IM prepares for tax appeals on two fronts

IRON MOUNTAIN — The Iron Mountain City Council is bracing for a potential battle over a tax appeal by Northern Star Industries of Iron Mountain, which includes Systems Control, that would reduce the company’s property value in the city by almost 90 percent.

Even as they prepare to answer that challenge, word comes of another Iron Mountain business — O’Reilly’s Auto Enterprises LLC — that also may take their assessment before the Michigan Tax Tribunal.

The city in August secured Jack VanCoevering — the tax attorney from Foster, Swift, Collins & Smith P.C. that represented Escanaba in successfully appealing a tax reduction earlier this year — soon after Northern Star Industries filed its challenge with the Michigan Tax Tribunal, City Manager Jordan Stanchina said.

The council Monday authorized hiring an appraiser, at a cost not to exceed $7,500, to evaluate the Northern Star Industries facilities, Stanchina said.

VanCoevering in late May got a state appeals court to reverse a tax tribunal decision that reduced the cash value of the Menards store in Escanaba from about $8 million to $3.5 million under the so-called “dark store” reassessment that maintains the property should be assessed as if vacant and empty.

While the Northern Star Industries petition still could be withdrawn, the city wants to be prepared, Stanchina explained.

Communities across Michigan have been hit with recent tribunal rulings that slash assessments, putting a significant dent in tax revenues for municipalities, county governments and school districts. It then shifts more of the tax burden to homeowners.

And any help that municipalities thought they would get with the proposed dark store legislation in Michigan is unlikely now that the bill is stalled in the Senate, according to Senator Tom Casperson, R-Escanaba.

House Bill 5578 had moved through and received approval in the House in June. The next step was to send the legislation to the Senate in the fall, but the bill may need to be reworked before brought back to the state legislature, Casperson said.

Under House Bill 5578, assessments for the big box stores would have been based more on “highest and best use” factors rather than a lower value based on claims that the property would not be easily filled if vacant.

Systems Control, a division of Northern Star Industries, petitioned in July to reduce the property value on its 3201 E. Industrial Drive site in Iron Mountain from $10.3 million to $1.4 million, an 86 percent drop.

That reduction, if granted, would cost the city $108,000 in annual tax revenues.

City officials noted Systems Control already receives a 50 percent tax break for much of the property through the state’s Industrial Facilities Tax incentive.

Iron Mountain officials noted that O’Reilly’s Auto Enterprises LLC is seeking to have the tax tribunal reduce the current cash value of its property at 1907 S. Stephenson Ave. from $1,043,200 — with a taxable value of $513,736 — to $300,000 that would be taxed at $150,000.