America's Property Tax Advisor

Michigan Dark Stores Bill Has
Wide-Ranging Impact


New Michigan legislation seeks to keep big box retail stores from winning lower valuations based on "Dark Stores" methodology. However, the bill has a much broader application that could change the way the Tax Tribunal operates for all commercial properties.


Dark Stores Dilemma


Dark stores valuations use closed stores as sales comparables to determine the value of newer occupied stores, often resulting in lower assessed values and tax bills for retailers.


Since 2010, the Michigan Tax Tribunal has agreed that these types of special use properties should be compared to dark or vacant structures for tax purposes.


Amy Drumm, vice president of government affairs at the Michigan Retailers Association explained that property typically is based on true cash value, which is defined in law as the usual selling price.


"So we have to look at comparable sales, and most of these properties that are larger retail properties or manufacturing properties sell when they're vacant because that's when they go up for sale. You don't sell a thriving business typically," Drumm said.


New Legislation


House Bill 4397, which amends the Tax Tribunal Act, was introduced by Representative David Maturen in March.


The bill states that in an assessment dispute, the Tax Tribunal shall make an independent determination of the subject property's value and separately state its findings of fact and conclusions of law to include the following:


  • The market in which the property competes including supply, demand, and economic viability at the specific location. Comparable vacant property is included only if the cause for vacancy is typical for properties of the same class.

  • The property's probable use for the present and immediate future that results in its highest and best use with comparables limited to the same highest and best use.

  • All private restrictions and covenants on the use of the subject property and comparables.

There is no language that makes the proposed law change specific to big box retail. A similar bill was approved by the Michigan House in 2016 but failed to win approval in the Senate.