Tax impact on local folks

The verdict by the Michigan Court of Appeals regarding a Michigan Tax Tribunal ruling could have an impact on local folks.

We’re talking major impact, as in increased property tax bills and/or reductions of municipal services for years to come.

What happened was the Michigan Court of Appeals upheld a Michigan Tax Tribunal ruling that significantly reduces the property tax assessment for the Home Depot store in Breitung Township.

The township filed a court appeal against the tax reduction, but this week’s decision agrees with the tribunal’s action.

Breitung Township argued that Home Depot’s appraisal report, which the tribunal mostly accepted, was legally flawed because it compared an occupied store to abandoned properties.

The appeals court, however, determined that it was appropriate to value the Home Depot store as vacant and available.

In recent years, Home Depot and other big retailers in Michigan have appealed assessments to the Tax Tribunal by challenging the “true cash value” of their properties.

In most cases, according to the Michigan Association of Counties, a lower assessment is achieved by likening the value of an operating business to that of a closed, abandoned property.

The ruling equates to a reduction of more than 50 percent in taxable value for the Home Depot property, according to Dickinson County Equalization Director Sid Bray.

It results in a total loss in tax base of nearly $8.2 million for the five-year period from 2009 through 2013.

Countywide, tax revenue losses for the five-year period (2009-13) would total $358,811, plus any interest that may have to be paid.

In filing its court appeal, Breitung Township was joined by Marquette Township, which has a similar dispute with home improvement retailer Lowe’s. Marquette Township’s appeal was also rejected.

Local government officials fear a multiplying effect, as other large-scale property owners could also gain reduced assessments.

Another problem is small businesses. Could they afford the time and expertise to appeal their assessments?

“It has to be fair to everyone,” said Joe Rogina, Breitung Township superintendent, said, noting “mom and pop” shops are assessed at their full valuations. “It’s not the way it’s supposed to work.”

Prior to this week’s ruling, Bray warned of the possible effects.

“Our desire at the county level is to let the public know of the possible future ramifications on local budgets should the appeals court uphold this argument and this trend of large commercial/industrial appeals continues absent any change in legislation,” he said. “The net effect of declining revenues caused by these decisions can affect all taxpayers at some point.”

The possibility of an appeal to the Michigan Supreme Court remains, although it’s not yet known if the townships will continue the case or drop it.

Earlier, Rogina indicated that the case could go on.

“I would say it has a pretty good chance of being decided in the (Michigan) Supreme Court,” he said.

The way it stands now, only a favorable court ruling, or a change in legislation will be able halt this assessment reduction trend.