After ‘yes’ vote, work begins on closing dark store tax loophole
Change in governor’s office could influence direction

By Ralph Chapoco

Nov. 9, 2018

WEST BEND — Among the ballot measures and candidates that voters decided on was an advisory referendum that asked voters to support legislation regarding the dark store tax, as it is commonly called.

Washington County residents overwhelmingly voted in favor of the referendum during the election Tuesday, with about 72 percent of the electorate, about 45,000 people, casting their ballot in affirmative within Washington County.

Support for the referendum was vast, with backers throughout the state. Voters in 17 counties and six municipalities also voted for the measure, petitioning their state legislators to pass a bill that would make it more difficult for corporate retailers and other retail establishments to challenge their assessments.

“I think everybody realizes that these dark store loopholes, when the Walgreens and Meijers actually sue these municipalities to reduce their property taxes to what it would be as an empty store, it impacts that entire community because the homeowners will be the ones to make up the difference,” said Donald Kriefall, chairman of the County Board of Supervisors.

In the county, an advisory referendum related to the dark store tax issue was introduced at the Executive Committee in June, when committee supervisors voted to approve its placement on the Nov. 6 ballot, and was approved by the County Board of Supervisors at the July meeting.

“That is an initiative from Outagamie County,” Kriefall said at the executive committee meeting. “It is an advisory (referendum) to show that we are in support of that. Right now, it is hung up in the Legislature and we want to make sure the Legislature addresses it.”

The referendum asked voters to support two bills introduced by Sen. Duey Stroebel and Rep. Robert Brooks, specifying how commercial properties are valued by municipal assessors to prevent the legal challenges that have been taking place in the previous few years.

Supporters had tried to persuade legislators to vote in favor of the two bills during the end of 2017 but could not convince enough of them to pass the legislation.

That stemmed from a decision made by justices of the Wisconsin Supreme Court, when they sided with representatives from Walgreens during a 2008 lawsuit challenging their assessment for properties in Madison.

Walgreens executives use lease agreements with other parties when developing a site to open a retail location. They include the cost of purchasing the land, the construction of the building as well as other expenses such as taxes and operations.

They argued successfully that assessors should not incorporate the payments they receive from the agreements when valuing the property, effectively reducing its value along with the corresponding property tax liability.

The decision in that case has spurred other challenges in which corporate retailers argue their properties should not be valued when they are operating, but during the times when they are vacant or “dark.”

That has concerned municipal officials and advocacy groups, who contend it will cause a shift in the tax burden from businesses to homeowners. Municipalities must provide services to those areas, through road maintenance and emergency services, causing an increasing burden on operational expenses but with steady revenues.

Opponents claimed there is no uniformity in the assessments, that locations are valued differently even though they are similar in size with comparable characteristics. They also said that property values should reflect the land and corresponding equipment and supplies used to construct the facility — not the income generated from the location.

“It clearly shows the public is concerned about the amount of shifting and the fairness amongst property taxes,” Public Affairs Coordinator Ethan Hollenberger said. “It is a reaffirmation of the uniformity clause in the (Wisconsin) constitution for property taxes by the people.”

Advocates hoped the results Tuesday would demonstrate to legislators the amount of support the legislation had among the public. That it would be one factor among others to eventually create progress.

“The bigger change in the prospects of this is the governor change,” Hollenberger said. “Tony Evers being governor changes the dynamic in a way that presents an opportunity to get it passed with some more force from the executive branch.”

The strategy would be to include the measure in the budget.

“I would guess he would use it as a bargaining chip in the state budget,” County Administrator Joshua Schoemann said. “The budget is full of legislation.”