Robert Hill Law Wins for CVS – Dark Store “Theory” is a Faulty Theory

By Robert A. Hill, property tax attorney and president, Robert Hill Law, Ltd.

Robert Hill Law recently won a significant case for CVS Pharmacy in Appleton, Wisconsin.

The case represents another victory for uniformity in property taxation in Wisconsin.

The City promoted the specious theory known as the “Dark Store Loophole” to argue that retailers like CVS should be taxed based upon the investment value of the CVS store instead of the market value of the real estate housing CVS as the tenant.

I argued that it is only sales of real estate which matter and that the circuit court was required by Wisconsin law to “Tax it at its sale value.” I am pleased to report that the Wisconsin Court of Appeals agreed with the circuit court on December 28th, 2016. Read the State of Wisconsin Court of Appeals decision by clicking here.

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Author Bio:

Robert “Bob” Hill has, for over twenty five years, successfully represented major companies in property tax appeals through both negotiations with tax assessors and litigation. His dedication to his clients has helped businesses throughout the United States save tens of millions in property taxes. Mr. Hill has earned Martindale-Hubbell’s highest peer review rating of AV-Preeminent for his legal knowledge, communication skills, high ethical standards, and his representation of clients in significant property tax cases.

Robert Hill Law Wins for Menards by Proving that Comparable Sales Matter

By Robert A. Hill, property tax attorney and president, Robert Hill Law, Ltd.

For the past ten years, big box retail stores, national and regional alike, have suffered dramatically reduced sale prices for the real estate they leave behind when they decide – for whatever reason – to close a location. This decade-long shift in sale pricing for mega-warehouse retail property is, to a considerable degree, caused by today’s “click-and-ship-not-sticks-and-bricks” retail economy. This shift in consumer preference appears to have caused a market phenomenon negatively affecting the overall utility, and the transferability, of the mega-warehouse retail store: a phenomenon which has mutated traditional big box retail stores; (i.e., mega-warehouses with cash registers inside) into mega-warehouse stores with silent cash registers inside (i.e., warehouses with vast storage space).

Unlike traditional retail – which focuses on shopper convenience, customer service, and overall buyer experience – the function of a mega-warehouse store is to house products for sale. In a mega-warehouse store, it is the consumer who must wade through a bevy of options while browsing through the warehouse. Appealing to do-it-yourself consumers, this retail model works if the retailer’s costs can be kept to a minimum while providing maximum cost savings to the consumer.

Modern property assessment practices have not kept pace with ever-growing shopper fondness for the “click-and-ship” retail model. Cost per-square-foot assessment considerations are modeled after traditional retail models at $80-90 per-square-foot. Yet, since the warehouse and the retail space are the same for mega-warehouse stores, prices for this property type average $24-28 per square foot and the argument for fairness becomes apparent. To be sure, not every square foot of a mega-warehouse directly generates revenue; it behaves more like an industrial warehouse. Therefore, total square foot formulas – modeled after a singular (i.e., traditional) retail model – are short sighted. Moreover, they are unfair.

For the past twenty-five years, Robert Hill Law has been an unrelenting champion of “Sales Matter” when assessing mega-warehouse retail properties. Robert Hill Law’s primary motivation is rooted in substantial justice: we must not permit government’s self-serving inclination to consider the total sales volume (“value-in-use”) of a store owned and occupied by a national retailer to affect (inflate) its real property assessments. In plain terms, a retailer’s sales revenues are incidents of ownership, not measures of value inherent to the property itself. Property assessment must be based on “market value” of the subject property. By trying to use sales revenues as a surrogate to determine property value, government assessors are ignoring the relevant “market.” The relevant “market” is not the approximate success of a “going concern” in relation to other going concerns. Rather, the relevant market is the property at its highest and best use in relation to other comparable properties. Therefore, a retailer’s sales revenue is irrelevant to answering the market-driven question: “What will you pay me for my property that has a big box warehouse store on it?”

