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Your Nearby “Dark” Retail Store Could Devalue Assessments

By Matt Eckerle, Principal, May 17, 2017

Common sense says that a retail store going out of business on one side of town wouldn’t affect the assessed property value of an operating store on the other side of town – but it could. The operating store’s assessment could be assessed at the same level as the “dark” store.

Retailers ranging from the big box stores to national drug chains have used the property values of closed or vacant stores to file assessment appeals on operational stores. As a result, the assessed value of operational stores can be reduced significantly to that of comparable vacant buildings in other areas. The dark store valuation, which has typically been applied to retail appeals, could also apply to other market segments.

Appeals by owners citing “dark” properties can have significant impact on your community’s financial situation. If an “open” store is valued at a “dark” store rate it can lead to:

  • Decreases in your property tax base, which can result in higher property tax rates, which can lead to higher tax cap losses;
  • Lack of clarity regarding your property tax base in your budget and planning processes, and questions related to the issuance of new debt;
  • In TIF areas, appeals settlements can negatively affect the revenue stream and could jeopardize your ability to make bond payments; and
  • Refunds on appeals settlements can impact your annual tax receipts or require you to make a direct payment to the taxpayer.

Dark store relief could be on its way:

The state has recognized this issue facing communities, and in 2016 the General Assembly passed a bill, which was signed into law, directing the Department of Local Government Finance develop new assessment rules that require properties be evaluated and assessed value be based on their market segments. In the next edition of Vision we'll outline the concept of market segmentation.

We'll also take a look at local options to help mitigate or understand the impact of property tax appeals in your community. Dark store assessments and property tax assessment appeals are a constantly moving target. If you have a question about property tax appeal issues and local financial impacts please contact us at .(JavaScript must be enabled to view this email address).

Information in this article was believed current as of the date of publication. As you know, changes occur frequently. The information presented is of a general educational nature. Before applying to your specific circumstances, please contact us at vision@umbaugh.com.


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