City of Marshfield Settles with Menards Over ‘Dark Store’ Dispute

Menards Reaches Agreement with City to Lower Property Taxes for 2020

Marshfield, WI (OnFocus) The City of Marshfield and Menards have reached an agreement over the store’s assessed property tax value that prevents a trial expected for this year.

Menard, Inc. and the City were engaged in litigation in Marathon County Circuit Court over the property tax assessment for the store property for the tax years 2017 and 2018, part of a “Dark Store Loophole” that has spurred other big retailers like Walmart and Walgreens to challenge communities to reassess property tax values as if the stores were vacant.

Menards had challenged the City to decrease its assessed value from $8.2 million to about $5.9 million.

Common Council discussed a stipulation agreement between Menard, Inc. and the City of Marshfield in closed session on Tuesday. The motion to approve the agreement passed 5-3 in open session with Aldermen Tom Buttke, Adam Fischer, and Ken Bargender voting no.

As part of the agreement, the City will reduce the 2020 assessed value for the Menards property from $8,714,600 to $8,200,000. Menard also releases any claims against the city for the tax years of 2017, 2018, and 2019, ending those challenges but not precluding any future ones.

The City and Menards had engaged in a mediation process which softened the initial request to reduce their assessed value to $5.9 million.

“Eventually over time Menards relented a bit, and now they’ve basically asked for a settlement for roughly for what we’ve had them at — $8.2 million,” said City Administrator Steve Barg. “Because they did some minor improvements, they’re asking that that not be included this year’s assessed value.” (Editor’s Note: see amendment below*)

As part of the agreement, each party is responsible for their own attorney fees and experts.

The League of Wisconsin Municipalities has had favorable rulings in court against big box stores regarding the dark store loophole, but going to court is “a roll of the dice,” according to Barg.

“If the City had decided to go to court and fight this down to the death and not give one dollar of concessions, we might well have lost,” said Barg. “We believe that this is a good ultimate decision for the City.”

The City is still facing a challenge from Walmart over its property tax assessment which may head to trial later this year, as no conclusions have been reached through mediation.

“The Council is obviously concerned with this. Anytime we agree to reduce the value, that means tax money lost and we need as much tax money as we can get to fund services, otherwise we have to increase taxes on other people,” said Barg. “But we’re not intending to bend much from our position that these are what these properties are worth, but we’d like to resolve them if we can without going to court.”

Menards and Walmart have been the only two retailers in Marshfield so far who have challenged their property tax assessment in relation to the dark store theory.

 

* 9/3/20 clarification from James Toth, City Assessor: Mr Barg stated: “Because they did some minor improvements, they’re asking that that not be included this year’s assessed value.”

In reality, new improvements are included in the valuation.  The overall lowering of the value was due to a concession on the land value to achieve a settlement that was both equitable and good for the community.  (Appellants can only object to the whole value not the individual parts of an assessment.)  Not valuing improvements due to new construction would be a wrongful change and would also reduce the Net New Construction amount which is used to capture new taxes.  (Without going into detail, increases in the municipal levy are limited to the amount of change due to new construction less demolitions.  Menards added a new outbuilding and service area onto the store.)

 

Dark Store Loophole: Walmart and Menards Take Action Against City to Lower Assessed Value