Jeff Parrott and Erin Blasko, South Bend Tribune
South Bend and Mishawaka officials are joining forces with St. Joseph County to defend property taxes levied against big box stores, and they could get help from state lawmakers.
A bill that has sailed through the Indiana General Assembly so far could protect millions of dollars in property tax revenue disputed by the stores.
Identically worded House and Senate versions of the bill have passed their chambers of origin without a single "no" vote, but they still must win final passage in the opposing houses.
At issue is a recent trend, playing out across the state and nation, called “dark sales,” in which big box stores argue that the value of their buildings should be based on the values of similarly sized but vacant, or darkened, buildings in their area.
The legislation would implement a concept called “market segmentation,” allowing taxpayers to base their appeals only on sales of comparable properties within their commercial markets. That means a home improvement store could compare itself only to another, currently operating, home improvement store in their area, said the Senate version’s author, Sen. Brandt Hershman, R-Buck Creek.
“It would lend a great deal of clarity to the process … and be favorable to local government,” Hershman said. “I think it would have the practical impact of dramatically limiting dark sales. I can’t say it will completely eliminate it but it will clamp down on it in a big way.”
At least nine such stores in St. Joseph County have appeals pending, some dating back as far as 2006, including Kohl’s, Lowe’s, Meijer, Target and CVS, according to records provided by the county assessor’s office. Some of the records don’t specify the assessed values that the stores have requested in their appeals.
But of the stores that have specified amounts, the county has assessed their combined value at about $75.4 million, while the companies have requested assessments totaling about $49.1 million. Assuming that property is taxed at the state maximum of 3 percent of assessed value, the cities would lose a combined $788,000 in tax revenue if the big box stores win their appeals, not including interest.
Representatives of Meijer, Kohl's and Lowe's did not return calls seeking comment. County records do not indicate the assessed values that Target and CVS have requested in their appeals.