....
To hear it from opponents, this emerging legal phenomenon essentially weaponizes an already grim retail landscape. But it’s not always clear who’s right and wrong—dark store theory is a battlefield muddied in the cryptic laws and upside-down logic of commercial property valuation. The potential slam to vulnerable tax bases is tangible, however. If the stores prevail in West Bend, for example, it would reduce property values by millions of dollars, force the city to refund hundreds of thousands of dollars in back taxes, and set back payments on the public infrastructure that the town built to lure these retailers in the first place. That could result in higher taxes for residents, fewer police officers, firefighters, and teachers, and potentially, a mess of public debt.
....
Born of the
post-recession retail apocalypse and spread by a cottage industry of “no-win, no-fee” tax consultants, dark store theory could foreshadow an even larger threat to local finances—a weakening of the basic social contract underpinning the property-tax apparatus that keeps cities and towns afloat. And here’s the rub: The ruthless logic helping these brick-and-mortar giants dodge their taxes might make a lot of sense.
....
In the biting Wisconsin wind, Williams showed me a photo of the Sam’s Club in West Allis that he battled last year, and which he is now fighting again. (He didn’t want to visit this store in person with me because of the legal dispute.) 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. These are the methods he uses for every type of property, Williams told me, following those rules in his handbooks. “I’m not saying my numbers are necessarily the best ones out there,” Williams told me. “But they’re what I get when I run the math.”
But a tax agent from Chicago filed an appeal on behalf of Sam’s Club, arguing that the store was worth just $7.2 million, based on the low sales costs of a handful of second-generation big box locations scattered around the state. The comparables that the agent provided included three former locations of the now-defunct electronics retailer American TV, an old Lowe’s, a former Target, and a former Walmart (actually, the same property in Greenfield Williams and I were standing in front of now). All of them sold for between $2 million and $4.5 million between 2012 and 2014: much lower sales prices than what their original owners had purchased them for years before. Some had second-generation occupants; some were bank-owned.
....
Those people fleeing aren't gonna be able to afford living in the suburbs. The suburbs may not have enough property tax to sustain. Either that they'll be some serious classism going on.