Fiscal Note
The proposed resolution authorizes an $85,305 total tax refund pursuant to a settlement agreement and approves payment of $33,833 from City resources to represent the City’s share of the settlement. The subject property is located at 4601 Frey Street Unit 400. The city's share of the refund will be paid through a reduction in property tax revenue budgeted in the 2026 Adopted Operating Budget. Other taxing jurisdictions (Dane County, Madison Metropolitan School District and Madison College) will pay their respective shares of the refund. If approved by the Wisconsin Department of Revenue, tax refunds can be recovered through levy limit adjustments.
Title
Authorizing the settlement and payment of a tax refund for tax year 2023 and 2024 for Frey Street Office, LLC v. City of Madison, Dane County Circuit Court Case number 2024CV001804. Authorizing entry into settlement agreement and approving payment of approximately $85,304.80 from City resources to effectuate the settlement, $33,833.42 represents the City’s approximate portion of the settlement. (District 11)
Body
Background
The subject property is an office condominium unit within the Springhill Suites Hotel located at 4601 Frey Street Unit 400, parcel number 0709-202-2302-4. The Subject Property is 22,830 square feet of built-to-suit rented space on the 4th floor of the hotel serving as office space for the Raymond Management Company which develops hotel properties throughout the United States. The subject property includes conference space, designated parking and a patio area completed in 2018.
The subject property is in excellent condition and is located in one of the most desirable office areas near Hilldale Mall in the City of Madison. The assessment of this property was challenging given the built-to-suit space for a condominium office located within a full-service hotel. The unique attributes and lack of comparable properties within the City of Madison required reliance on comparable properties from other jurisdictions where the comparable properties have higher vacancy rates and lower rent, impacting the assessed value of the subject property.
The City set the assessment and the Board of Review sustained the assessed values for 2023 and 2024 based on the best information practicably available at the time. The property owner brought suit in Dane County Circuit Court pursuant to Wis. Stat. § 74.37 as a claim for excessive assessment for tax year 2023 and 2024. Plaintiff hired an expert to conduct a retroactive appraisal of the subject property pursuant to the lawsuit and both parties engaged in discovery for the exchange of relevant information.
Settlement
Based on the additional appraisal and discovery conducted in this case the parties have reached a tentative settlement in this matter reducing 2023 and 2024 assessments.
2023 assessment of $8,420,000 reduced to $6,000,000.
2024 assessment of $8,420,000 reduced to $6,100,000.
The tentative settlement based on recalculated assessments for tax year 2023 would result in a total refund of approximately $44,233.89 and the 2024 tax refund would result in approximately $41,070.91. The City’s portion of the refund would result in approximately $18,772.73 for 2023 tax year and $15,060.69 for 2024. This resolution seeks approval of the settlement agreement with Frey Street Office, LLC along with all other approvals necessary to carry out the settlement including adjusting the City’s revenues.
Under the proposed settlement, Frey Street Office, LLC would be paid a total of approximately $85,304.80 as a refund for both tax years 2023 and 2024. The parties would stipulate to the dismissal of the lawsuit with prejudice. Frey Street Office, LLC will not be paid any additional interest, costs or fees. This resolution authorizes the City Attorney to sign the Settlement Agreement on behalf of the City of Madison. The City’s share of the settlement is approximately $33,833.42 for both tax year 2023 and 2024.
The City Attorney and the City Assessor recommend the approval of the proposed Settlement Agreement.
Necessary Authorizations
This resolution
1. Approves the Settlement as outlined above.
2. Authorizes the City Attorney to sign the Settlement Agreement on behalf of the City.
3. Approves the payment in total of approximately $85,304.80 to settle tax years 2023 and 2024.
4. The City’s share of the settlement is approximately $33,833.42.
Resolution
WHEREAS, Frey Street Office, LLC pursued an action against the City of Madison for excessive assessment for its property located at 4601 Frey Street, #400 in Madison, WI for tax years 2023 and 2024; and
WHEREAS, Frey Street Office, LLC and City of Madison have reached a proposed settlement regarding the 2023 assessment, which settlement the Common Council finds is in the best interest of the City; and
WHEREAS, the City Attorney, City Assessor, and Finance Director all recommend the approval of the settlement as described in this resolution; the City Attorney will subsequently enter into a Settlement Agreement for the following total tax refund of approximately $85,304.80 with no additional interest or costs.
NOW, THEREFORE BE IT RESOLVED, that the Common Council authorizes the payment of approximately $85,304.80 from City resources to Frey Street Office, LLC, in full settlement for tax years 2023 and 2024;
BE IT FURTHER RESOLVED, that the Assessor and other City staff are authorized to file for reimbursement (“Chargeback”) from other taxing jurisdictions pursuant to Wisconsin Department of Revenue procedures; and
BE IT FURTHER RESOLVED, that the City Attorney is authorized to sign the settlement agreement on behalf of the City of Madison; and
BE IT FINALLY RESOLVED, that the City’s share of the settlement is approximately $33,833.42 for both tax years 2023 and 2024.