Walmart’s request for a tax break in Ellsworth could test the ‘dark store’ theory

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The Walmart Supercenter in Ellsworth is appealing the city’s rejection of its request to cut its property tax bill in half. The outcome could be a Maine test case of the “dark store” tax assessment theory, which big box retailers have used nationwide to argue that their properties are worth less for tax purposes.

Walmart, located on Myrick Street, is seeking to reduce its Ellsworth property tax bill in 2017 from about $361,000 to $180,500, City Assessor Larry Gardner said. It appealed the city’s denial of that request to the State Board of Property Tax Review in January 2019, seeking a reduction of the building’s valuation from $20.1 million to $10.1 million.

That board recently denied Ellsworth’s request to dismiss the case.

In appeals Walmart has filed concerning stores in three communities around the state, the company has argued that its properties are not meant to be repurposed and should be valued as if the stores were dark – vacant, up for sale and likely unappealing to prospective buyers. As a result, the company argues, its buildings should have lower property values for local tax purposes. The giant retail chain is also seeking to cut its property taxes in half in Brunswick, and it’s seeking 75 and 80 percent reductions in Farmington and Sanford respectively.

Last year in Bangor, the city reduced the valuation of the local Walmart property to $17 million from $19 million in response to tax abatement requests from the retailer.

“I think that argument should not be in the appraisal world, because what it does is, it looks into the future and says ‘one day, we’ll be gone, and because we will be gone, you should value us the way you would when we’ve left,’” Gardner said.

Attempts to contact Walmart’s attorneys in the case, from the firm Stavitsky and Associates in Fairfield, New Jersey, were not successful Tuesday.

Walmart artificially creates the dark store argument, Gardner said, because it places into the deeds of properties it buys a clause restricting the properties from being used for another big box store. This complicates the city’s use of the approach it uses to assess most properties — by their highest and best use.

“If you’re a big box, the highest and best use is a big box. They take away that use with restrictions on the deed,” Gardner said. “Just when they pack up and leave, they will include these restrictions that are negative to the highest and best use that they had. All the big boxes are doing it.”

Ellsworth has had some success repurposing a big box store, Gardner said. The Jackson Laboratory bought the former Lowe’s home improvement store in 2012, and it opened its new mouse vivarium there in August 2018.

But Jackson Lab bought the 17-acre facility at Kingsland Crossing for $3.2 million — far less than what Lowe’s paid for it, and far less than the city’s $16 million assessed value for the property. Lowe’s shuttered the store after almost four years of operation in November 2011 during a nationwide wave of closures of underperforming locations.

No hearing date on Walmart’s Ellsworth appeal has been set.

In the state Legislature, a bill pending this year would restrict the use of the “dark store” assessment approach by requiring that stores larger than 20,000 square feet be assessed based on their current use.

Published by Fox23Maine

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