EAU CLAIRE — The city won a court victory against a suit in which Scheels sought tens of thousands of dollars back from its previous property tax bills.
The suit, one of many filed by Scheels and similarly-sized companies across the country, claimed Eau Claire’s assessments in 2019, 2020 and 2021 were all significantly overvalued. In 2020 it filed suit over the first two years, seeking a refund of $30,785. It added a suit for 2021 seeking another refund and the cases were later consolidated.
In its arguments, Scheels said the city’s appraisal of the property was “legally and factually not credible.” The judge in the case didn’t agree. In her order, Judge Sarah Harless said Scheels “has failed to overcome the presumption of correctness afforded the City’s assessment of the subject for the years 2019, 2020 and 2021.”
The presumption of correctness was one of the factors in the Wisconsin Supreme Court’s February 2023 opinion rejecting a similar bid by Lowe’s Home Centers against the City of Delavan.
That case dealt a serious blow to the use of a widely favored theory for retailers: the dark store theory. That argument held that retail properties have a significantly lower value than governments assess because the value of a closed location — a dark store — is low relative to most other properties because few other buyers are interested in large locations and because they aren’t generating revenue anymore. Because of that, retailers argued assessments should be based on the site’s value if it was not in operation.
While local governments’ assessments are presumed to have been conducted accurately, that can be overcome if the plaintiff shows significant deviations from regulatory guidelines. In the Lowes case the court noted the manual for assessments “should avoid using sales of improved properties that are vacant (‘dark’) or distressed as comparable sales unless the subject property is similarly dark or distressed.”
Previous suits of this nature have largely resulted in negotiated settlements between Eau Claire and the companies. One suit by Menards sought a reduction of 36% on its bill. The settlement cut off 9.5%. A suit by Walmart asked for a whopping 56% cut, but they settled for a mere 4%.
The ruling means Eau Claire’s tax bill will stand for the years in question, though there are additional cases pending for later years.