Menards 'dark store' suit against Howard headed to trial in 2018
Big-box retailer Menards and the village of Howard continue to battle over a $6.7 million difference of opinion on how much the company's store on Woodman Drive is worth.
The next round will be fought in court, now that the retailer has sued the village in a dispute over Howard's 2017 assessment of its store, on 18.7 acres at 2300 Woodman Drive.
Menards' lawsuit is one of more than 200 filed in Wisconsin by retailers citing "dark-stores theory," according to figures from the League of Wisconsin Municipalities. Dark stores theory enables retailers to pay lower taxes by arguing that their stores are similar in value to vacant stores — even if those stores are in other parts in the state.
Dark store challenges to local assessments have been upheld in courts throughout the state.
Menards' lawsuit against Howard is scheduled for trial in February 2018, Village Administrator Paul Evert said.
At stake is about $111,000 in 2017 school, village and county tax payments that would have to be refunded if the store wins the case. Howard-Suamico schools alone would lose about $55,000 this year if Menards wins.
When business taxes are reduced significantly, municipalities must cut spending, or have other taxpayers make up the difference.
Howard assessed the store at $12.45 million. Menard Inc., which said it spent $10.6 million on land and building costs, claims the store should be assessed at $5.8 million. Menards compares the site to closed stores that include a Beaver Dam Home Depot, a Sheboygan Sears and the long-vacant Cub Foods on Green Bay's east side.
Cub Foods, on an eight-acre site, is assessed for $1.8 million and pays $40,000 a year in taxes. A redevelopment project beginning this month is projected to raise its value to $5.5 million.
The tax bill for the Menards store is about $209,000 this year.
As retailers and local governments battle over the value of individual stores, state lawmakers are working to close loopholes that enable retailers to win dark stores cases.
A bill from Rep. Rob Brooks, R-Saukville, and Sen. Roger Roth, R-Appleton, would require assessors to determine assessments using "similar stores" in the same market. It also would prohibit them from treating vacant stores as comparable properties when valuing a working business.
A bill introduced by Brooks and Sen. Duey Stroebel, R-Saukville, would require that property be assessed "at its highest and best use." Effectively, that means an active business would have to be assessed as an active business.
The bills are being circulated as a growing number of communities presses for legislation to make it more difficult for retailers to win dark-stores lawsuits.
Brown, Fond du Lac and other counties this year adopted resolutions supporting legislative action. So did village boards in Ashwaubenon, Pleasant Prairie and Howard, and city councils in Appleton and Oshkosh.
"The purposes of these initiatives is simple," the authors said when they introduced be bills last month. "To ensure equity in the property-assessment process, and prevent more of the property tax burden from being shifted to homeowners."
The state's largest business lobby group, Wisconsin Manufacturers & Commerce, opposes the bills. WMC says they would increase the cost of doing business.
Presumably, that would prompt higher prices for consumers.
"Some overly-aggressive assessors have already tried doing this with larger retail stores and restaurants, leading to massive tax increases," the group said. "In some cases, retailers saw their property tax bill increase by over 500 percent."
By the numbers
The Wisconsin League of Municipalities, which opposes "dark stores" lawsuits, has compiled a database of Wisconsin cases involving challenges to business assessments.
The list of more than 240 cases, filed in 26 counties, dates to an action that Walgreen Co. brought in Madison in May 2004. Though not comprehensive, the database offers a deep look at corporate challenges to assessments across Wisconsin.
Most prolific challenger
Walgreen Co. has filed more than 70 court challenges to its assessments between 2004 and 2015, statistics from the Wisconsin League of Municipalities show.
That's the most cases filed by one company.
Overall, the Illinois-based retail-pharmacy giant sought assessment reductions in 19 counties, including Outagamie, Winnebago and Marathon.
Other frequent filers
Minnesota-based Target Corp. was the next most-frequent filer, with more than a dozen assessment challenges filed in nine counties.
Other retailers with multiple challenges include Sears Holdings Corp. and Blain's Farm & Fleet.
Online clothing retailer Lands End. Inc. was involved in nine court cases related to the assessment of its headquarters in Dodgeville. The dispute between the retailer and the city dragged pm for eight years until the state Supreme Court ruled in 2016 on the interest rate that the village needed to include in a tax refund to the retailer.
Not surprisingly, the state's largest cities had significant numbers of assessment challenges — at least 16 for Milwaukee and 10 for Madison.
But two smaller cities with significant retail presences, Oshkosh and Janesville, each had at least 10. Wausau, had at least eight, including four by Walgreens and two by Sears.
Other communities with five or more: Eau Claire, Fitchburg, Onalaska, Racine and Sun Prairie.
Such challenges have been much less common in northeastern Wisconsin. Little Chute faced four. Appleton and Grand Chute faced three apiece.
Ashwaubenon and Howard are among the Brown County villages that have faced challenges.