Target Corporation’s call-out for a price check on its property evaluation of its S. Grand Avenue store has ended with a refund for the big-box retailer.
The Minneapolis-based corporation said it was overtaxed on its store property at 660 S. Grand Avenue and sued the city.
The store will get a $42,428 refund, in a settlement approved by the city council on Sept. 17.
The company’s lawsuit against the city claimed its S. Grand Avenue property was overtaxed for 2017 and 2018 and was due a $177,116 refund.
It’s the second time in the past five years the city has settled with Target over property assessments. The city refunded $85,020 in property taxes when the company challenged is 2012-2014 property assessments.
The settlement, approved by the City Council on Tuesday, will impact the city, the Sun Prairie Area School District, Dane County, Madison Area Technical College and the state.
City staff recommended the settlement because challenging the case in court would have been costlier.
The city assessed the property at $8.9 million for 2017 and 2018, but Target claimed in its lawsuit that the correct assessment should have been no higher than $5,042,157 for 2017 and $5 million for 2018.
As part of the settlement, the city agreed to not exceed an $8,165,033 assessment for 2019 on Target’s property.
Statewide, big-box retailers have sued municipalities challenging tax assessments and getting big dollar refunds, as the companies try to reduce operation costs and be competitive.
Target, Woodman’s and Walmart have all received settlements within the last four years when the companies sued over tax assessments—ending up with $313,353 in tax reductions/refunds.
City officials estimated the Walmart and Woodman’s tax settlements brought an $11.16 increase on an average ($258,000) city home.
The Target settlement OK’d this week will increase taxes 59 cents on an average home ($260,000), according to City of Sun Prairie Director of Administrative Services Connie DeKemper.
Sun Prairie attorney Don Millis represented Target and said in a previous interview that property assessment challenges are all about businesses trying to keep costs down. He also cited problems with mass assessment procedures, that he said are even more difficult in the fast-growing City of Sun Prairie.
More businesses are using the “dark store” and other strategies to get refunds from municipalities. In 2017 there were 79 “dark store” appeals in Wisconsin, compared with 63 in 2016, and 66 in 2015, Wisconsin Public Policy, a non-partisan research group, reported last August.
City of Sun Prairie voters approved a November 2018 referendum to end loopholes corporation use to cut their tax bills.
City officials said the referendum could put pressure on state lawmakers to end tax avoidance strategies such as prohibiting business property owners from using closed, vacant (dark) properties for determining the assessed value of open, occupied and fully operational property.
Lawmakers introduced a bill earlier this year that they say would close the dark store and Walgreens property tax loopholes. The bill is being reviewed in committee. A public hearing on the bill was held Sept. 18.