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Local officials and state lawmakers from the Kenosha area gathered earlier this week to urge support for a nonbinding, Kenosha County referendum on the Nov. 6 election ballot that calls upon the Legislature to close a loophole that allows large retailers to skirt property taxes.

As business opportunities expand, especially throughout Racine County and Southeast Wisconsin, the problem is expected to cause property tax challenges in other communities.

Through what is called the “dark stores” loophole, major retailers and entities that own big-box store properties have successfully challenged municipalities to base their tax assessments not on comparable businesses, but rather on the assessments of shuttered stores that are no longer operating.

In so doing, the property tax burden is shifted further onto homeowners, who shoulder an increasingly large share of the property taxes paid across Wisconsin, Kenosha County Executive Jim Kreuser noted.

“This is all about leveling the playing field for homeowners,” Kreuser said. “We’re not saying we don’t want retail development. We want tax fairness.”

Newer store not comparable to former store, say officials

Kreuser and the other officials addressed the media today near the Somers Walmart store, which is an example of the dark store loophole in action. While it is a relatively new, thriving store, the old, long-vacant Walmart store on 52nd Street in Kenosha is what retailers consider a comparable property, for assessment purposes.

Kenosha County and the City of Kenosha are among the several units of local government across the state that have scheduled referendums on this issue. This comes as the Wisconsin Legislature has not taken action on a pair of bills with bipartisan support, which would close the loophole.

Local Reps. Peter Barca, D-Kenosha, Tod Ohnstad, D-Kenosha, and Samantha Kerkman, R-Salem Lakes, as well as Sen. Robert Wirch, D-Somers, are among the more than 80 co-sponsors of AB 386/SB 292, which was never brought to a vote during the current legislative session.

That bill addresses the dark store loophole. A second bill, AB 387/SB 291, specifically addresses another concern – known as the “Walgreens Loophole” – through which owners of chain drugstore properties have received lower assessments through court decisions affirming that values should be determined based on hypothetical “market rents,” rather than the actual, higher rents being paid.

If the Legislature does not take action, property taxes will go up, Wirch cautioned.
“The best way to fight it is to vote ‘yes’ on the resolution on the ballot and lobby Madison leaders after the election, so they take care of this bill and hold property taxes down,” Wirch said.

Barca said the dark store loophole amounts to a property tax shift that will hurt homeowners and small businesses.
“Unquestionably for those people of modest means, their taxes are definitely going to go up if this is not addressed,” Barca said. “And to shift that burden from big-box stores to senior citizens, people of modest means, is just absolutely irresponsible. And that’s something we cannot continue to have.”

The countywide referendum question in Kenosha County reads:
“Should the State Legislature enact proposed legislation that closes the dark store loopholes, which currently allow commercial retail properties to significantly reduce the assessed valuation and property tax of such properties, resulting in a substantial shift in taxes levied against other tax paying entities, such as residential homeowners, and/or cuts in essential services provided by an affected municipality?”

Rex Davenport

Rex Davenport is a reporter, editor and editorial project manager with more than 40 years of experience in newspaper, business magazines and other content channels.