Settlement in dispute over property tax assessment

BY KEVIN BONESKE

REPORTER/PHOTOGRAPHER

After meeting in closed session Monday night, the Rhinelander City Council voted in favor of refunding $15,994 to settle a lawsuit brought against the city by the Eau Claire-based Menard, Inc. over the property taxes assessed against the Menards store in the city for 2016.

Though the city has until Feb. 15, 2018, under the agreement to pay the entire amount to the law firm representing the company, interim city administrator Keith Kost said the settlement includes the total refund from all the taxing entities combined, of which the city’s share is approximately $7,323.

Kost noted the other taxing jurisdictions, of which the School District of Rhinelander has the largest remaining share of the refund at approximately $6,558, would contribute their portions of the refund back to the city.

Had a settlement not been reached, Kost said the school district indicated it was willing to help pay the city’s attorney fees to challenge the lawsuit. The city had retained the law firm of von Briesen & Roper as a special counsel to handle the case, for which Kost noted the city’s cost for the attorney fees upon reaching a settlement was “not substantial.”

Menard, Inc. had alleged in the lawsuit that the total assessed value of the company’s property at 2221 N. Stevens St. for 2016 of $8.4 million, as set by the city assessor and affirmed by the city’s Board of Review, was more than $2 million higher than the property’s fair market value, which the company claims was no higher than $6,131,581 as of Jan. 1, 2016.

The company claimed the 2016 assessment imposed on the property was at least excessive by $51,829.80, the amount Menard, Inc. initially sought as a refund.

As a result of the settlement being reached, Kost said the company’s property assessment for 2016 will instead be $7.7 million with the 2017 assessment set at $8.4 million, for which Menard agreed not to challenge as being excessive.

“This was a very favorable settlement to the city and the other tax districts,” Kost said.

The effort by Menard, Inc. to lower its assessment at stores in Rhinelander and elsewhere in the state has used the so-called “dark store theory” as the basis for determining the value of the properties, in which lower taxes on those stores have been sought by arguing they are similar in value to vacant (i.e. “dark”) stories.

The City Council previously went on record by passing a resolution urging the state legislature to pass legislation to disallow large retailers such as Menards from using the “dark store” loophole to reduce the assessment.