10 ms·

Now there’s plenty of room to argue that the stores are asking for too much now, but fundamentally the towns have been breaking the law, which is why the stores

Now there’s plenty of room to argue that the stores are asking for too much now, but fundamentally the towns have been breaking the law, which is why the stores are winning the court cases. “As of 2017, the city had valued that store at $11 million, a number based on what the property had cost the owner to buy back in 2001, plus the added value of renovations over the years, adjusted at the going rate of depreciation.” However, that’s not the way properties are supposed to be valued by state law - it is supposed to be based on the resale value. And there’s a terrible market for used big box stores.

cmiles74 8y ago
I have to disagree that the town's have been breaking the law. You can criticize their choice of comparable properties but it doesn't strike me as illegal or necessarily dishonest. However it seems like maybe we need an entirely new way to valuate these properties... When a home is assessed we look at similar houses (similar in size, number of bathrooms, garage, etc.) These are features that have teal and tangible value for people in the market for a home. People agree these are valuable things. It sounds like much of the value of these properties isn't really part of the properties themselves. Instead we're seeing the value in the I improvements to the property _around_ the store: what was once empty land now has a four lane road, electric lines and other utilities constructed solely to support these stores. Is it fair to turn around and argue that this value isn't enjoyed by these big box stores? That seems to be their logic: the Home Depot has value, but not much: it's a shoddy square box full of shelves. Yet the municipality spent a lot of money on infrastructure to support this store that they can't afford without these taxes.
- 0xffff2 8y ago
  Surely the resale value of the property takes into account the level of infrastructure surrounding the property, which would mean that a valuation based on resale value prices in those improvements at their market value.
  - cmiles74 8y ago
    After reading the article, the impression I came away with was that they were choosing "comparable properties" that were recently re-sold big box sites. It seems that the municipality's appraisers take the infrastructure around the site into account whereas the appraisers for the big box stores are not.
    - ams6110 8y ago
      Each party's appraiser comes up with a value favorable to its customer? You don't say!
      - cmiles74 8y ago
        I think it's weird in this case that the methodology on each side is so drastically different. IMHO, the missing piece is clear rules on how to compare large crappy properties that only warehouse stores are interested in... Everyone used to agree on methodology but now the large chains are changing their minds. Similar to the Amazon HQ2 saga, providing tax breaks to these companies isn't worth it in the long run; that practice should probably cease.
  - chrisdhoover 8y ago
    The cost of the increased infrastructure should be charged during construction and capitalized by the owner. The on-going operational costs by the city should be covered by service rates. Property taxes should go into the general fund to support police, fire, schools
shkkmo 8y ago
> However, that’s not the way properties are supposed to be valued by state law - it is supposed to be based on the resale value There is also a very small market for sales of big box stores. Their value is very location dependent in a way that is difficult to compare, and most of these 'dark stores' would require millions of dollars in renovations to be usable. "in many states, including Wisconsin, sales are supposed to be the first variable in the valuation equation, whenever possible" So no, resale value is not supposed to be based soley on resale value.
- plasticchris 8y ago
  > So no, resale value is not supposed to be based soley on resale value. Can you clarify? This seems an odd statement.

cmiles74 8y ago

I have to disagree that the town's have been breaking the law. You can criticize their choice of comparable properties but it doesn't strike me as illegal or necessarily dishonest. However it seems like maybe we need an entirely new way to valuate these properties... When a home is assessed we look at similar houses (similar in size, number of bathrooms, garage, etc.) These are features that have teal and tangible value for people in the market for a home. People agree these are valuable things. It sounds like much of the value of these properties isn't really part of the properties themselves. Instead we're seeing the value in the I improvements to the property _around_ the store: what was once empty land now has a four lane road, electric lines and other utilities constructed solely to support these stores. Is it fair to turn around and argue that this value isn't enjoyed by these big box stores? That seems to be their logic: the Home Depot has value, but not much: it's a shoddy square box full of shelves. Yet the municipality spent a lot of money on infrastructure to support this store that they can't afford without these taxes.

0xffff2 8y ago
Surely the resale value of the property takes into account the level of infrastructure surrounding the property, which would mean that a valuation based on resale value prices in those improvements at their market value.
- cmiles74 8y ago
  After reading the article, the impression I came away with was that they were choosing "comparable properties" that were recently re-sold big box sites. It seems that the municipality's appraisers take the infrastructure around the site into account whereas the appraisers for the big box stores are not.
  - ams6110 8y ago
    Each party's appraiser comes up with a value favorable to its customer? You don't say!
    - cmiles74 8y ago
      I think it's weird in this case that the methodology on each side is so drastically different. IMHO, the missing piece is clear rules on how to compare large crappy properties that only warehouse stores are interested in... Everyone used to agree on methodology but now the large chains are changing their minds. Similar to the Amazon HQ2 saga, providing tax breaks to these companies isn't worth it in the long run; that practice should probably cease.
- chrisdhoover 8y ago
  The cost of the increased infrastructure should be charged during construction and capitalized by the owner. The on-going operational costs by the city should be covered by service rates. Property taxes should go into the general fund to support police, fire, schools

shkkmo 8y ago

> However, that’s not the way properties are supposed to be valued by state law - it is supposed to be based on the resale value There is also a very small market for sales of big box stores. Their value is very location dependent in a way that is difficult to compare, and most of these 'dark stores' would require millions of dollars in renovations to be usable. "in many states, including Wisconsin, sales are supposed to be the first variable in the valuation equation, whenever possible" So no, resale value is not supposed to be based soley on resale value.

plasticchris 8y ago
> So no, resale value is not supposed to be based soley on resale value. Can you clarify? This seems an odd statement.