During open session, the Menomonie City Council passed a resolution asking state legislators to approve current legislation that would close property law loopholes used by some national chain stores to substantially reduce the property taxes they pay.
In a closed session Monday night, the council was confronted with two real-world examples of just why asking Gov. Scott Walker and the Legislature to support the bill would prevent serious increases in the property taxes assessed to Wisconsin’s homeowners — who currently pay 70 percent of the state’s total levy.
Returning to open session, the council unanimously denied two excessive assessment claims for relief from 2017 city taxes. Filed with the city on Jan. 8, Walmart was seeking to have the assessment of its distribution center’s property at 6100 3M Drive dropped from $35.5 million to $23 million. And in a similar filing dated Jan. 24, Andersen Distribution — which leases property at 5929 Packer Drive N.E. from a holding company — asked that its assessment be reduced from $21.4 million to $17 million.
According to Andersen’s claim, the company is seeking a tax refund of $110,726.69 plus any applicable interest. The tax imposed on the Walmart property was $885,332.22. The company claims that based on comparable data, the property’s fair market value is considerably less and its tax obligation should be no higher than $572,525.
City Administrator Lowell Prange reported that the excessive assessment claims brought by Andersen and Walmart are the first of this magnitude the city has had to face. He noted that Bank Mutual filed a claim a year ago for a much smaller amount in the $3,000 to $4,000 range — rather than 7-digit reductions.
Regarding the potential hit to the coffers of not only the city but the county and Menomonie School District as well, Prange said, “Between the two entities, there would be a reduction of local property taxes of around $500,000 in what’s being requested.”
Prange said that it was actually coincidental that the claims — and the resolution on proposed legislation that would close the loopholes that allow large businesses to successfully make such claims — appeared on the same council agenda. The closed session agenda to discuss the claims was already set when the draft resolution from the League of Wisconsin Municipalities was received.
The resolution asks legislators to end the practice of what’s known as “Dark Store theory” primarily by big box stores but also other large commercial properties like distribution centers. The resolution explains how the “Dark Store” strategy works: “Some national chain stores ... argue that the assessed value of a new, thriving store should be based on comparing their buildings to vacant or abandoned stores from a different market segment.”
What makes this a problem is that it puts a “disproportionate burden of property taxes on homeowners that will worsen unless legislators take action to close loopholes in property tax law that some national chain stores use to gain substantial reductions in property taxes.”
The lawsuits that ensue force local governments to lower the market value of thriving chain stores which shifts the tax burden to the owners of local businesses, apartments and home.
Legislation to close the loopholes that allow that to happen — and which reportedly has enough bipartisan support in both the Wisconsin Senate and Assembly — has been drafted and introduced. But Prange said he received word from the League on Friday that although the legislators tried to make some amendments to the proposed bills, “It looks like it’s going to be dead for this legislative session.”