State Should Move Carefully On ‘Dark Store Loophole’ Legislation

On its face, the New York State Association of Counties’ support of legislation to eliminate the “Dark Store Loophole” as an argument to decrease commercial property tax assessments is a good thing.

The “Dark Store Loophole” allows businesses that appeal their property tax assessment to occasionally use empty stores or vacant land as evidence for a lower assessment. Obviously, decreasing assessments in such a manner costs counties, cities, towns, villages and school districts tax revenue and shifts more of the taxing burden from the business in question onto surrounding businesses and homeowners. Several New York courts have adopted the “Dark Store Loophole” in decisions, something which is concerning to county officials statewide. The state Association of Counties is asking the state Legislature to enact legislation that requires sound appraisal theory in developing property tax assessments and eliminate the “Dark Store Loophole” as part of its decisions.

The fate of the “Dark Store Loophole” has bearing here in Chautauqua County, particularly when it concerns big box retailers and manufacturing buildings. Allowing companies — particularly those that have benefited from tax breaks in the past — to lower their tax assessments based on the premise that a usable building down the street should be treated, for tax purposes, as a burned out shell is bad for taxpayers.

Legislators should move cautiously, however, on any “Dark Store” legislation. The last thing New York needs is legislation that gives potential tenants for large, empty buildings a reason to think twice. And, some states have actually come up with solutions whereby assessors value occupied property for higher tax assessments solely because the buildings are occupied. That is exactly the type of solution New York should absolutely, under no circumstances, entertain for a second.

The “Dark Store Loophole” is a problem for which there is likely not a quick solution. The state does not need to add another chapter to its lengthy book of regulations that are unfriendly to businesses, yet it must do something to protect local taxpayers.