The ‘dark store’ effect
A study commissioned by the Indiana County Assessors Association and Association of Indiana Counties used Allen County data to simulate the effect of cutting assessments for big-box stores and industrial properties by 45 percent.
The study found assessed value statewide would be cut by $3.5 billion, at a cost of more than $120 million to taxpayers and taxing units. Revenue reductions due to property tax caps would mean $43 million lost by local government and schools. In Allen County alone, they would take a $4.1 million hit.
The study, by Policy Analytics, also showed 25 percent of properties in tax-increment financing districts would be affected, reducing the revenue TIF districts depend on to cover bond obligations.
Indiana’s property tax assessment system saw a complete overhaul in the 17 years following a landmark case arguing violation of the constitutional requirement for “a uniform and equal rate of property assessment and taxation.” Few would argue that the new system, based on verifiable market value, isn’t an improvement.
But a pair of Indiana Board of Tax Review decisions threaten to upend the system once again, with successful challenges by two big-box retailers to assessments based on rules designed to spread property tax burdens fairly and equitably among all taxpayers.
Lawmakers this spring passed Senate Bill 436 to address the challenge but instead seem to have added to the confusion. As it stands, thousands of Indiana taxpayers could face higher bills as the tax burden is shifted to homeowners and small-business owners. Where tax bills have already hit the constitutionally protected tax cap, revenue will go uncollected. Cities, towns, schools and libraries will be left with less support.
Following the lead of big-box retailers in other states, Meijer and Kohl’s separately argued that their businesses should be assessed as if they were vacant, because the buildings – not the value of their sales operations – made the properties valuable.
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