Fiscal Note
The proposed resolution authorizes a $101,540.25 tax refund pursuant to a settlement agreement. The subject properties consist of two Shopko retail stores located at 2201 Zeier and 7401 Mineral Point Road in the City of Madison. The refund will be paid through a reduction in property tax revenue budgeted in the 2018 Adopted Operating Budget.
Title
Authorizing the settlement and payment of a tax refund for tax year 2016 and 2017 for Shopko Stores Operating Co., LLC v. City of Madison, Dane County Circuit Court Case number 17CV1248, 2018CV1653 and 2018CV1652. Authorizing entry into settlement agreement for two Shopko properties for tax years 2016 and 2017 for a total refund of $254,275.79 and approving payment of approximately, $101,540.25 from City resources to represent the City’s share of the settlement.
Body
Background
The subject properties consist of two Shopko retail stores located at 2201 Zeier and 7401 Mineral Point Road in the City of Madison. The two parcels sold in 2015 for $10,000,000 (Zeier) and $11,304,000 (Mineral Point). The two parcels were sold by a REIT and the buyers were two non-related parties. Shopko has long-term triple-net leases in place until approximately 2029 for both locations. The City set the 2016 assessments at the subject sale prices.
Shopko filed an objection with the Board of Review and presented what is commonly know as “Dark Store Appraisals” with opinions of value which consisted of $3,870,000 (Zeier) and $4,200,000 (Mineral Point). The “Dark Store theory” is a methodology that only utilizes sales comparisons of similar big box retail stores that are vacant. The Wisconsin Property Assessment Manual and Wisconsin case law caution assessors against using dark and/or distressed properties as sales comparables. The Board of Review sustained the assessments and Shopko subsequently sued the City suit for excessive assessment and violation of the Uniform Taxation Clause of the Wisconsin Constitution.
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