Mayor vetoes council’s decision on Walmart tax assessment dispute

Rhinelander Mayor Kris Hanus has vetoed a decision made by the common council on Aug. 12 approving a proposed settlement with Walmart/Lincoln Plaza regarding the tax assessment for the Walmart building at 2121 Lincoln Street.

Hanus announced the decision on Aug. 16, explaining that further reflection in the days following the meeting prompted him to request the council reconsider the move.

“After going back and forth about this decision over the last couple days, I concluded that I do not believe that the proposed settlement agreement is in the best interest of the City of Rhinelander,” Hanus wrote in his veto statement. “I respect the council decision to make this agreement, and I understand your reasoning behind it. However, I ask you, as the deciding body, to take another look at this topic and explore other possible options that may better serve the City of Rhinelander.”

The exact terms of the proposed settlement are unclear. The River News made an open records request for a copy of the proposed agreement, however the city clerk’s office advised there was no documentation available.

“Per legal counsel, no legal agreement document exists, as negotiations are ongoing,” clerk Austyn Zarda explained.

The matter was discussed in closed session on Aug. 12 and no details were mentioned when the panel returned to open session for the vote.

After the unanimous vote was entered into the record, Hanus indicated he disagreed with the decision but was not going to issue a veto.

“My only comment on this topic is, I will not be vetoing this but I do think anytime an entity like Walmart thinks they should pay less in taxes its not great for the community and we should have a stronger arm of making them pay their fair share,” he said.

In a written statement dated Aug. 16 and addressed to the council, Hanus explained why he changed his mind.

“My point of contention is this: the property was assessed at a value of $13 million in 2016. In 2017, the assessed amount was challenged and was reduced — via settlement — to $12 million. In 2022, an addition was added — as was an interior remodel — yet, ultimately, they now believe that this property is worth less. I respectfully disagree. As a $550 billion dollar company, Walmart has the means to pay their fair share in taxes. If anyone in this city deserves a tax break, I believe we should look towards the small mom-pop businesses rather than multinational conglomerates  — ‘the Little Guy,’ who is the backbone of our community and to whom a tax break would make a world of difference. The settlement that was approved by Council would allow Walmart to reduce the amount they pay annually to the school district, college, county, and the city of Rhinelander every year by roughly $30,000 total. To large corporations like Walmart, this amount is merely a small drop in the bucket. To our local agencies, however, this cut could have deep ramifications for years to come.”

“While I cannot speak for the other jurisdictions involved, I would like to put this into perspective for the City of Rhinelander,” he continued, noting, for example, that the city invests approximately $10,000 a year planting trees and, year to date, and has waived roughly $17,000 in fees to aid organizers of community events.

 “Personally, I believe utilizing funds for investments like these in our community have a much better impact then giving funds to a multi-billion company such as Walmart,” he wrote. “We can also look at the services that Walmart requests from the city. Year to date, our dedicated Police Department has been called to over 143 calls, and our Fire Department and EMS have responded to over 30 calls. These are just some examples of the local services that this company property relies on to make their business work. I believe this, in part, supports the reasoning for them paying their fair share in taxes. I do not blame them for trying to better the bottom line of their business, but I can’t stand by and not raise my hand when these actions will have a negative impact in our community. I did not make this decision lightly and (it) has been on my mind since Monday night. A past City of Rhinelander Mayor once told me, ‘Sometimes the best outcome is not easy or fast and the path may waver, but the best outcome comes with time and many voices.’ While I respect the action that the Council has taken, I believe that we can do better for the City of Rhinelander.”

 “Whatever the ultimate outcome will be, please know that I will respect and support your decision,” he added.

According to city attorney Steve Sorenson, a 2023 Wisconsin Supreme Court decision (Lowe’s Home Centers, LLC v. City of Delavan) helped municipalities faced with tax assessment challenges from big box stores but did not put an end to the practice.

The court ruled that the City of Delavan’s 2016 and 2017 tax assessments of a Lowe’s store were not excessive, he explained.

“According to the majority, Lowe’s failed to introduce sufficient evidence to overcome the presumption of correctness afforded to municipal assessments pursuant to Wis. Stat. § 74.37,” Sorenson wrote in response to an inquiry from the River News. “This decision did not stop the Walmart attack on valuations. The philosophy is that the one cannot use a vacant comparable store to determine value. The value of a growing thriving store must be set as a growing thriving store not as an empty building with no value. The Court didn’t say that there maybe some value in looking at the sale prices of vacant stores but they did make it clear that to just use vacant store sales would be totally inappropriate. Although the decision helps in the city’s current situation there are still questions on the various appraisal methods. Technically, the real estate has value separate from the merchandise sales so a value based on a sales analysis is also not completely fair. Therefore the argument is in this case how can the value go down when the building has had improvements made to it and sales are up. The Supreme Court has said that unless there is strong compelling evidence to the contrary the City’s Assessor’s value will stand. This is the current state of the law but the arguments keep going that you cannot in a city like Rhinelander find comparative sales value without using the sale of vacant building and that sales of such buildings in a limited market area such as Rhinelander are significantly less than the value put on the Building by the Assessor who extrapolates the sale of much smaller commercial buildings with active business as the basis of the valuation of the Walmart building.”

 “The art of assessing is a difficult one,” he concluded.

Per the council rules, the proposed settlement must be placed on the council’s Aug. 26 agenda at which time the council can attempt to override the veto. It’s unclear if the matter will be discussed in open session.

Heather Schaefer may be reached at [email protected].