If uniformity is to be maintained – a big “if” in some states – assessors must come to accept the fact they are to determine the market value of the real estate and not simply establish a “pecking order” based on the occupant’s business profits. Assessors must adhere to the fundamental legal principle that requires government to “Tax it at its sale value” – An apt and sternly-worded admonition several state supreme courts have been forced to preach in unanimous opinions each time government assessors get greedy by taxing an occupant’s business instead of the real estate which houses the business.

With assessors conflating a property’s intrinsic value with its market value, one is left to wonder who will be next if we allow this type of tax discrimination to go on? Consider this hypothetical situation: Richie Cunningham’s family in Milwaukee generates $2.5 million dollars in a web-based business operated from their home. Their neighbor, Potsie Weber, sells his identical home across the street for $250,000.

The following year, the Milwaukee County Assessor raises the Cunningham family’s assessment from $250,000 to $2,500,000. When Richie Cunningham asks why his assessment is not based on the recent sale price of Potsie Weber’s identical home, the county assessor informs him that, unlike Potsie Weber’s assessment, the value of his real property is based on the sales generated in his home and not by what the home would sell for in the open market because the assessor claims the law gives him the “discretion” to choose which residential properties are governed by actual sales of real estate and which are not.

Allowing assessors to determine property tax assessments by different valuation methodologies undoubtedly will accomplish many things fiscally for county and city government. But the cost to the state comes in the form of tax discrimination against taxpayers already paying a disproportionate share of property taxes every year their national (or regional) retail stores remain open. And, as Richie Cunningham’s situation illustrates, maintaining any semblance of uniformity among taxpayers requires that real estate sales of the “sticks, bricks, and dirt” remain the sole measuring stick by which all valuation for property tax assessments are set.

“Tax it at its sale value” is the law in Wisconsin, and in most states, precisely because it is the only way to objectively determine what real estate sells for in the open market. National and regional retailers are often treated unfairly because they are not locally-based. Indeed, few local retailers deploy a mega-warehouse model, so cost-per-foot assessments are fair to them. But, their product inventories are managed differently and they are assessed based on actual sales of similarly used real estate, which results in a much lower price per-square-foot valuation for property tax assessment purposes than non-local retailers bear.

Robert Hill Law is centered on ensuring that property tax assessors throughout the Upper Midwest (and the U.S.) establish and deploy a uniform assessment model; one focused on a formula which respects, rather than attempts to undermine, the actual sale prices achieved by sellers in the overwhelming number of sales of this property type that have occurred nationally since 2005. Robert Hill’s mantra: “Assessed properties must be treated uniformly and you cannot do this if some are treated as real estate and others are treated as businesses who can afford to pay more than their competition, even though the buildings themselves are all-but-identical to the local retailer next door.”

To illustrate the point, the Minnesota Tax Court ruled in September of 2015 that a Menards store located in Moorhead Minnesota had been over-assessed by at least 4 million dollars for several years. Robert Hill Law, with Paradigm Tax Group, litigated a reduction of approximately $16 million on behalf of Menards. The Minnesota Tax Court and the Minnesota Supreme Court agreed these mega-warehouse retailers should be assessed based on the sale prices of comparable mega-warehouses as evidenced by sales of like property: Not by the value-in-use methodologies the county suggested as a ready substitute.

And in a case Robert Hill tried in late February of 2017; involving a Menard’s mega-warehouse in Cottage Grove, Minnesota; he introduced into evidence the comprehensive study done by Brett A. Harrington of International Appraisal Company.  Harrington’s study, entitled “Big Box Retail Properties Sales Transaction Analysis,”  marshals together an overwhelming number of market (sales) data to explain how and why mega-warehouse retailers should see assessed values closer to $30-40 per-square-foot (instead of the $80-90 per-square-foot used by value-in-use assessors).

As our economy gravitates more toward a “click-and-ship” retail future, which all-but-eliminates the need for mega-warehouses with cash registers, Robert Hill Law will remain dedicated to ensuring property tax assessments are uniform and fair to all taxpayers: big and small, locally based or not.

