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The legal war between the City of Houghton and Walmart is heating up.
The skirmish began when the world’s largest retailer, owned by the world’s richest family, challenged the assessment on its Houghton location.
In a case filed against the city with the Michigan Tax Tribunal in 2018, the company asked for the valuation of its store to be lowered by 60 percent. The company agreed to delay the case twice, first because of the Father’s Day Flood, and then because of the COVID-19 pandemic. Now, they’re pressing it, and also demanding $1.2 million in refunds for taxes paid over the past six years.
Houghton City manager Eric Waara said the lost future revenue would be noticed by city residents…
Other entities that receive property tax revenue would also feel the pinch…
At issue is the type of evaluation applied to properties such as Walmart’s store.
Local assessors have typically applied a “highest and best use” standard, valuing the property at a level they think it’s worth in its current usage, and what it might be worth to a buyer who would want to use it for the exact same purpose.
Companies such as Walmart are arguing that a “comparative” appraisal standard should be used. That would set the value at a level the company could reasonably expect to sell the property for, based on other sales of similar properties, if they closed and vacated the store. That has become known as the “dark store” concept.
Buildings such as Walmart’s are rarely purchased by other entities for “highest and best use” purposes. The two large retail buildings recently vacated by Shopko in Houghton and L’Anse attracted little interest from retailers, and were eventually sold to churches at discounted prices.
“Dark store” lawsuits aren’t new, but Waara says this situation is different, because Walmart agreed in 2004 to accept a higher assessment, in exchange for investment the city made to help fund the construction of their store…
Those investments included building a public roadway, relocation of utilities, and wetland mitigation work.
The city has now filed a lawsuit, asking a federal court to hold Walmart to the terms of the agreement.
A local task force has also been formed, made up of representatives of the city and other groups that will be hurt if Walmart’s tax appeal is successful. The goal is to raise awareness of the issue, and the potential cost to the community.
Waara says there is one thing that citizens can do to help…
The task force and the city say they hope their efforts encourage Walmart to respond to numerous settlement overtures that have been proffered.
