— The state Legislature is expected to come forward soon to close a
tax loophole that big box stores have been using to slash their tax
bills. The legislation is being prepared by Sen. Duey Stroebel,
R-Cedarburg, and Rep. Rob Brooks, R-Saukville. The bill is expected
to come out in the next few weeks, according to Stroebel. “We have
something that’s almost ready,” he said.
theory is a tax argument being used by a variety of big box store
chains to argue their stores are over-assessed for tax purposes.
Under the argument, the operating business within a building should
not factor into assessment; the assessment that decides a store’s
property taxes should be determined by recent sales of comparable,
In 2008, a
Wisconsin Supreme Court case Walgreens v. city of Madison, sided
with Walgreens, saying
that the store’s
taxes should be based not on the store’s lease agreement, but on
what the landlord could get if the drugstore moved out of the
buildings, which are generally developed and built to the store’s
the League of Wisconsin Municipalities shows more than 80 percent of
Walgreens locations and more than 95 percent of CVS stores operate
on lease agreements.
different than dark store theory, because most of those properties
are leased, box store chains followed with the argument that their
market value should be based not on the value of a new and
operational business, but on the value of abandoned stores and the
often built for specific companies and specific needs, sell for
considerably less after abandoned than the value they hold while
functioning because such buildings hold limited use to other users,
according to Stroebel and LWM information.
“The courts have
really kind of hijacked the assessment process,” Stroebel said.
has experience and education in real estate and assessment, said the
revenue of a property has always been part of assessing it for tax
(revenue) really the essence of how property is assessed … Due to
this court decision, you can’t consider the cash flow,” said
Stroebel, owner of Terrace Realty in Cedarburg.
“To profess to
be able to determine the market value blind to that factor is just
not realistic,” he added.
show communities across Wisconsin have had lawsuits filed against
them by box stores such as Lowe’s, Target and Shopko, among others,
contesting their taxes. In many cases, the businesses have either
won and had taxes slashed or refunded, or the municipalities came to
a settlement to avoid expensive legal battles, according to the LWM.
information states that assessors have estimated some communities
could experience residential tax bills increasing by hundreds of
dollars, as residential taxes go up by 5 percent to 17 percent to
compensate for the drop in commercial properties’ taxes.
the legislation is straightforward. The loophole will be closed as
the bill specifies that the revenue a property’s generates is a
factor in its assessment.
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