West Bend officials support bills to combat ‘dark store’ appraisals


June 27, 2017

 The exterior of Shopko is seen Monday morning in West Bend. The West Bend Common Council voted to approve a resolution supporting legislation to combat “dark store” appraisals.
John Ehlke/Daily News

Members of the West Bend Common Council are closely observing two legislative proposals, mindful their fate will have significant consequences for area residents.

Aldermen voted to approve a resolution during the June 19 meeting to support two state senate bills designed to limit the methods corporate representatives use to reduce the property taxes they pay to municipalities.

“I will just say I am going to vote yes to this, but I do have concerns in my understanding of it with the senate bills and these being two separate issues they are lumping together,” Alderman Adam Williquette said.

According to the resolution, one of the bills, SB 291, would reverse a specific court decision that favored the Walgreen Co. against the city of Madison by explicitly stating that leases can be factored into the property valuations for locations that have them.

The other, SB 292, states that assessors must use properties that are within the same market segment and similar property conditions, including age, condition, use, type of construction, location, design and economic characteristics when they determine the value of a facility for property tax purposes.

 The exterior of Menards is seen on Monday morning in West Bend. The West Bend Common Council voted to approve a resolution supporting legislation to combat “dark store” appraisals.
John Ehlke/Daily News

Representatives from national retailers such as Walgreens and Shopko have increasingly lobbied for alternative valuation methods to reduce the value their properties are listed with assessors, lowering the property taxes they owe to the corresponding municipalities — and these bills aim to address those issues.

The bills are important to West Bend officials because they have been personally affected by issues related to dark stores and other property tax valuation assessment methods.

State Sen. Duey Stroebel authored one of the bills that provides assessors additional tools from which to use when assessing properties for tax purposes.

“This is really, just to say, to allow our assessors to utilize the lease or the income stream that comes from the property in order to make a value determination or at least have a chance to factor that in,” Stroebel said during a prior interview when he visited the Daily News.

West Bend officials understand intimately the importance of this bill since Walgreens personnel challenged their assessment for their stores in West Bend.

Walgreens personnel work with contractors to purchase properties in different locations throughout the country, including West Bend. They then build their facilities to certain standards and offer lease agreements to others that cover the costs for property taxes and other expenses such as rent, operations and development.

They argued the payments they receive from those lease agreements should not be included in the valuation when city officials determine the property taxes they are owed.

Representatives filed a lawsuit and won their court case against Madison. As a result, city officials had few options for recourse and had to acquiesce to company executives who requested a lower valuation. Assessor Jeff Yoder assessed the two Walgreen locations at $6.75 million and $5.7 million, but those valuations were later changed to $2.4 million, costing officials almost $180,000 in estimated revenues.

This bill is meant to address that.

“What we are saying in Wisconsin is that you can look at income, you can look at the leases because these very same properties you see, the Walgreens that say it is only worth such and such amount because that is the same as this vacant store down the street, they are both brick, the same size and the same amount of land — they are two totally different animals,” Stroebel said during an interview when he introduced his bill. “Those very same buildings, when they sell them, they market them — here is the cash flow and they apply a capitalization rate to that cash flow to determine a value.”

Representatives from Menards and Shopko also want to challenge their property value assessments, but using different logic. They maintain their stores should be valued when they are vacant instead of when they are operating, but Yoder and other city officials contend they are not comparable situations.

West Bend could lose an additional $400,000 if representatives from national chains have their way. Even as potential revenues decline, the expenses cities must endure to provide services to those locations do not.

Emergency responders must respond to incidents and infrastructure for utilities must be maintained, so the money to fund those initiatives have to come from somewhere. That burden could shift to personal property owners.

“It is either going to be a good or bad thing when it comes to the floor in Madison and we’ll see, but it is something that needs to be addressed statewide,” Williquette said.

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