Six in Dickinson County file tax appeals

IRON MOUNTAIN – The Michigan Tax Tribunal has received six appeals from Dickinson County property owners this year, including two each in Iron Mountain and Kingsford and two in Breitung Township.

Potential tax losses in the six cases total $34,512 for Dickinson County’s operating budget, along with $20,909 for other county levies, plus significant municipal and school district losses, said Sid Bray, county equalization director.

The appeals are as follows:

— Kingsford Broach & Tool seeks a taxable value of $205,000 for its property on Maule Drive in Kingsford, which would be a reduction of more than $1.13 million.

— Orion Properties, owners of Freeman Nursing and Rehabilitation Center in Kingsford, wants a taxable value of $500,000 for its facility, representing a reduction of $205,600.

— Niagara Development, which operates a private landfill in Breitung Township, seeks a total taxable value of $110,000 on numerous parcels, a reduction of more than $1.46 million.

— Thomas Theatre Group Inc., which owns the Tri-City Cinema 8 in Quinnesec, seeks a taxable value of $600,000, a reduction of $486,600.

— O’Reilly Auto seeks a total taxable value of $175,000 on its Iron Mountain store, which would be a $692,500 reduction.

— S & S Shopping Center Ltd., owners of the Kmart Plaza complex in Iron Mountain, wants a total taxable value of $582,305, a reduction of nearly $1.46 million. The plaza encompasses all of the buildings in the L-shaped complex, including Tractor Supply and the empty former Kmart store.

“Both Kmart Plaza and O’Reilly attempted to file appeals last year … however, because of an administratively technicality, were denied by the tribunal,” Bray said.

The potential tax revenue losses are a worst-case scenario, Bray noted. Frequently, a settlement is reached between the property owner and the municipality before the tribunal is called upon to rule.

Iron Mountain reached settlements in four cases in 2017, reducing taxable values for MJ Electric, We Energies, Pine Grove Country Club and Pizza Hut owner Northfield Restaurant Corp. Together, the appeals cut revenues for city government by nearly $34,000 and county tax revenues by $16,000.

Those settlements followed a 61 percent reduction won by Verso Corp. for its pulp and paper mill in Quinnesec, slashing the taxable value from $28.1 million to $11 million, delivering a $107,180 hit to the county budget. Also, Systems Control achieved a 62 percent reduction on the taxable value of its East Industrial Drive complex in Iron Mountain, slicing it from $10.3 million down to $3.9 million. The tax loss to city government in that case was about $67,000.

If Kingsford Broach & Tool wins its full appeal, the loss to city government in Kingsford would be about $12,500, Bray said in a memo to the county board.

Any property owner may contest their property values at the tax tribunal each year, even if they received reductions in previous years. From 2015 through last year, the county budget alone lost more than $400,000 in revenues as a result of tax settlements, largely due to appeals from Verso.

Over the past decade, the “dark store” theory has been used by retailers to challenge tax assessments across the state. Under the dark store approach, retailers argue store operations have nothing to do with the value of the underlying real estate. Instead, they seek to pay the same rate as a store that is vacant.

A court case involving Menards and the city of Escanaba is being closely watched because it may have long-term implications on the dark store assessment method.

In 2016, the Michigan Court of Appeals ruled the Michigan Tax Tribunal had committed an error of law when it reassessed the value of Menards’ Escanaba store and reduced the city’s tax assessment on that property more than 56 percent for three years.

Menards appealed the decision to the Michigan Supreme Court, which refused in October to hear the case. After the denial, the Michigan Court of Appeals remanded the case back to the tax tribunal to allow more testimony.

As part of the appellate court ruling, the tax tribunal has been ordered to hear evidence on deed restrictions — which limit future uses for vacant stores — and examine the cost-less-depreciation approach, a common method assessors may use to determine property value.