man walks under an overhang Wednesday afternoon outside
of Menards in West Bend.
John Ehlke/Daily News
During the Oct.
17 West Bend Common Council meeting, aldermen and Mayor Kraig
Sadownikow voted to approve a resolution asking Gov. Scott Walker
and state legislators to protect residential property owners and
independent business owners from a potential tax increase because
large retailers are asking the values of their properties be
“If you decide
to pass this resolution, it will let the governor and legislators
know that these loopholes are not good for Wisconsin municipalities
and the shift of property tax to other residential owners,” Assessor
Jeff Yoder said. “Basically, like Adam (Williquette, alderman for
District 7) said, there are two different issues out there. “One is
with your lease-type properties — there are arguments about how to
assess that correctly. The other item is the big box dark store
theory where they are saying that my thriving store is only worth
what a dark, vacant store is worth.”
resolution, parts of which were obtained from the Wisconsin League
of Municipalities, Wisconsin residents pay more than 70 percent of
the total statewide tax levy and there are lawsuits in the state
that compel assessors to value stores from large retailers at a
lower amount than what they believe is the true market value.
references the Indiana and Michigan state legislatures that passed
legislation regarding the matter, and implores Wisconsin to do the
properties deal with the Walgreens store, but the dark store tax
issue is a separate topic that could dramatically decrease the
amount of property tax revenue the city collects from large
retailers such as Walmart, Menards or Shopko.
the city’s commercial consultant, said locations are valued based on
sales of similar properties that are sold.
type of things,” Lorier said when asked what factors are considered.
“Is it the same use? Is it another grocery store, another tavern —
that type of thing? Is the economics the same?”
In terms of
dark stores, retailers want their properties assessed using
saying you can only use properties of dark stores, properties that
are sitting vacant,” Lorier said. “Those are the ones they want to
use. Our argument there is a reason they left. The location isn’t as
good. It is not desirable. There is a reason it is vacant. It is not
the same as it is now.”
Stores that are
vacant will be assessed at a lower price because of economics — it
is not worth as much if empty compared to one that is in use because
there isn’t any monetary value. The store is not generating sales,
and Yoder and Lorier argue it is not comparable to one in an area
that is active.
officials are involved in two cases against two retailers, Menards
and Shopko, who want their properties valued at the same amount as
similar stores that are vacant.
fallout can be significant because differences in the valuations
between the opposing sides is in the millions of dollars. In total,
if the retailers receive a favorable ruling, the city of West Bend
could lose more than $150,000 annually.
potentially understates the loss because retailers want back pay and
interest from when they paid taxes for the higher assessment.
scenario, municipalities collect less revenue but must still provide
a level of service, including law enforcement and emergency calls.
“If they are
not going to pay their fair share of taxes and not pay enough to
cover your police and fire, and all the services that go to it, do
you really want them in your community?” Lorier asked rhetorically.
will navigate a maze of consequences and decide if large retailers
are worth the revenue they generate despite the increased services
tightening budgets, many areas must cover revenue losses in some
other fashion and the burden is shifting to residential property
owners. From an issue briefing published by the League, homeowners
could experience an 8 percent estimated increase in their property
taxes, about a $250 increase if the theory is fully implemented.
spokesman Jeff Abbott asked the Daily News to send the question by
email and would comment via written response if someone is willing,
but no email was returned.
sent to Shopko representatives LeAnn Harley and Michelle Hansen, but
there was no reply.
not the only state dealing with the issue. Big box stores are large
retailers that have an advantage of applying the theory to other
states if it is deemed appropriate — so the trend may continue.
from the Lincoln Institute of Land Policy said it is starting to
affect states such as New York. It is an important issue in Indiana
director of state affairs from the Michigan Municipal League has
concerns the dark store valuation method will spread to other
“What we saw in
Michigan were 30, 40, 50, 60 percent appeals for reductions in
value,” Hackbarth said. “Then you started to see it ripple to your
Target stores, to your Menard stores, Home Depots and your Lowes,
and it just spread to every single one of those entities. Now our
concern is what other entities start looking at that same set of
arguments and making a claim to them.”
there is a difficulty in estimating the potential fallout because
the data is decentralized, but he said it could be anywhere from $75
million to $100 million in local property tax revenue that has been
lost over three years.
officials had to make decisions to compensate.
“I know in some
of those Upper Peninsula communities, they had library hours
reduced,” Hackbarth said. “They have had services and hours reduced
in cities. It is a very real impact in services, especially in some
of those smaller communities where that one store may be a big chunk
of the tax base.”
officials are turning to the state for assistance.
League came up with a proposal and that was for the resolution, so
that is coming from the League of Wisconsin Municipalities and they
are proposing the legislators pass a couple of items that will help
with the dark store issue and the leasing issue,” Yoder said.
State Sen. Duey
Stroebel’s Communications Director Ethan Hollenberger wrote as much
in an email to the Daily News.
“As I mentioned
to you, Senator Stroebel is working with stakeholders to find a
legislative solution to the “dark store” tax theory,” Hollenberger
wrote. “At this time, a piece of legislation is being drafted for
introduction when the legislative session begins in January.”
said he deals with this issue on daily basis.
assessments get dropped in half, it will shift it to the rest of the
tax base,” Williquette said. “Residential properties will see it. It
is a loophole. It is not a consistent — so there is an opportunity
in the legislative session this year in Madison to fix it and give
us a clear direction on how these assessments should happen going