GOSHEN — Elkhart County taxpayers, without knowing it, recently paid out nearly $3.1 million to local businesses and big box stores that have disputed property tax bills with the state, a tactic known as the “dark store” effect.
The $3.1 million hit affects not only the county fund, but the cities, schools, libraries and townships where these businesses sit.
“Dark store” is based on the premise that a company appeals its property tax bill in that one or more of its locations should be assessed a lower property tax as if its building was sitting on the property, nonoperational. Big box companies, for example, argue that one of their stores is only capable of supporting that specific business, which in theory makes the assessed value of the property much less, as if it sat empty.
The state grants a reassessment value for each year an appeal is won, which recalculates property taxes paid to local municipalities by that local business. Municipalities are then ordered to repay the funds back to the businesses, including interest.
It’s not new and it’s spreading, not just within Indiana, but to other states including Wisconsin, Michigan, Alabama and Texas.
Meijer, Thor Motor Coach and Forest River RV are just a few of the companies that have won appeals with the Indiana Board of Tax Review for Elkhart County locations, according to documents from the county auditor’s office. Lowe’s, Menards and CVS pharmacy are likely to appeal next, said Elkhart County Assessor Cathy Searcy.
Meijer appealed its property tax bill for its Elkhart Road location all the way back to the 2003-04 fiscal year, county documents state.
“Its ridiculous,” said county Auditor Pauline Graff.
Graff said there’s nothing the county did in error. The businesses appealed to the state and happened to win. The auditor’s office just processes the paperwork when a decision is made, and the settlement amount, she said, and these were possibly the largest refunds the county has had to pay back.
Meijer actually agreed to a settlement on the interest, in that it would only accept approximately $173,407 instead of the $359,358 that it was due to collect.
Thor Motor Coach won its appeals with the state for a refund of property taxes from the 2013-14 fiscal year, to the 2015-16 fiscal year, according to county documents. The total hit to county accounts was approximately $590,855 for Thor’s location in Wakarusa.
Forest River in Middlebury received a payback amount of about $1.2 million for appealed property tax years between 2008-09 and 2014-15.
Thor spokesman Jeffery Tryka Monday said the company did go through the appeal process.
“It’s a normal course of business,” he said.
Wakarusa Town Manager Jeff Troxel said he hasn’t recalled a time recently where money had to be paid back to a local business. Troxel said the town will likely have to watch its spending for the rest of the year as a result of paying a share of $252,586 of the reassessed $590,855 due back to Thor.
But with all the reinvestment Thor is making in Wakarusa, Troxel said the revenue would likely be recouped quickly.
“It is what it is,” Troxel said. “It’s something companies do. It’s happening all around the state.”