Milwaukee Journal Sentinel

‘Dark store’ appeals on rise as issue hits ballots this fall

- Patrick Marley

MADISON - A new study suggests challenges to property assessment­s on big-box stores are on the rise, increasing the likelihood that the fight over so-called dark stores will continue into the next legislativ­e session.

A survey of 215 Wisconsin communitie­s released Tuesday found 79 of them had dark store appeals in 2017, up from 63 in 2016.

The review by the Wisconsin Policy Forum comes at a time when dark store legislatio­n has stalled and local government­s around the state are asking voters about the issue.

At issue is how local government­s assess the property value of big-box stores, which determines how much they owe in property taxes. When those stores get lower assessment­s, other businesses and homeowners typically have to pay a larger share of

the local government’s overall tax levy.

To determine property values, assessors can review the cost of building a store, the sales price of similar properties and the income a property can generate through leasing or other means.

Active stores contend their values should be based on the sale of similar properties, including ones that were vacant — or dark — when they were sold, rather than on the cost of building them or their income potential. Looking at other property sales shows what buyers are actually willing to pay, they argue.

But local government­s counter that thriving stores shouldn’t be compared to stores that were unsuccessf­ul and are are now vacant. Doing so has the effect of unfairly lowering the property values — and taxes — of active stores, they contend.

Lawmakers from both parties have offered legislatio­n to address the issue. Senate Bill 292 would prevent assessors from calculatin­g active stores’ property values by comparing them to dark stores.

Nineteen of the state’s 33 senators — 10 Democrats and nine Republican­s — signed onto the bill but failed to get the measure to the floor for a vote.

Jerry Deschane, executive director of the League of Wisconsin Municipali­ties, said he hoped the latest round of appeals by large retailers would get lawmakers’ attention.

“This thing is a snowball and the more it’s allowed to run downhill, the bigger it’s going to get,” he said.

The Wisconsin Policy Forum survey was conducted in conjunctio­n with the League of Municipali­ties. The policy forum does not take a stance on legislatio­n, but the league supports it.

Business lobbying group Wisconsin Manufactur­ers & Commerce opposes the legislatio­n because it believes it would force retailers to pay more than their share of property taxes, said Scott Manley, WMC’s vice president of government relations. He said the Wisconsin Policy Forum report helps his argument because it shows the issue of how retailers are assessed affects just a small part of the overall property taxes that local government­s levy.

“I don’t think it helps the Legislatur­e reach a conclusion that raising taxes on business is the right way to go,” he said.

The bill would have unintended effects, he said. If properties that are in use couldn’t be compared to vacant properties, then homeowners would face difficulti­es challengin­g their assessment­s when property values in their neighborho­ods declined because they couldn’t compare their homes to nearby abandoned buildings, Manley said.

Sen. Dave Hansen (DGreen Bay) blamed Republican­s who control the Legislatur­e for not taking action on the measure because of WMC’s opposition.

“They were more concerned about doing the bidding of WMC than the residentia­l taxpayer,” he said. “We should have been looking out for the taxpayers, the residentia­l taxpayers, and not the Menards and Shopkos.”

Hansen noted Senate President Roger Roth (RAppleton) — a sponsor of the bill — prevented a vote on the measure this year. Roth said he had to block that vote for procedural reasons that protect the minority party as much as the majority party.

Roth said the legislatio­n was held up because some senators couldn’t make up their minds on it after hearing conflictin­g informatio­n. Increased attention on the issue will help the bill’s chances in the next session, he said.

GOP Gov. Scott Walker during a stop in Kenosha last month said he would like to see the issue addressed early next year. He didn’t say exactly how he wanted to handle the matter, but Roth said he believes Walker would sign it if he wins re-election.

“At the end of the day, this is a property tax issue and no one over the last eight years has done more to protect property taxes here in Wisconsin than Gov. Walker and this Republican-led Legislatur­e,” Roth said. “We can’t allow all of that good work to be undone by having a backdoor tax shift between the commercial property to the residentia­l property, which is what happens if we don’t fix this dark store loophole.”

Walker’s Democratic challenger, Tony Evers, told the Wisconsin State Journal this spring that he supports the dark store legislatio­n.

Advocates of the bill are trying to turn up the pressure with local votes showing support for changing the law. In an August advisory referendum, 91 percent of voters in West Allis favored legislatio­n that would prevent using dark stores for assessment­s.

At least 13 other communitie­s are holding similar advisory referendum­s in November, including Waukesha, West Milwaukee, Kenosha and Brown and Walworth counties.

Meanwhile, a special committee is studying the issue and will present a report to the Legislatur­e next year. The committee consists of lawmakers and others interested in the issue, including a Kenosha-area assessor and a WMC lobbyist.

Bob Vujea, a property tax manager for Meijer Inc., wrote in a recent memo to the committee that the dark store legislatio­n would “severely limit an assessor’s ability to determine a property’s true value.”

Whether a property is vacant shouldn’t factor into how much it is worth, he wrote.

“A potential buyer is not concerned with the previous owner’s business,” Vujea wrote. “The buyer is purchasing the physical structure — not the business inside the structure — and that purchase determines the market value of comparable properties, whether vacant or occupied.”

 ?? MARK HOFFMAN / MILWAUKEE JOURNAL SENTINEL ?? Meijer and other retailers in Wisconsin want their property values — and their taxes — to be based in part on the value of outlets that have closed, known as “dark stores.”
MARK HOFFMAN / MILWAUKEE JOURNAL SENTINEL Meijer and other retailers in Wisconsin want their property values — and their taxes — to be based in part on the value of outlets that have closed, known as “dark stores.”

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