Walmart wants to lower its property tax bill in Ellsworth and other communities in Maine and elsewhere. Lawyers representing the multibillion-dollar company are using the “dark store” theory to seek hefty abatements of the assessed values of its stores. The gist of the theory is that a Walmart store isn’t worth nearly as much without a Walmart in it. So, the reasoning goes, the value of a bustling store should be calculated based on a vacant, “dark” one.
Big-box stores are built specifically to meet each chain’s needs. When a store closes or relocates to a new even more specially designed building, the big empty box left behind is hard to sell. Curtis Picard, president of the Maine Retail Association, has described them as “single-use facilities.”
Designing a nearly 200,000-square-foot building to be disposable is wasteful, but not something Ellsworth or other communities have much control over. But those same communities should not be penalized for the logical result of intentional design.
Part of what makes a former big-box store so unmarketable is that companies often restrict via deed covenants how the property can be used in the future. They don’t want a competitor coming in and setting up shop. Probably sound business logic, but a consequence of that strategy is fewer prospective buyers. Any resulting blow to resale value is self-inflicted.
Still, some former big-box stores manage to find new life and new worth. In Ellsworth, Jackson Laboratory has taken over the former Lowe’s building, turning the home improvement store into a state-of-the-art mouse production facility projected to create hundreds of jobs over the next decade. Marden’s does a bustling business out of the former Ellsworth Walmart location.
When it comes to handling these abatement appeals, Maine’s municipal assessors are outgunned. Even if a company’s appeals are ultimately denied, getting a town into mediation or a settlement may be enough to get the value lowered by even a small percentage. That could mean thousands of dollars in annual savings for the businesses and less property tax revenue to support local schools, roads and emergency services. Ellsworth is now in the mediation phase with Walmart, which paid $361,000 in taxes in 2017.
State lawmakers are considering a bill that would require assessors to consider a property’s “highest and best use” when calculating the value of a retail store of over 20,000 square feet. The legislation faces challenges on constitutional grounds. While it may not be the right solution as written, it is reassuring that our representatives in Augusta are tackling the issue.
The state must give municipal assessors clear guidance on how to assess these properties and the resources to back them up when challenges arise. Municipalities shouldn’t be forced to choose between using taxpayer dollars to fight such appeals or forfeiting taxpayer dollars by settling.