not of high value.

The Michigan Tax Tribunal has upheld this “dark store theory” and cut property tax assessments in some cases by as much as 50% – impacting local revenues and subsequently local services.  These rulings have resulted in a loss of millions of dollars in tax revenue for local governments across Michigan.  This theory has a devastating effect in that municipalities don’t just lose future revenue, but have to pay back the retailers for “over-taxing them” in prior years.

For example, an appeal involving a Lowe’s store in Marquette Township left the community on the hook to repay the company more than $755,000 in property taxes it was found to have overcharged the retailer.  As a result of Lowe’s successful appeal, the community has been forced to cut numerous services to its residents.

Legislation has now been introduced in Michigan to eliminate this “loop-hole” and help municipalities facing tax assessment appeals by big box retailers.  It’s based on what Indiana has done to fix the problem and will require these retailers to pay their fair share in property taxes.

You can bet that the City of Auburn Hills is watching this important debate closely as numerous big box retailers reside in our town and pay considerable taxes that support essential operational services like police, fire, and infrastructure.

To learn more about the dark store issue, check out the recent Detroit Free Press stories listed below: