Huron County View

County to join Bad Axe in tax dispute with Walmart




The City of Bad Axe is currently involved in a lawsuit with Walmart over the taxable value of its Bad Axe location. The Huron County Board of Commissioners recently decided to help the city in its efforts. (Photo by Seth Stapleton)

The City of Bad Axe is currently involved in a lawsuit with Walmart over the taxable value of its Bad Axe location. The Huron County Board of Commissioners recently decided to help the city in its efforts. (Photo by Seth Stapleton)

BAD AXE – The City of Bad Axe is currently involved in a lawsuit with big box retailer Walmart regarding the taxable value of the company’s property and the Huron County Board of Commissioners have decided to pitch in.

At its latest meeting Sept. 14, the board moved to contribute financially, a prorated amount based on tax revenue losses to the city, for its attorney and appraiser fees in its state tax tribunal case with Walmart.

“The city greatly appreciates the county commissioners taking the time to listen to what is going on with the tax tribunal case, and have a willingness to work with the city,” said Bad Axe City Manager Robert Stiverson. “Also, the city greatly appreciates the district library for assisting the city with the case as well. It’s unfortunate that such a case needs to even be considered, as the city wants to see our businesses succeed and thrive and understands their need to control costs as a means of being successful.”

Back in August, Stiverson sent a letter to commissioners reaching out for financial help in the city’s dispute with the company. In it, Stiverson said if the city doesn’t fight Walmart in the state tax tribunal, the county stands to lose $7,071 a year in tax revenues.

“We are asking if the county will be willing to contribute financially a prorated amount based on tax revenue losses for the attorney and appraiser’s fees to help fight Walmart,” Stiverson said in the letter.

The issue between the two entities involves a concept known as the Dark Store theory of property tax assessment.

According to the Michigan Municipal League, the Dark Store theory is a tax loophole scheme being used by big box retailers to lower the amount they pay in property taxes. Retailers such as Walmart, Meijer, Lowe’s, Target, Kohl’s, Menards, IKEA, and Home Depot across the state are arguing that the market value of their operating store should be based on the sales of similar size, comparable properties, that are vacant and abandoned and may not even be located in Michigan.

Stiverson noted the city’s appraiser uses a methodology that deals with stores that are open for business, vs. Walmart arguing for the Dark Store concept of appraisal.

Under those varying methodologies, the city’s appraiser is using a figure of $45 per square foot to figure Walmart’s appraised value, while the company’s appraiser is closer to $35 per square foot. This would amount in a 25% reduction in taxable value.

In its original petition filed to the Michigan Tax Tribunal in April 2019, Walmart requested the tribunal to enter an order reducing the taxable value of its property from $4.3 million to $3.5 million. In addition, the city would be required to pay back refunds, plus interest and costs.

Other entities that stand to lose tax revenue should Walmart prevail in the case include the Huron County Road Commission, Huron Intermediate School District, Bad Axe Public Schools and the Bad Axe District Library.

According to Stiverson, Walmart has used the Dark Store concept in other communities, with more to come if they are successful. He cited a case with the City of Escanaba, in Michigan’s Upper Peninsula, that is several steps ahead of Bad Axe in the process.

Escanaba has been before the tax tribunal and lost, before winning in the Court of Appeals, sending the case back to the tribunal. In its second tribunal, Escanaba lost again and is in the appeals process again.

Stiverson said the city expects the same fate, and its request for abeyance until after Escanaba’s second Court of Appeals verdict was denied by the court.

Bad Axe has been through the initial court proceedings. The latest hearing took place June 11.

Currently, the city has incurred costs totaling $66,299 for appraiser Integra Realty Resources and legal firm Simen, Figura & Parker, LLC.