Sauk County leaders want to join forces with local municipalities against big businesses that use a legal loophole to lower their tax bills.
“I think we should do more locally, collaboratively with our other local units of government to resist this,” Tom Kriegl of Baraboo, a member of the Sauk County Board’s Executive and Legislative Committee, said Friday.
He was referring to the dark store loophole, which big-box retailers use to lower their property values and pay less in taxes.
The companies file lawsuits arguing that their properties should be valued only based on their brick-and-mortar structures. They say businesses that operate day-to-day should be valued the same as vacant, or “dark,” stores.
When the companies are successful in getting their tax bills lowered, officials say, that shifts the burden to ordinary homeowners.
Following a discussion Friday, the committee asked two officials to research ways the county might coordinate with local municipalities to fight the lawsuits.
They asked Sauk County Corporation Counsel Daniel Olson and Administrative Coordinator Alene Kleczek Bolin to bring back a proposal at a future meeting.
Kriegl said when a big box store sues the municipality that is responsible for its property tax assessment, other taxing entities within the county are not notified. And when a company is victorious, those other entities, including the county, are suddenly on the hook to provide a refund.
Olson said because of the impact on the county, it makes sense to try to coordinate with municipalities and stay ahead of the game.
He said large retailers have access to high-powered and resourceful legal teams that are experienced in dark store litigation, and it’s difficult for small municipalities to contest them.
“So you have some dynamics that really feed into not challenging, or not litigating, these cases, particularly in smaller communities,” Olson said. “If you get a coordinated, better-resourced resistance, that might be useful.”
The committee discussed the possibility of offering county support to municipalities that are sued by big box stores. That would prevent the county from being caught off guard by a settlement, because it would provide an incentive for municipalities to notify the county immediately when a lawsuit is filed.
Kriegl provided the committee with an analysis — based on data from the Sauk County Treasurer’s Office — that said contested assessments from 2009-2015 have impacted taxing entities within the county by at least $2.6 million.
Kriegl estimates that the tax hit jumps to $5.3 million when the lowered assessments are applied to years after the lawsuit.
In September, the village of Lake Delton agreed to settle a tax lawsuit with Great Wolf Lodge by paying the resort $52,486. The county, the Wisconsin Dells School District and Madison Area Technical College may have to fund a portion of that settlement even though they were not involved in the lawsuit.
Other businesses within the county, including Noah’s Ark waterpark, Walmart and Menards also have contested their property tax assessments.
In July, the board passed a resolution urging state lawmakers to create legislation “changing the manner in which valuation and property tax assessment are determined for large commercial retailers in order to close the Dark Store loopholes.”