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Janesville sees increase in big box retailers suing over assessments

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Neil Johnson
July 10, 2014

JANESVILLE—The city of Janesville is being sued by a growing number of local big box retailers who say their city property tax assessments are too high.

Within the last 30 days, local retailers Sears, Target, Blain Supply and Menards have filed lawsuits in Rock County circuit court arguing that 2013 city assessments have generated tax bills that are higher than the companies' own assessment of the properties. 

The companies are asking the court in four separate lawsuits to order the city to refund the difference in tax money, according to court filings.

Between the four companies, the suits seek property tax refunds totaling $419,000, with the largest amount—a $217,000 return—being sought by Menards, according to court papers.

The city of Janesville has seen 20 such suits land in the courts in the last three years, according to city assessor records. That's a small fraction of the 24,000 properties in Janesville.

And the amount of tax money involved represents just six tenths of one percent of the city's total of $90.6 million in property taxes, city Assessor Richard Haviza said. 

But what's significant is that a growing proportion of the city's active property assessment lawsuits—22 percent of them—are now tied to assessments of big boxes and large retailers.

The sudden blip of four large Janesville retailers suing at once can be attributed to statutory time limits on tax disputes. But Haviza said other cities around the state are seeing more large retailers suing over assessments.

“I think that if there is a pattern, my perspective is it's the fact that you have certain property owners that are doing this across the state on their properties. I don't know that they're doing this in other states, but I know it's more than a couple companies,” he said.

He said the city's outside counsel that handles property assessment lawsuits reports there are “200 or 300” such tax disputes active statewide, with a growing number coming from big retailers.

Haviza said there isn't a clear explanation, other than the fact that larger retailers tend to have larger assessed property values, and hence, higher tax bills.

Haviza said Menards has had suits over assessments in several other communities in Wisconsin in the past few years. Most recently, the company sued the village of Mount Pleasant over a property assessment.

Since 2011, Target Corporation has had 10 property tax disputes against communities across Wisconsin, according to Wisconsin's Circuit Court Access website.

Assessment lawsuits suits reach the courts once property owners are denied an adjustment in assessments through local open-book reviews and appeals to municipal boards of review and city councils.

The city of Janesville denied all four retailers' claims earlier this year.  

The city of Janesville typically denies excessive assessment claims, and Haviza estimated that about 60 percent of the city's assessment cases that reach the courts either are dismissed or have ended with the court upholding the city's estimated assessment. 

Haviza said the city of Janesville has not changed how it calculates assessed value of properties, which is a major factor in determining property tax bills.

He said the city follows state law, and uses rules and methods for calculating assessed value that are “pretty universal” across the state. He said the city's main benchmark for assessed value is “arm's length sale” or recent sale value of comparable local property.

In some cases, companies or the attorneys that represent them arrive at a different assessment, based on their own market calculations.

“At the end of the day what it boils down to is there is a difference of opinion on the value of property,” Haviza said.

Don Millis, an attorney for Wisconsin-based firm Reinhart Boerner Van Dueren, the firm that has brought the assessment suits against the city for Sears, Blain Supply and Target, said he doesn't believe there is a breakdown in how Janesville handles its property assessments.

“There's no sea change in Janesville,” Millis said. “From a practical standpoint, our clients have a lot of stores, a lot of locations.”

He said his firm analyzes real estate and business market trends to arrive at assessment estimates for clients, and if it spots assessments that appear out of line, it advises companies to consider contesting them.

“We're doing the same thing as the assessors, we just don't see it the same way,” he said.

Millis said the current trend in some markets is that there is more available retail real estate and less demand for it, which could affect fair market property value calculations.

At the same time, he said larger retailers are under the gun with lingering market pressures held over from the Great Recession, including large inventory and decreased demand.

Millis indicated that could be a reason why more retailers are moving forward with property tax disputes, although he said his firm is not given and does not analyze information from clients on local or regional store performance.



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