The term "dark store" refers to a property tax valuation issue involving large retail properties, commonly known as big-box stores. In property tax appeals, some retailers have argued that the value of their operational store should be determined by using sales of vacant or former big-box properties as comparables. 

The concern for Michigan communities is that vacant properties may sell for substantially less than operating stores for reasons that do not apply to the property being assessed. Former retail properties may also be sold subject to deed restrictions that limit future use or prohibit competing retailers from occupying the property. Those restrictions can reduce the property's marketability and sale price. 

When sales of these properties are used as comparables for an operating, unrestricted store without appropriate adjustments, the result can be a significantly lower property tax assessment. 

The Michigan Municipal League supports a fair, transparent, and consistent property tax system that accurately represents the true cash value of commercial property.

MML supports policies that:

• Allow local governments in certain circumstances to consider the removal of deed restrictions or other limitations that may artificially reduce the sale price of a comparable property.
• Ensure properties used as comparables in an assessment or appeal are genuinely comparable to the property being valued, including consideration of occupancy, condition, use, and market circumstances.
• Recognize accepted valuation methodologies, including the cost, sales-comparison, and income approaches, when appropriate to the property being valued.
• Provide clear and consistent standards for the Michigan Tax Tribunal when reviewing commercial property tax appeals.
• Protect communities and other taxing jurisdictions from valuation methods that shift an unfair share of the property tax burden to homeowners and other taxpayers.

When the assessed value of a major commercial property is substantially reduced, the effect reaches beyond the individual municipality.

Property taxes support essential public services, including police and fire protection, roads, libraries, schools, and other community services. Significant assessment reductions can also require taxing jurisdictions to refund taxes collected in previous years following a successful appeal.

The League is not advocating assessing commercial properties above their market value, but Michigan should ensure that valuations accurately reflect the property.

Michigan courts have partially addressed aspects of the dark-store issue, but disputes over the valuation methodology, depreciation, obsolescence, and appropriate comparable sales of large commercial properties continue. These cases require local governments to devote significant resources to defending assessments before the Michigan Tax Tribunal.

The Legislature has considered several proposals in past sessions intended to provide greater statutory clarity, including a four-bill package introduced during the 2023–24 legislative session. Those bills did not become law.

MML will continue working with state lawmakers, local assessors, and other local government partners to pursue the needed statutory changes that provide greater clarity in the valuation of large commercial properties.

BOXED IN: A Documentary about the Dark Store issue in Michigan from Northern Michigan University on YouTube.