Fiscal Note
The proposed resolution authorizes a $76,036 total tax refund pursuant to a settlement agreement and approves payment of $30,360 from City resources to represent the City’s share of the settlement. The subject property is located at 1255 Fourier Drive. The city's share of the refund will be paid through a reduction in property tax revenue budgeted in the 2025 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 for 1255 Fourier LLC v. City of Madison, Dane County Circuit Court Case number 2024CV001488. Authorizing entry into settlement agreement and approving payment of approximately $76,036.22 from City resources to effectuate the settlement, $30,360.03 represents the City’s approximate portion of the settlement. (District 9)
Body
Background
The subject property is an office building with 129,782 square feet of rentable space which completed construction around 2018. Sauk Trails Plaza II, tax parcel number 0708-151-0310-9 located at 1255 Fourier Drive. The subject property is in excellent condition and is located in one of the most desirable office parks in the City of Madison. The assessment of this property was challenging given the effect of the pandemic and increase in remote working causing volatility in the demand for office space. 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, impacting the assessed value of the subject property.
The City set the assessment and the Board of Review sustained the assessment 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. 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 assessment.
2023 assessment of $33,002,100.00 reduced to $28,500,000.00.
The tentative settlement based on recalculated assessments for tax year 2023 would result in a total refund of approximately $76,036.22. This resolution seeks approval of the settlement agreement with 1255 Fourier LLC along with all other approvals necessary to carry out the settlement including adjusting the City’s revenues.
Under the proposed settlement, 1255 Fourier LLC would be paid a total of approximately $76,036.22 as a refund for tax year 2023 and in turn the parties would stipulate to the dismissal of the lawsuit. 1255 Fourier 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 $30,360.03.
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 $76,036.22 to settle tax year 2023.
4. The City’s share of the settlement is approximately $30,360.03.
Resolution
WHEREAS, 1255 Fourier LLC pursued an action against the City of Madison for excessive assessment for its property located at 1255 Fourier Drive for tax year 2023; and
WHEREAS, 1255 Fourier 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 $76,036.22 with no additional interest or costs.
NOW, THEREFORE BE IT RESOLVED, that the Common Council authorizes the payment of approximately $76,036.22 from City resources to 1255 Fourier LLC, in full settlement for tax year 2023;
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 $30,360.03.