Assessor warns that ‘dark store’ method could bankrupt counties

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BLOOMINGTON, Ind. (Aug. 3, 2015) -- The Monroe County assessor is fighting back against a method she says chain stores are increasingly using to get out of tax payments.

Assessor Judy Sharp isn't mincing words when it comes to the so-called "box stores" in her county, especially as she sorts through all the paperwork they've been throwing at her.

"We're under attack," Sharp said.

In just the past couple of weeks, Sharp received a half dozen assessment appeals from chain stores that include Lowe's, K-Mart, Best Buy and Target.

The appeals hit on an issue that has been popping up around Indiana. Dubbed the "dark store" method, large chain stores appeal their property values by comparing their buildings to similarly sized, vacant stores. The companies argue that they should be paying taxes on a lesser amount because their buildings are not of high value.

Two higher courts have ruled in favor of the stores, leading more to try the method with assessors like Sharp. Even more troubling, she said if an assessor loses an appeal, the county then owes the store back taxes with interest that can total into the millions of dollars.

"It could break government," Sharp said. "These corporations have deep pockets and counties don't."

In one example, Sharp said Bloomington's Best Buy store is valued at $49 per square foot right now. The store is appealing, asking its value be dropped to $7 per square foot. If it wins, that would lower its property taxes by 85 percent.

Sharp said that if stores continue to win their appeals, it could push taxes for homeowners up and even cause cuts in services like police and fire departments, schools and libraries.

Sharp and other assessors took the issue to the legislature this session, but she said a bill passed there was too convoluted to cause any change. She's hoping to get their attention again and even push the issue all the way to the Indiana Supreme Court.

"As you lose assessed valuation, the tax rate goes up so what this really means in a nutshell is the rest of us, especially the residential homeowners, are going to be paying more property taxes because our tax rate will have to go up," Sharp said.