Dark Store / Walgreens Loophole (Article 1 of 3) / by Tom Roessler

Wisconsin Supreme Court delivers huge property tax break for Wisconsin retailers.  Read on to find out more...

History and explanation: In the 2008 Wisconsin Supreme Court case Walgreens vs City of Madison case, Walgreens argued that the assessed value of their properties for property tax purposes should be less than half of the actual recent sale prices of such properties.  The court concluded that the actual rents Walgreens pays should not dictate the value of the real estate for property tax purposes. Instead, assessors should value the property based on hypothetical “market rents”.  Since the decision, attorneys for Walgreens and CVS argue that the actual sale prices of their properties don’t represent market value.  Instead, the assessments should hinge on the amount the landlord could get if the drugstore moved out and a different retailer moved in.  The courts have agreed and these stores are now regularly assessed at half or less than half of their sale prices.

While courts in Wisconsin have not yet ruled on other types of properties, tax attorneys for large chain stores argue before assessors that the tax value of their new stores should be based on the value of closed retail properties in other areas.