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An affiliate of Wisconsin Manufacturers & Commerce

Wisconsin Supreme Court Decision in “Dark Store” Case Contains Helpful Language for Taxpayers

On February 16, 2023, the Wisconsin Supreme Court issued its decision in the case of Lowe’s Home Centers, LLC v. City of Delavan, which involved a so-called “dark store” property tax assessment issue. Under Wisconsin law, if a piece of property was not sold recently, an assessor must estimate its value by looking at recent sale prices of comparable properties. Based on the specific facts of this case, the court determined that Lowe’s had failed to show that the city’s assessments were excessive. The court determined that the assessor had properly declined to consider sale prices of other stores that Lowe’s alleged were comparable to its store, reasoning that those sales were distressed and thus not comparable to the thriving Lowe’s store.

The supreme court, however, left open an avenue for businesses and other property owners to challenge their assessments as excessive. Crucially, the court noted that Wisconsin law does not “prohibit the use of vacant properties as comparable to occupied properties.” The court also noted that, although an assessor should generally avoid comparing a dark property to a non-dark property, not all vacant property is dark. Instead, as the court explained, vacant property “is considered dark when it is vacant beyond the normal time period for that commercial real estate marketplace.” Whether an occupied property is comparable to a vacant property depends “upon how long the property has been vacant as compared to the normal exposure time for a property of that type in the same geographic area.”

The supreme court thus effectively adopted the position that WMC took in an amicus brief that it filed in this case in March of 2022. In that brief, WMC argued that not all vacant property is considered dark and that occupied property may be comparable to vacant property. The supreme court explicitly agreed with both of those points. Although Lowe’s lost this case under its specific facts, the supreme court’s discussion of the law should help ensure that local governments don’t inflate a property’s assessed value in order to excessively tax it. 

View the supreme court decision here.

View WMC’s amicus brief here.