Walmart Sues Sturgeon Bay Again Over Property Assessment

Walmart has once again filed a civil suit in Door County Circuit Court seeking to lower the overall assessed value of three parcels that it owns along Egg Harbor Road in Sturgeon Bay. File photo by Kevin Boneske.

Walmart has once again filed a civil suit in Door County Circuit Court to challenge the assessment of its three parcels along Egg Harbor Road in the City of Sturgeon Bay.

“Unfortunately, we’re all too familiar with this,” said city administrator Josh Van Lieshout.

The Walmart Real Estate Business Trust – which last year reached an out-of-court settlement with the city to lower its assessment for property-tax years 2021 and 2022 – alleges in its suit, filed Aug. 4, that the 2023 assessment for the combined value of the parcels should be no more than $4.45 million, compared to the current assessed value of $6.671 million. 

Last year’s out-of-court settlement lowered the assessed value to the current amount. Prior to reaching that mediated agreement, it had been $7.65 million.

Before agreeing to that settlement last year, Walmart also claimed the parcels should have been assessed for no more than $4.45 million.

In Walmart’s latest suit, filed by the Milwaukee-based law firm of Gimbel, Reilly, Guerin & Brown, the company claims the assessed value is “excessive,” and the assessment was “not uniform with the assessment of other properties in the city and state and therefore violates the Uniformity Clause of the Wisconsin Constitution.”

The city has 20 days from the date of receiving the summons to respond in writing to the suit.

Walmart and other commercial retailers with stores in Wisconsin have sought to lower their property assessments with what’s known as the “dark-store loophole,” in which they claim that their properties are worth the same or close to the lower value of similar, but empty buildings.

State law recognizes three possible methods for assessing property: the market approach, which compares properties that have sold to value those that have not; the cost approach, which is related to the cost to develop a property; and the income approach, which involves a property’s income potential.

Should Walmart prevail once again in seeking to lower its assessment in Sturgeon Bay – either in court or through an out-of-court settlement – the company would also be able to receive a refund of property taxes determined to be excessive that were imposed above what should be the assessed value.

Possible Challenge to Walmart

Instead of once again reaching a negotiated settlement with Walmart on the assessed value, Van Lieshout said changes in state case law could bolster the city’s effort to defend its assessment in court.

In Lowe’s Home Centers, LLC v. City of Delavan, a Wisconsin Supreme Court ruling issued in February favored Delavan in defending its assessment of a Lowe’s store.

That decision found that Lowe’s failed to demonstrate that Delavan’s assessments of the 134,574-square-foot store on 14.525 acres were excessive, and Lowe’s “did not provide significant contrary evidence sufficient to overcome the presumption of correctness” for property assessments.

Lowe’s claimed Delavan’s assessments improperly excluded comparable properties for the sole reason that they were unoccupied, but the Supreme Court agreed with Delavan that the unoccupied properties Lowe’s presented as being comparables were properly excluded from the analysis in determining Lowe’s assessed value.

Van Lieshout said officials in Sturgeon Bay would be getting in contact with their insurance attorney to determine if another approach besides negotiating would be appropriate with Walmart’s latest suit.

“Given Walmart continues to argue their assessment, I suspect they believe all or part of Delavan wouldn’t apply, or that there are other shortcomings in the [City of Sturgeon Bay’s] assessment,” he said. “As has always been the case, the real story is why the Wisconsin Legislature didn’t act to close the dark-store loophole in the first place, instead relying on the courts to do it for them.”

Sturgeon Bay is a member of the League of Wisconsin Municipalities, which has been involved in recent years with opposing the dark-store loophole. The league created a series of best practices for municipalities to follow to succeed in assessment litigation, such as adhering to practices and procedures found in the Wisconsin Property Assessment Manual when determining assessed values. 

Assessed Value Amounts

Of Walmart’s three parcels, Door County property records show the largest – at 25.78 acres – has an assessed value of $6.053 million, with the land valued at $1.291 million and improvements listed at $4.762 million.

The second-largest parcel, with approximately seven acres, has an assessed value of $506,000, with the land valued at $366,000 and $140,000 worth of improvements.

The third parcel, with 1.87 acres, has a listed assessed value of $112,000 for the land only. 

Walmart claims the three parcels are worth no more than $4 million, $400,000 and $50,000, respectively.