City recommends settling Blain Supply lawsuit

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Jake Magee
Thursday, February 9, 2017

JANESVILLE—The city is poised to settle another lawsuit from a business claiming Janesville incorrectly assessed its property value, leading to higher taxes.

City staff is recommending the city council settle lawsuits Monday with Blain Supply, 3501 E. Racine St. The business is suing Janesville for assessing the property's value higher than Blain representatives believe it is worth, according to a memo to the council from assistant city attorney Tim Wellnitz.

The property is assessed at $19.7 million. The company believes the property should be assessed at $12 million and that it was improperly assessed from 2013 through 2016.

A settlement has been negotiated to settle the claims and assess the property for $17 million for 2013 and 2014, $16.25 million for 2015 and $15.5 million for 2016. The total refund to Blain Supply equals about $327,000.

“The recommendation from staff is to go ahead with the settlement based upon the risks versus the benefits of what could happen with the trial if we didn't go ahead with the settlement,” Wellnitz said.

The city's contribution, which would be paid through its reserve fund, equals about $110,000. The remaining $217,000 would come from back-charging the other taxing jurisdictions, including the Janesville School District, Rock County and Blackhawk Technical College, Wellnitz said.

“Unfortunately, that's how the cookie crumbles,” council President Sam Liebert said.

Settling these suits is cheaper than fighting them in court, but it sets a dangerous precedent, Liebert said.

Other businesses might see Janesville's willingness to settle as a way to win easy money suing the city over assessed property values. Several lawyers only charge for such cases in the event the client wins, so there is little risk for those who might sue, Liebert said.

Such lawsuits also hurt taxpayers, he said.

“By us lowering their assessed value, not only are they going to get this money back, but also that means everyone's taxes across the entire city go up just a little bit,” Liebert said.

The lawsuit is an example of the “dark store” lawsuits that have surfaced recently. In such suits, businesses claim their use of a given property is unique and that the parcel wouldn't sell if the business left, so its assessed value should be comparable to a nonoperational business—a dark store.

The council will likely vote to settle the matter, but Liebert plans to pull it from the consent agenda and vote against settling Monday. Such lawsuits should be fought, he said.

“No city wants to be that first one to do it, so the strategy seems to be to roll over and capitulate and pay these highway-robbery men, if you will,” Liebert said.

In Liebert's six years on the council, he has seen about a dozen similar lawsuits, he said. The city has probably paid about $900,000 to $1 million in the cases, about two-thirds of which was money given back to the businesses with the remaining cost being legal fees, Liebert estimated. About five or six similar lawsuits are pending, he said.

Monday's agenda is minimal and includes no old or new business—a first for Liebert.

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