This past Tuesday, for 90 minutes, the Racine County Government Services Committee heard arguments on both sides of the “dark store” loophole issue.
It took 90 minutes because the issue is complicated.
A lot of people act as though this issue is cut and dried and that it can be summed up into a one-sentence referendum question. It cannot be.
The “dark store loophole,” broadly defined, allows businesses that appeal their property tax assessment to occasionally use empty stores or vacant land as evidence for the lower amount.
Dan McHugh, assessor for the Mount Pleasant, said, the village has “continuously been in litigation with large retail properties who have been appealing their assessments repeatedly.”
For example, McHugh said the Walgreens store at 6125 Durand Ave. sold for roughly $6.3 million but, “When they appealed their assessment, they asked that it be lowered to $1.75 million. I don’t know about you, but my home is not assessed for one-third or less than what I paid for it.”
McHugh said Mount Pleasant was recently served with three lawsuits: two from area Walmarts; and one from Roundy’s, which owns Pick ‘n Save, challenging their assessments.
“This is what we’re dealing with: values that are cherry-picked and have no basis in fact,” McHugh said. “Then we’re going to be in court the next three years defending this value, trying to protect our tax base.”
However, it’s not as simple as McHugh describes.
Cory Fish, director of tax, transportation and legal affairs for Wisconsin Manufacturers and Commerce, explained to The Journal Times: The dark stores legislation would allow tax assessors to value occupied property higher solely because of its occupancy. For example, if you had two homes identical in every respect except that one was occupied and one was vacant, the occupied home would be assessed and taxed more than the vacant one—even though the fair market value would be the same for each home.
No rational buyer would pay more for the occupied home than the vacant one. The same should hold true for businesses. The property tax is meant to value the land and improvements, not the commerce that is going on inside the walls of the business; that is what the income tax is for, Fish explained.
While no one wants homeowners to have to pay more in taxes, we also don’t want to scare away businesses because of taxes. Already, many retailers have shut their physical doors because of online sales giants like Amazon.
Does it make sense for Walgreens to have to pay more, just because of their Walgreens sign? Shouldn’t the value of the building be the same with or without the sign?
As we said at the beginning, the issue is complicated. Legislators need to take the time to fully understand both sides before making any legislative decisions.
One thing is clear: Something needs to be done.
These cases cannot continue to be litigated in court. That is costing residential and commercial taxpayers and is a losing battle for both.