Reilly supports bills against 'dark store' tax assessments
Says trend saves for big-box stores, increases tax burden on homeowners

By Hannah Weikel - Freeman Staff

July 20, 2017

WAUKESHA - Mayor Shawn Reilly recently traveled to the state Capitol to give favorable testimony for two bills that would curb big-box stores asking for lower tax assessments based on the "dark store theory."

At least eight big-box stores or pharmacy chains are at various stages in tax assessment appeals with the city, challenging their property tax assessments and asking that they be compared to vacant stores, which could cut property taxes by up to 50 percent in some cases. 

Reilly testified before the Assembly Ways and Means Committee in support of Assembly Bills 386 and 387, along with other mayors from across the state. He told the committee that the bills are needed to curtail "unfair and ongoing" property tax shifts that are placing higher burdens on homeowners while saving big box retailers money.

Among the stores that have benefited from the "dark store" strategy in Waukesha are Menards, Walmart, Target, Walgreens and Woodman's, Reilly said.

- In 2006, Menards paid $14 million for its property. Menards took out a building permit to build its store, showing the cost to build as $7 million. Menards' current opinion of value is $8.26 million.

- In 2008, Walmart paid $8.25 million for its property. Walmart took out a building permit to build its store showing the cost to build as $10.5 million. Walmart's 2017 Board of Review objection form indicates that its opinion of value is $8.87 million.

- In 2008, Target paid $2.62 million for its property. Target took out a building permit for its store showing the cost to build as $7 million. Target's most recent court filing indicates its opinion of value is $5 million.

- After a Wisconsin Supreme Court ruling upholding Walgreens' argument that their actual sale prices don't reflect market value and taxes should be assessed based on their leases, Waukesha settled with Walgreens at approximately $2.5 million for each of the four stores in the city. The Walgreens store on Madison Street sold in 2012 for $4.9 million. Because of the court ruling, Waukesha is not able to increase the assessed value of any Walgreens based on that sale.

- In 2012, Woodman's paid $11.8 million for its property. Woodman's took out a building permit to build its store, showing the cost to build at $12 million. Woodman's 2017 Board of Review objection form shows that its opinion of value is $14 million.

When large retailers receive property tax breaks there is a shift in taxes to homeowners in the municipality, though it's unclear exactly how much.

Waukesha City Assessor Paul Klauck said the burden placed on residents depends on how much the stores settle for and how long the mediations take. Waukesha is in mediation with Menards, but there's no telling how long that process will take with other big box retailers, making it impossible to come up with a dollar amount.

Since the first committee hearing on June 29, no action has been taken on the bills.

Email: hweikel@conleynet.com

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