The curtain might be falling on the dark-store legal theory in Wisconsin, but it’s possible big-box retailers will find another method to reduce their property tax assessments, a Janesville official said.
Dark-store lawsuits returned to headlines earlier this week after Gov. Tony Evers said he planned to outlaw the legal strategy in his first state budget. Often used by large retail corporations, dark-store lawsuits compare fully operational businesses to vacant buildings of similar size in an effort to reduce their valuations.
Janesville and other municipalities have lobbied the state Legislature to prohibit the dark-store strategy, but bipartisan bills to do so died on the Capitol floor. Advisory referendums to ban use of the strategy passed overwhelmingly across the state in November.
Although City Assessor Michelle Laube is “cautiously optimistic” the Legislature will forbid dark-store lawsuits, companies might still find ways to reduce their tax bills, she said.
“They can’t use the comps of the vacant dark stores, but what are the comps they’re going to give us now? Or maybe they will go away. I don’t know,” Laube said.
“That’s our hope, but we won’t know until after the legislation is passed and in effect. We’ll see where things go from there. I wish I had the crystal ball.”
Municipalities typically don’t have the financial or legal resources to compete with corporate attorneys, which often leads to settlements. When one business’s assessment falls, other taxpayers must cover the difference to meet the tax levy, Laube said.
In August, Laube told The Gazette that the average Janesville home could see a tax bill increase of $26 if 11 pending assessment appeals were successful. The city considered three of those—coming from Woodman’s, Walmart and Sam’s Club—to be dark-store lawsuits.
The city council Monday night will consider approving two payments to Woodman’s totaling more than $90,000. Monday’s meeting will finish with a closed session to discuss the city’s strategy in its pending cases with Walmart and Sam’s Club.
Laube declined to comment specifically on any of those three cases.
Woodman’s, 2819 N. Lexington Drive, was assessed at $15.9 million in both 2017 and 2018. A private appraisal that did not assess the gas station or car wash building valued Woodman’s at $8.8 million, according to a city memo.
The city agreed to reduce the Woodman’s assessment to $14.2 million. Janesville will pay roughly $32,000 of the accompanying $90,000 tax refund; the rest will come from other local taxing entities such as the county and school district, according to the memo.
Even if Evers enacted legislation to ban dark-store lawsuits, it wouldn’t affect Janesville’s pending cases, Laube said.
The city might see more property assessment appeals—not necessarily related to the dark-store strategy—this summer from homeowners and small businesses. That’s because the city is undergoing a full revaluation of all commercial and residential properties.
Change notices are scheduled to be mailed in May.
Laube estimated the city will send out 26,000 change notices in 2019 instead of the typical 3,000 per year because every property is getting checked.