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JANESVILLE—Three businesses have filed fresh lawsuits against the city of Janesville, demanding refunds for taxes they believe resulted from inflated tax assessments of their properties.

Bank Mutual, 2111 Holiday Drive; JBRC Investments, 1310 Plainfield Ave.; and Dickens Partners, 4323 Milton Ave., filed suits in Rock County Court in August seeking tax refunds for 2016, according to court documents.

The parties argue the city over-valued their properties by more than $1.8 million total. The three businesses were assessed at a total of $3.9 million but have a total fair market value of just over $2 million, according to the lawsuits.

All three businesses have filed property tax lawsuits against the city before. They’ve filed new lawsuits for a new year, said Meg Vergeront, a Madison attorney who helps Janesville with such cases.

In similar lawsuits filed against the city and other municipalities, businesses have relied on the so-called “dark store theory.”

As The Gazette reported in March, assessors value working business properties based on the buildings, the land, potential to produce income and other variables. The dark store theory is that property should be assessed equal to a building of the same size that’s no longer running—a “dark store.”

It’s unclear if the three lawsuits filed against the city in August rely on the dark store theory. The businesses haven’t released their property appraisals, so it’s too early to tell if they derived their fair market values using the dark store argument, Vergeront said.

The Gazette was not able to reach Minneapolis attorney Mark Vyvyan, who represents the businesses in the three lawsuits.

“But are big box businesses trying to use dark stores? Yeah, they are,” Vergeront said. “We take the position it’s not appropriate.”

The League of Wisconsin Municipalities has been working on a bill modeled on legislation that recently passed in Indiana. The Indiana law combats the dark store argument by requiring business values be determined using comparable sales in a similar market. That means property values must be determined at least in part by comparing to businesses with similar ages, customer bases, structures, building materials and so on, said Curt Witynski, assistant director of the league.

“How can a closed, boarded up K-Mart … be in the same market segment as a store that is successful (and) relatively new?” he said.

The plans to introduce a bill after the Legislature convenes in January, Witynski said.

In the meantime, Janesville has its hands full.

At least eight businesses have used the dark store tactic against the city since 2011. As The Gazette reported earlier, the city settled four of the cases, lowering property values by millions of dollars and giving the businesses a total of more than $132,000 in tax refunds.

At least six other lawsuits not using the dark store theory have resulted in $48,000 in refunds.

The three new lawsuits are on top of Janesville’s 15 unresolved property tax lawsuits, eight of which use the dark store argument, stretching back to 2013.

Historically, the Janesville City Council has been split on how to handle such cases.

Council members Doug Marklein, Carol Tidwell and Rich Gruber have argued it’s best to settle and grant the refunds to avoid expensive legal fees.

President Sam Liebert has said he can’t support that notion, knowing the resulting shortfalls increase taxes for other city taxpayers.

Typically, municipalities cave and settle rather than spend resources to fight such cases, Witynski said.

“In an ideal world, we would devote lots of resources to fighting this strategy in court, but clearly that’s not happening…” he said.

Read more at http://www.gazettextra.com/20160929/janesville_businesses_continue_to_sue_for_lower_property_tax_rates