Follow our company profile on LinkedIn for related news and updates.

Author Bio:

Robert “Bob” Hill has, for over twenty five years, successfully represented major companies in property tax appeals through both negotiations with tax assessors and litigation. His dedication to his clients has helped businesses throughout the United States save tens of millions in property taxes. Mr. Hill has earned Martindale-Hubbell’s highest peer review rating of AV-Preeminent for his legal knowledge, communication skills, high ethical standards, and his representation of clients in significant property tax cases.

What are the Top Three Things to Look for in a Property Tax Attorney?

By Robert A. Hill, property tax attorney and president, Robert Hill Law, Ltd.

From my perspective, the answer is simple: Integrity, Perseverance and Knowledge. 

Integrity is key. Find a team that is “lean and mean” by design – but highly networked to be scalable to your specific needs. Here’s a classic example: Since property tax issues vary by state, your tax issues might need expertise beyond your home state. You need not vet and hire 50 attorneys, nor must you hire an expensive “Big-law” firm with one property tax expert per state. A firm with integrity would not have you paying for more than what your specific needs require. Simple as that.

Perseverance is critical; however, it should always be directly tied to integrity. Litigation is expensive and the tax attorney you choose should be first focused on a perseverance rooted in compromise – keeping your case out of the courts.

Knowledge is rooted in the efficient collection of the evidence to your situation, but also the reputation – and relationships – with those parties that can establish a compromise sooner than later. Be asking, “What percentage of your cases is solved in compromise as compared to full litigation?” And, “In those cases that are solved by compromise, what is the average number of months it takes to reach an acceptable compromise?”

Integrity is key. The team you choose should feel like a true ally, and a team of relentless advocates working for you.

Property Tax Reduction Case Studies:

  • Big Box Home Hardware Retailer – $9 million in savings over three years
  • Big Box Pharmacy Retailer – $2 million in savings over four years
  • Minnesota-based Food Retailer – $3.7 million in savings over three years
  • Well-known Food Brand – $250,000 in annual savings

Author Bio:

Robert “Bob” Hill has, for over three decades, successfully represented major companies in property tax appeals through both negotiations with tax assessors and litigation. His dedication to his clients has helped businesses throughout the United States save tens of millions in property taxes. Mr. Hill has earned Martindale-Hubbell’s highest peer review rating of AV-Preeminent for his legal knowledge, communication skills, high ethical standards, and his representation of clients in significant property tax cases.

The Property Tax “Aha!” Moment for Business Property Owners

By Robert A. Hill, property tax attorney and president, Robert Hill Law, Ltd.

You and your team pay attention to the sale of business properties near to or adjacent to your own properties. You easily find the sale price and likely will calculate the square foot price to compare to your own property’s market valuation.

It’s possible you may have even consider the tax assessor’s valuation of your property, but sat passively in frustration in the fact that the marketplace facts do not mesh with the assessed valuation.

The “Aha!” moment occurs when you hear marketplace stories of property owners or competitors that just saved $5 million in their property taxes. When one bears witness to peers having success that dramatically affects their bottom line year-after-year, curiosity is piqued.

I would suggest to you this: Pay attention to the market of similar properties. Watch for sales of those properties and watch closely those businesses geographically near to your property or very much like the market location of your property. When you see like-property sales that are less than your assessed value per foot, raise that red flag. Understand that good property tax attorneys exist that can quickly drive a compromise that directly affects your bottom line. I welcome your call/email to discuss your property tax red flags. We offer a software solution that simply and quickly can validate your concerns with tangible market facts.

Property Tax Reduction Case Studies:

  • Big Box Home Hardware Retailer – $9 million in savings over three years
  • Big Box Pharmacy Retailer – $2 million in savings over four years
  • Minnesota-based Food Retailer – $3.7 million in savings over three years
  • Well-known Food Brand – $250,000 in annual savings

Author Bio:

Robert “Bob” Hill has, for over three decades, successfully represented major companies in property tax appeals through both negotiations with tax assessors and litigation. His dedication to his clients has helped businesses throughout the United States save tens of millions in property taxes. Mr. Hill has earned Martindale-Hubbell’s highest peer review rating of AV-Preeminent for his legal knowledge, communication skills, high ethical standards, and his representation of clients in significant property tax cases.

