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De Pere contributing $5,000 to eliminate dark store loophole

By Kevin Boneske
Staff Writer

DE PERE – The city of De Pere has joined the list of municipalities contributing money to the League of Wisconsin Municipalities for an issue advocacy campaign to eliminate what’s known as the dark store loophole.

The city council voted 6-1 Tuesday, Aug. 21, to take $5,000 out of the unassigned reserve fund for LWM’s campaign.

Alderman Larry Lueck, who stated he supported the effort to end the loophole but thought $5,000 was too much to contribute, cast the lone dissenting vote.

LWM Executive Director Jerry Deschane, who had sent out a letter in June asking each municipality in the state to consider a minimum contribution of $1,200, appeared before the council to discuss the LWM’s efforts that will be bringing the issue before voters this year in the races for governor and the state legislature.

As of Aug. 20, Deschane said 38 communities in the state had contributed a total of $76,400 toward the campaign along with the Wisconsin Towns Association and Wisconsin Counties Association planning to support the LWM’s efforts.

“We also have support in the amount of $75,000 from the League of Wisconsin (Municipalities) Mutual Insurance, and then the League(of Wisconsin Municipalities) itself will withdraw $75,000 from its own reserves,” he said.

Deschane said the “soft target” in raising funds from municipalities for the campaign is $100,000.
“Based on the response from those 38 communities, and frankly the positive responses we continue to get, I would expect us to get there and probably exceed it a little,” he said.

The dark store loophole relates to commercial retailers and manufacturers challenging the assessed value of their properties by claiming they are worth the same or close to the lower assessed value of similar but empty buildings.

Companies which challenged their assessments in court and won have been able to receive a refund with the affected municipalities having to make up the difference with that lost property tax revenue, such as with homeowners having more of the tax burden.

The effort to eliminate the loophole didn’t pass in the last legislative session that ended this spring when a measure to do so didn’t come up for the vote.

Deschane said LWM is doing a six-week digital campaign to bring the dark store loophole issue to the attention of candidates running for the state legislature and governor.

“We’re trying to generate 60,000 visits to our website, where we have a four-minute video of this,” he said. “Our marketing advisors tell us that that’s a reasonable number. It sounds huge to me.”

Deschane said legislators need to be reminded how the dark store loophole matters at the local government level.

“There were 84 co-sponsors of this bill in the last session of the legislature,” he said. “We couldn’t get them to bring it to the vote. We are very close, but it’s going to take continued pressure through the election season.

Deschane said state law has dictated assessing property by one of three different methods – the market approach by comparing other properties, the cost approach related what it cost to develop the property or the income approach with the income potential of the property.

“There are two different loopholes in the law that owners of big properties – big box retail is probably the most visible, but also some manufacturers – are arguing that their property is so unique that there is no way they could ever sell it for what it cost them to build, or anything near that, and in fact their store should be compared to a dark vacant store, a dark store,” he said.

The way assessment law works, Deschane said the dark store loophole doesn’t affect the total property tax revenue local units of government are able to receive, but rather will have an impact on where the property tax revenue will be obtained.

“If you reduce the assessment of commercial properties, that money gets shifted to homeowners,” he said.

Deschane said he expects “some sort of resolution” to the dark store loophole in the next legislative session.

De Pere City Administrator Lawrence Delo noted the city has had to deal with the loophole issue in the past when it reached a settlement over the Shopko Distribution Center in De Pere.

Other local municipalities that have contributed toward the LWM’s campaign include the villages of Ashwaubenon ($10,000), Howard ($2,000), Suamico ($1,200), Hobart ($1,200) and Allouez ($1,200).

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