The exterior of Shopko is seen Wednesday morning as
around the parking lot in West Bend.
John Ehlke/Daily News
After settling a lawsuit with one of the larger
retailers in the area, West Bend representatives
officially started the process for returning payments to
fulfill their obligation.
Common Council members voted to approve a resolution
during Monday’s meeting that authorizes a correction of
taxes to Shopko Stores Operating Co. in the amount of
$37,092.05. The refund was part of a settlement
agreement from a lawsuit filed in August by company
representatives to lower their property tax payment.
“This is in relation to the agreement that you entered
into with Shopko,” Administrator Jay Shambeau said.
“This returns the funds to them and then we collect the
funds back from the other taxing entities.”
City officials will not recoup the entire amount of the
loss because they forfeit their share of the refund.
Others will refund the city their respective portions of
taxes they must refund.
During Aug. 22, some of the largest retailers in West
Bend — including Menards, Shopko and Walmart — filed
lawsuits to have their property taxes reduced, claiming
their property value assessments were higher than they
should have been.
City staff valued Shopko’s property at almost $7
million, but company representatives believed it was
only worth about $4 million. Walmart’s location was
valued at $12.5 million, but representatives believe it
should be valued at $10.2 million. Menard’s was at $10
million, but challengers wanted the property valued at
lawsuits were nearly identical, except for the value of
the assessments. During a closed-door session during the
Sept. 11 Common Council meeting, members learned of the
settlement and voted to approve to approve it during
open session. The details were not disclosed to the
public at that time.
Sadownikow alluded to the agreement during the Oct. 11
Common Sense Citizens of Washington County meeting.
had a lawsuit with Shopko,” Sadownikow said. “I just
signed that paperwork just a week or two weeks ago. We
settled with them. They had an appraisal. We had an
appraisal. They decided to settle on our appraised
number, which seems strange to me.”
Robert Hill, an attorney who represents the retailers
concurred with Sadownikow that the settlements favored
West Bend, but disagreed with his reasoning.
is correct, but it is not correct to say there is a
struggle between the average sale price and some other
price because we are really settling these, using as our
measuring stick, as the social cost of these buildings
because they do sit vacant and available for long
periods of time, and the city does have to deal with the
consequences of that,” he said.
lawsuits with Walmart and Menard’s will continue.
are hopeful that we can mediation on all these and
settle them along the lines that we were talking about,”
Hill said. “We are never going to settle for anything
close to the actual sales prices. We know that, but we
do feel that a reduction is — when they are selling for
$20 per square foot and they are assessed at $80, $50
becomes a really Solomonic number.”
Sadownikow said city officials also reached an agreement
with the valuation of the Meijer location. The two
parties were $3 million apart regarding the property’s
assessment, eventually agreeing to $17 million for a
store that is almost 200,000 square feet.
There is legislation under consideration by the state
Senate and Assembly giving assessors the authority to
value commercial properties as if the buildings are
still in use.
it doesn’t pass, going forward, before we approved a
building, before we approved more development, we would
probably have to have a specific developer’s agreement
with each individual developer,” Sadownikow said.
Before the developer can connect to any utility, be it
electricity or water, Sadownikow said they would have to
agree their properties are valued at a specified number.
dark store tax theory has been a concern among municipal
representatives who have watched larger retailers file
lawsuits challenging their assessments. Should the
retail officials win their cases, that could mean
thousands of dollars in lost tax revenue.
the heart of the dispute is how to appropriately value
commercial properties — as vacant or in operation.
“They are saying you can only use properties of dark
stores, properties that are sitting vacant,” said Robert
Lorier during an earlier interview, West Bend’s
commercial consultant. “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.”
Retail locations that are vacant will be assessed at a
lower value because they are not as valuable as those
that are in use. If a homeowner occupies a property,
they will work to care for the location, mow the lawn
and paint the house, but that same owner can leave the
home in disrepair if the individual doesn’t live there.
The person is not living at the location anymore, so
what does that person care? In that case, the value of
the property will decline because it is not as well
managed as one that is occupied.
Retailers want their properties assessed in the latter
situation. This becomes significant because the taxes
cities collect decline given the reduced assessments.
However, city staff must still service the location.
When there is an emergency, law enforcement and first
responders must travel to the scene. Municipal crews
must still maintain the infrastructure.
Municipal officials must generate revenue from elsewhere
to offset their operating cost, and many are concerned
that burden will shift to commercial properties. There
also doesn’t seem to be an end to it. If one retailer
can successfully make the claim, then what is stopping
an individual homeowner wants to lower his property
assessment, then will so will everyone else. Sadownikow
and others worry the process will not end the cycle for
reducing revenues continue.
However, Hill and his colleagues view the situation
differently. Michael Wedl, an assessor who sides with
Hill, displayed a graphic that displayed variations in
how retail locations are assessed per square foot. One
location in Milwaukee was valued at $20 per square foot
while another was at $120.
“Right there we have got an issue,” Wedl said. “Even if
it is an old Target and a new Walmart, why is there a
$100 per square foot between them?”
also argued that the assessment should only reflect the
materials that comprise the location, the brick, cement
and other supplies that make up the store. The income
generating portion of the business should not be part of
the property assessment and should not be taxed.
an entrepreneur operates a business within a home, then
the property tax should reflect the value of the
property, not whether there is a business that generates
income on the premises.
“What the major retailers are saying is that, ‘We are
already subsidizing everybody else, because we are
already paying taxes on assessments that are three and
four times what we could sell these buildings for,’”
Hill said. “But, we also have a duty to our
shareholders, the public, the owners and, quite frankly
to other taxpayers, not to just say, ‘assessors are free
to pick whatever number they choose,’ they have to stay
in line with sales prices because that is the only thing
that keeps the system honest.”
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