November/December 2020 Issue

Also in this issue: Can Employers Require Employees to Get a Covid-19 Vaccine? Possibly, but Legal and Policy Questions Remain.     |     City Cannot Appeal Reduction in Assessed Value by Board of Review     |     Municipalities Must Give New Unemployment Insurance Notice to Employees

Village of Plover Wins Tax Case; Dark Store Argument Fails

12.03.20

The Village of Plover won a big property tax assessment case when the Wisconsin Court of Appeals affirmed the Circuit Court’s approval of the valuation made by the Village. The taxpayer, a large Lowe’s store, had argued that its value should be based on empty big box developments, the so-called ​“Dark Store” theory. Lowe’s Home Centers LLC v. Village of Plover, 2019 AP 974 (Fourth District, October 29, 2020, not recommended for publication).

Lowe’s built its big box store in Plover in 2005. It was assessed at $7.35 million every year since then. In 2016, Lowe’s challenged the assessment, arguing that the property was only worth $4.62 million. After a trial, Judge Flugaur of the Circuit Court for Portage County found that Lowe’s had not overcome the presumption of correctness in the Village’s assessment, rejecting each argument made by Lowe’s.

The Court of Appeals affirmed, agreeing with the Circuit Court that each of Lowe’s arguments lacked merit.

First, Lowe’s argued that Plover had failed to examine the value of the property each year and that it just let the original assessment stand. Plover showed that it has used the ​“mass appraisal” method, authorized under Wisconsin law (see Metropolitan Assocs. v. City of Milwaukee, 2018 WI 4, ¶40, 379 Wis. 2d 141, 905 N.W.2d 784, and the Wisconsin Property Assessment Manual (WPAM)). The Court of Appeals agreed that Plover properly used the mass appraisal method, which allows for adjustments of assessments based on data applied uniformly across the jurisdiction. Since Plover properly used a legal method of appraisal, the fact that the value did not change was not dispositive.

Second, Lowe’s argued that the property should be assessed by comparison to other similar sales. But Lowe’s used only sales of properties that that were vacant or ​“dark.” The Court of Appeals, like the Circuit Court, relied on explicit language in the WPAM that the assessor ​“should avoid using sales of improved properties that are vacant (‘dark’) or distressed as comparable sales unless the subject property is similarly dark or distressed.” Since Lowe’s was a fully operational store in a thriving commercial area of Plover, Lowe’s use of the Dark Store theory was wrong.

Finally, the Court agreed with the Circuit Court’s analysis of Plover’s assessment method, and declined to disturb the lower Court’s finding that the cost approach by the expert for Plover was more credible than the expert for Lowe’s. The Court agreed that, having found the cost approach by the Village to be the best shown, it need not engage in lengthy analysis of the income approach offered by Lowe’s.

The Lowe’s case shows the importance of preparation of a detailed case, with experts, by a municipality facing a taxpayer with a well-financed challenge to the assessment. Assessment challenges often turn on the factual details of each piece of property in comparison to similar properties. The Village of Plover’s work in this case was critical to the end result. Perhaps challenges based on the Dark Store theory will become less popular with more decisions like this one.