State Rep. Jimmy Anderson
Press Release

Republicans Lower Walmart’s Property Taxes, Raise Yours

Local governments and taxpayers will continue to pay for tax loophole

By - Feb 13th, 2018 03:48 pm

MADISON – Today, Assembly Republicans voted against closing the ‘Dark Store’ loophole. Based on a Supreme Court decision in 2008, big box retailers are allowed to base their tax assessments on their value as a vacant store rather than a store in operation. This so-called ‘Dark Store’ loophole saves corporate retailers millions of dollars and shifts the burden of those savings to homeowners and other businesses.

“I am disappointed, but not at all surprised that Assembly Republicans sided with big box retailers over their local governments today. Walmart and WMC have been lobbying the legislature for months” said Rep. Anderson. “Any way you look at it, leaving this loophole open shifts the tax burden away from huge retailers and onto local property taxpayers.”

“Speaker Vos threw a fit on the floor because we tried to hold a vote on a bill that has 28 Republican co-sponsors in the Assembly. It has 22 Democratic co-sponsors. The platonic ideal of bi-partisanship! This bi-partisan piece of legislation was supported by local governments and local elected officials all across Wisconsin.”

To cite just a few examples of retailers using the dark store loophole to avoid paying taxes:

  • Using the Dark Store Loophole, Menards reduced the value of its property in Fond du Lac, from $9.2 million to $5.2 million.
  • A CVS property in Appleton reduced the value of its property from $4.4 million to $1.8 million. Local taxpayers are now on the hook for a $350,000 refund.

“We can get this done before the legislative session ends. We simply need the political will from the Republican leaders in the state capitol to make it happen,” Rep. Anderson concluded.

More about the Dark Store Loophole

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8 thoughts on “Republicans Lower Walmart’s Property Taxes, Raise Yours”

  1. Troll says:

    Jimmy you may want to clarify the issue more. Though you emphasizing Democrats good.. Republicans bad..wins you this audience.

  2. Adam says:

    @Troll-

    What is there to clarify? This bill enjoyed broad bi-partisan support, but special interests won again. Republican leadership is owned by special interests. This fact is not debatable and is decidedly bad for most WIsconsinites.

  3. Tim says:

    The only way to fight this is to expand the dark store loophole. Assess every property as though it were foreclosed.

  4. Mike says:

    The assessors have pulled the wool over the eyes of the public and of the legislature. There is no loophole! Real estate goes vacant all the time, that does not mean that it’s abandoned or even in a bad location. To the contrary! Big box retailers build their stores in locations generally surrounded by other retail properties. There are vacant big box stores that were vacated in some cases because the user wanted more space. If they don’t have space to add to their current building they build across the street or down the block leaving the old store vacant, but in no less condition or location.

    One reason these properties sell for so little is a simple supply and demand issue. The fact is that there are very few buyers for such a large single tenant building. They can’t be reused as warehouses because they are not in industrial areas and don’t have the infrastructure or the structural elements needed by a warehouse user. When you sell your home and leave before it sells, is your house worth any less? No, because the real estate market (the people who are buying homes) assumes you will be gone and it pays what the “Fair Market Value” of your house is. It’s no different with any other property type.

    Another reason is that these are custom buildings. Target won’t buy a Walmart, a Home Depot won’t buy a Menards, etc. because they want to use their own model so when you walk in the door, everything is the same another building of the same brand.

    Why would they pay more than they could sell it for? Because they don’t plan to sell it and they are enjoying the custom nature of the property. I’m a Vikings fan. If I move to Green Bay and build a Vikings themed house with carpet inlays of Vikings horns and purple tile in the kitchen and bathrooms it will cost far more than a standard house to construct due to the custom features, yet what would the market pay me for it? Not much because there is no market for Vikings homes in Green Bay. Why would I build it? Because I will enjoy the custom features and that enjoyment makes it worth it to me, not the real estate market, but me. This is the same with any custom built property.

    The national average sale price for big box stores is around $27 per square foot, yet the big box owners are trying to make deals with assessors at $40 to $55 / SF recognizing the budget issue these refunds are causing. Assessors have made up the Dark Store theory as a way to place blame on big bad corporations instead of fixing the problem the assessors caused.

    Changing the way we value property for big box properties (what they are trying to do in the legislature) is inequitable and unconstitutional. Courts nationwide are ruling in favor of the big box retailers because in court, the judges are hearing the whole story as opposed to the scary story the assessors are selling.

    Using sales of vacant stores is how all real estate is valued (you vacate your house and the next person buys it) the vacancy is a mandatory circumstance when purchasing an owner occupied property – if it isn’t vacant the new user can’t really use the building right? The market dictates what it is willing to buy these properties for. If a big box building is in poor condition or in a lesser location, appraisers make adjustments to account for these factors. This is appraisal 101. How do I know? I’m a senior accredited assessor…and a staunch democrat.

  5. Tim says:

    If you have an oil well, you don’t pay taxes on the value of an empty well.

  6. Troll says:

    Thanks, Mike for your insight.

  7. Mike says:

    Tim, while what you say is true, it doesn’t apply to real estate. The difference is that you can’t refill a well, but real estate refills all the time. What you suggest is that if you move out of your house, the value decreases, which is false. Again, were talking about owner occupied real estate, which only sells as vacant, just like a house.

    Occupied real estate often does sell for more, but it generally isn’t because of the real estate, but because there is a lease that wasn’t based on what the market would pay. Built to Suit is a term that means that the property was custom built for a specific user (back to the Green Bay Vikings house). These users are most often national brand retailers. As a financing tool the builder/owner and the user/tenant enter into what they call a lease, but it’s really a mortgage and it includes the customized building, rent, profits to the owner over time, etc. If the user for which the property was built leaves, the next user wouldn’t pay for anything besides the real estate. Investors buy the build to suit leases (which includes the real estate) which provides the buyer with an income stream higher than they could achieve by leasing a building at market rates and there is often very little risk because these national brands will continue to pay rent even if they vacate the property. High rent with low risk equates to a high sale price, but while the sale price includes the real estate, what is being purchase is an over market rent and low risk.

    Fee Simple valuation (the method we use for property taxes and the method used by appraisers who value single family homes) is the value of the real estate only and is based on what the market would pay for the real estate only. Occupied or vacant the fee simple value is the same because regardless of what the property is being leased for (if it’s leased) the appraiser applies market rates to estimate the value. The market rates are based on what other “like kind” properties sell for (hence using the vacant property sales just like the appraiser does for single family homes) and what the market has demonstrated it would pay for rent, but not the build to suit rent, the rent that the property would lease for if there was a “For Lease” sign on it (which would also require it to be vacant).

  8. Mike says:

    Also Tim, you say that we should assess all properties as if they are foreclosed. No one is using sales of foreclosed properties to estimate market value, they are simply using market transactions to demonstrate market value, which is the only way to do so. If the legislature decides to pass the bills on the table, your taxes will sky rocket because the method used to value one property will have to be used to value all properties. No longer will single family homes be based on what like kind home sell for (those are vacant and the legislation restricts using vacant sales), but they will have to look at your personal income and other non fee simple, non real estate criteria to estimate the value.

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