The property tax bill of an average Janesville home could increase by more than $26 if pending property assessment appeals against the city are successful.
Janesville is involved in 11 pending appeals from local businesses. They are seeking a cumulative valuation reduction of about $30 million.
Residents would be affected because the city must collect a certain amount of tax revenue to support its annual budget. If there is less property value throughout the city, then each property owner would have to pay more to meet the tax levy, City Assessor Michelle Laube said.
If all the pending disputes are reduced by their full amounts, the average resident taxpayer would be on the hook for $26 of additional tax payment. That would be in addition to $22 in added tax burden the average resident is carrying because of previous assessment changes, she said.
Janesville has historically settled most of its valuation appeals instead of going to court, so the $26 figure is not likely to be fully realized.
Finance Director Max Gagin said most municipalities settle because it costs less than litigation.
Janesville considers three of the outstanding 11 appeals to be dark store cases. These often come from regional or nationwide businesses seeking more substantial valuation reductions than a typical assessment appeal.
The city’s three dark store cases come from Sam’s Club, Walmart and Woodman’s. In such appeals, the taxpayer wants its operational property assessed at the value of a vacant building of similar size, which would have the effect of lessening the tax burden for the business, Laube said.
Gagin said those vacant buildings used for comparison can sometimes be located in different communities with different demographics than Janesville.
The city uses several methods to appraise its properties. One approach accounts for a business’s income and expenses relative to similarly performing businesses, Laube said.
Factoring in a property’s potential income will lead to a much higher valuation compared to a property that assessors consider vacant, she said.
“They (appraisals) should all be relatively similar if the comparables used were similar. But there’s never a definite answer, and that’s what makes assessing hard,” Laube said. “There’s good answers, there’s bad answers but there’s never a definite answer.”
The income-based approach is only used for commercial properties. People typically don’t generate considerable income out of their homes, so the method does not apply to residential valuations, she said.
Janesville is not expecting any of its pending cases to be settled by the end of the year.
As for the $22 tax impact from past valuation changes and the potential to add to that, Laube said the only corrective method is to do a citywide assessment revaluation. Janesville has not done so since 2011, but it is entering the early stages of that process for 2019.