Eau Claire will refund $136,568 to Menards out of the $1.44 million the home improvement company paid in property taxes on its two local retail stores over the past three years.
In a 9-0 vote Tuesday afternoon, the City Council approved a settlement that will result in about a 9.5% tax cut for Menards, which was smaller than what the Eau Claire-based retail chain sought in lawsuits it filed in recent years that alleged excessive taxation.
City attorney Stephen Nick called the pending settlements “modest adjustments” backed by evidence of comparable building values and the broader commercial retail market in Eau Claire and similar cities.
The settlement lowers assessed values of the Menards stores at 3619 S. Hastings Way and 3210 N. Clairemont Ave. Currently assessed at $11.8 million by the city, the store on Eau Claire’s southeast side would lower its value to $10.6 million under the pending agreement. The Clairemont Avenue store had been taxed based on $10.9 million in property value, but will drop to $9.9 million.
Lawsuits filed by Menards over tax bills for 2017 through 2019 had argued for values as low as $4.8 million for a store.
Jeff Abbott, company spokesman, said Menards was pleased to settle the matter out-of-court.
“We’re very happy because things are always better off being settled amicably between friends than duking it out in court,” he said in an email.
The city also will refund $18,828 to owners of a hotel on Eau Claire’s southeast side for 2017 to 2019 property taxes.
Eau Claire East Motel, a subsidiary of Duluth, Minn.-based Island Investments, owns the hotel at 3614 Gateway Drive, which had recently remodeled and switched brands from County Inn & Suites to Best Western.
The city had assessed the hotel’s value at $3.4 million, but lawsuits filed by the owners claimed its value was as low as $1.6 million.
The settlement has the city and hotel owners agreeing on a value of $3.1 million for the property.
That results in a refund of almost 9% on the $213,200 paid in property taxes on the hotel for the last three years.
Though the city is agreeing to slight reductions in assessed values for the hotel and Menards stores, the city government remains confident in how it determines the value of properties for tax purposes.
“The settlements, we think more than anything, reflect the high degree of accuracy of our initial assessments,” Nick said.
After the City Council’s approval, attorneys for both the city and property owners will execute the agreements and have the civil lawsuits dropped in Eau Claire County Court.
The businesses still must pay their full 2019 tax bills — including the disputed amount — before getting their refunds, Nick said.
The city still has open lawsuits by five other retailers claiming excessive taxation for stores in Eau Claire. Those companies are Walmart, Sam’s Club, Oakwood Mall, Festival Foods and Sears.
Nick said the city will continue to firmly defend against “lowball valuations” that compare sales prices of stores that have closed to argue lower tax bills for those that are thriving in Eau Claire. But he said the city will be open to reviewing new, factual information for making adjustments as warranted.
Catherine Emmanuelle, council vice president, urged state legislators to act on closing what has been deemed the “dark store loophole” that mostly large retailers have used to argue for large cuts in their tax bills.
“We have a very large problem that needs courageous leadership across our state of Wisconsin to address this,” she said.
Fellow Councilwoman Emily Berge agreed, and added that money taken off of large business’ tax bills ends up being paid by homeowners and others.
“When these large-box retailers pay less in taxes they get shifted to residents in Eau Claire and smaller businesses,” she said.
Though Gov. Tony Evers spoke last year about eliminating the “dark store loophole” and a bill was introduced in the state Legislature to do that, it has been stalled in a Senate committee since last spring.