I am a little baffled at the February 26th column by Cory Fish on “Dark Stores” as I respect both him and Wisconsin Manufacturers and Commerce (WMC), and he usually makes better arguments.
First of all, the Dark Store legislation has support from a variety of interests, including the National Federation of Independent Businesses. I have run a real estate development company for thirty years. Moreover, I will put my conservative legislative record on protecting all taxpayers, whether residential or commercial, since 2011 up against anyone. Some small businesses are supportive of this proposal, so let’s get beyond the ad hominem and discuss the merits of the proposal. I hope the debate on this idea isn’t had on the battlefield of ominous references to “tax-payer funded lobbyists.”
In 2008, the Wisconsin Supreme Court ruled that leases tied to a piece of real property cannot be used in assessing its value. This was done, primarily, because even though such practices have been common in my career in real estate, the statutes didn’t specify leases must be considered in statute.
The issue of leases and income is important when one thinks about assessing fair market value. For many properties, such as a house, the highest and best use is as an owner occupied home. Owner occupied homes change hands frequently. Your realtor can give you a pretty good indication of what your house is worth because one can analyze that market.
The same principles apply to income-generating commercial properties. The highest and best use of many commercial properties is their ability to generate income. This is the income from a lease going to the property owner, NOT the business success or acumen of the tenant business. The concept is similar to an investment decision you may make on buying a stock with a dividend or putting money in a CD – how much you are willing to pay up front for a future stream of income.
Income generating properties are sold on the open market and priced according to the amount and reliability of said income stream. A property owner shouldn’t pay taxes on a lower value presuming no income stream when the free market has determined its true worth by virtue of its income stream value to investors.
The claims about different valuations based upon mortgages or whether a home is vacant are beyond absurd and look to me like desperation scare tactics. The only way this bill could affect the property taxes on your home is a potential slight decrease if income generating properties were assessed properly and some of that burden was not being shifted to other real estate taxpayers.
As a businessman and homeowner, I don’t want to pay any more taxes than I must. I understand the desires of WMC and others who represent a particular subclass of business interests who benefit from the current tax law ruling.
However, Wisconsin should assess property based upon fair market value and let the chips fall where they may. That’s how it works for your home and small owner-occupied businesses, and that is how it should work for larger commercial properties as well.
Duey Stroebel (R-Cedarburg) represents the 20th Senate District.