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Local factory reassessed for $300,000 less

By TRAVIS WEIK - tweik@thecouriertimes.com

A New Castle factory may be using a tactic known as the “dark store theory” to lower their assessed property value, thereby lowering their tax bill.

American Axle Manufacturing (AAM), formerly Grede Foundry, has appealed the assessed value (AV) of the Plum Street property.

According to county tax records, the property is currently owned by Grede LLC.

Henry County Assessor Jodie Brown said the property was last assessed during the “2016 pay 2017” reassessment cycle. That means the value was figured in 2016 and the taxes were due in 2017.

Brown said the property is scheduled for reassessment again in the “2020 pay 2021” cycle.

“They have appealed 2018 pay 2019 and 2019 pay 2020,” Brown said.

According to Brown, the appealed amount was $2,123,300 with a total tax bill on the property of $63,765.24.

Brown said the AV has been adjusted to $1,824,400 with an adjust tax amount now of $54,759.12.

The difference of $9,006.12 is about a 14 percent decrease in what the company has to pay in property taxes each year.

Brown explained assessment for all property types begin with a physical inspection of the parcel where physical characteristics (construction type, age, size, etc.) are measured and logged.

This information is then translated into a cost per the Department of Local Government Finance (DLGF) cost manual.

“If the parcel is an income producing parcel, then the income approach of value is used,” Brown said. “Annually, properties are statutorily required to be adjusted based on market data, otherwise known as the direct sales comparison approach to value.”

Some big-box retailers and industrial property owners have challenged this approach through “dark store” assessments.

Dark Store Theory

Brown explained that the “dark store theory” is the use of sales of vacant retail properties to value properties that are occupied with operating businesses.

As an example, a Menards in Escanaba, Michigan, used the sale of eight empty stores to argue its AV should be $3 million, not the $7-8 million that Escanaba assessed.

“Typically, these sales of vacant or ‘dark’ stores are much lower than other indicators of value for occupied stores, such as the costs of construction,” Brown said. “This theory is commonly used by retailers, but has some applicability to large industrial properties, as well.”

As part of their appeal, AAM/Grede offered 11 Indiana properties it believes the county should compare it to for assessment.

Property tax reassessments are one way local businesses lower their tax liability. Another option is a tax abatement.

Brown said the New Castle foundry does not have a current tax abatement for real property, but it does have an abatement on personal property.

As far as Brown knows, the New Castle foundry hasn’t had any previous abatements.

The Henry County Commissioners have allowed Brown to seek help from an outside company with the AAM/Grede AV reassessment appeal.