Want to reduce your property taxes by up to 90%? Do like Target stores is doing. Get a lawyer and get in line.

Target, Walmart and other big box retailers with stores in small and medium sized New York towns have hit upon a way to cut their town and school property taxes by as much as 90 percent! Very good for the retailer's bottom line, but bad news for small and medium-size towns relying on major national brick and mortar retailers for tax dollars. They'll be hung out to dry, and left to find other sources to cover the shortfall in town assessments. (And guess who who that'll be!)

A report in syracuse.com posted March 18, 2019 outlined how large retail and drug store retailers are using a tax dodging strategy that has already lowered their property bills in other states. 

Stores like Target, Walmart, Kohls, as well as large home improvement and drug stores we all know and love are trying to get their tax bills reduced by as much as  99% in suburban towns in Central New York and other upstate areas. If it works, that deficit in town income would be shifted to every other taxpayer in those towns.

Target has served lawsuits to Manlius, Cicero and Camillus, NY arguing that their tax bill should be cut by 90%. Although the likelihood of Target getting such a massive tax break is unlikely, their tactic and arguments for the reduction have already reduced taxes for stores in other parts of New York. From Buffalo to Long Island, town tax assessors have been fighting dozens of similar suits by proposing a new assessment strategy.

The legal tactic that has successfully picked the pockets of town assessment offices statewide is called "Dark Store Theory." Store lawyers argue that their fully functioning stores should be valued the same as vacant stores when it comes to charging local property taxes. The tactic forced the town of Queensbury, near Lake George, which had assessed its Target store $9 million and collected a tax bill of $327,000 to lower the assessment to $5 million. Not only did the town lose nearly $4 million in assessments, but it was forced to drop the store's tax bill to $33,000 and pay back nearly $500,000.

Dark Store Theory in a nutshell
The Dark Store Theory argument is simple: If Target was to sell a store, they are selling a vacant building. They are not selling a building with a long-term lease on it.” In Queensbury, Target's assessor compared the Home Depot store’s value to seven vacant big-box stores outside of the region. The state appeals court was satisfied.

Currently, Target is suing the towns of Manlius, Camillus and Cicero. In those cases, Target is represented by the same Long Island law firm that won in Queensbury.

The galling thing about this story is that Target already enjoyed tax breaks in many of these localities. The Onondaga County Industrial Development Authority granted tax exemptions for 10 years to help lure the Target store to a dead mall in Fayetteville. Cicero offered a tax exemption that reduced Target's assessment by 50 percent for the first three years, with more tax breaks over the next 7 years. Communities often grant up-front tax advantages to lure new retail and commercial firms, expecting to make up the short-fall after the grace-period runs out. But as soon as those tax breaks expired, the stores filed lawsuits to lower their taxes.

In case you are wondering, Target Corp. reported net income of nearly $3 billion in 2018.

Stopping Dark Store Lawsuits

Town assessors and county officials in New York are hoping to stop the spread of the “dark store” tactic with state legislation.

Last month, New York State Assemblyman Ken Zebrowsky, a Democrat from Rockland County, introduced a bill supported by the New York State Assessors’ Association and the New York State Association of Counties. The new law would require assessors to compare properties of similar in condition, use, type of construction, location, design, physical features and economic characteristics including similarities in occupancy and income-generating potential to determine a fair assessment of the property's value.

Assembly Bill A4752 does not have a Senate companion.