Seeing a Trend of Buildings being Sold for Less Than Your Property’s Assessed Value?

By Robert A. Hill, property tax attorney and president, Robert Hill Law, Ltd.

As an owner of one or more business properties, you or your team are likely watching the sales of buildings near to or adjacent to your property. I’d call that a “best practice” in business property ownership. But, a “red flag” is the sale of buildings near your property that don’t match the property tax assessor’s valuation of your property.

If you sold your property today and cannot get payment that matches its assessed value, you’re paying too much in property tax. Why not keep that money to hire those needed employees or begin that business-transforming initiative you believe necessary to remain competitive?

Where do you start? Find a property tax attorney team that can help you quickly and efficiently collect the hard facts to ensure you have a case. Look for a team that is scalable and prides itself in compromise, instead of costly litigation.

We can start you and I’d welcome your call. We’ve built a proprietary software system that quickly and efficiently provides the details to determine whether your perceptions are valid and whether a case is to be made. Since we work strictly on a contingency fee basis, there is no risk to you – only the reward that comes from a substantially reduced tax assessment in line with market principles.

Put a team of relentless advocates to work for you.

Property Tax Reduction Case Studies:

  • Big Box Home Hardware Retailer – $9 million in savings over three years
  • Big Box Pharmacy Retailer – $2 million in savings over four years
  • Minnesota-based Food Retailer – $3.7 million in savings over three years
  • Well-known Food Brand – $250,000 in annual savings

Author Bio:

Robert “Bob” Hill has, for over three decades, successfully represented major companies in property tax appeals through both negotiations with tax assessors and litigation. His dedication to his clients has helped businesses throughout the United States save tens of millions in property taxes. Mr. Hill has earned Martindale-Hubbell’s highest peer review rating of AV-Preeminent for his legal knowledge, communication skills, high ethical standards, and his representation of clients in significant property tax cases.

Now Automated – Property Tax Assessments for Business Property Owners

By Robert A. Hill, property tax attorney and president, Robert Hill Law, Ltd.

Your business property has just been assessed and marketplace knowledge tells you this tax assessment just doesn’t seem right. What to do next?

You need additional facts and you need them quickly. You want a simple means to efficiently find hard facts and determine whether there’s the leverage to save your business hundreds of thousands – or millions – of dollars over the next few years.

We’ve built a proprietary software that offers an unequaled property tax assessment analysis. It’s fast (often completed in minutes), collecting and presenting the facts to prepare a case against the assessor’s valuation. No other property tax firm in the United States has built anything like it.

After a short conversation, we only require a copy of your property tax statement. Results are often tabulated within minutes. To engage our team is simple. Contact us by phone at 952-426-7373, or via our Contact Form. Since we work strictly on a contingency fee basis, there is no risk to you – only the reward that comes from a substantially reduced tax assessment in line with market principles. Put a team of relentless advocates to work for you.

Property Tax Reduction Case Studies:

  • Big Box Home Hardware Retailer – $9 million in savings over three years
  • Big Box Pharmacy Retailer – $2 million in savings over four years
  • Minnesota-based Food Retailer – $3.7 million in savings over three years
  • Well-known Food Brand – $250,000 in annual savings

bobAuthor Bio:

Robert “Bob” Hill has, for over three decades, successfully represented major companies in property tax appeals through both negotiations with tax assessors and litigation. His dedication to his clients has helped businesses throughout the United States save tens of millions in property taxes. Mr. Hill has earned Martindale-Hubbell’s highest peer review rating of AV-Preeminent for his legal knowledge, communication skills, high ethical standards, and his representation of clients in significant property tax cases.

Robert Hill wins big case for Menards

In a seminal decision, the Minnesota Tax Court ruled that a Menards store located in Moorhead Minnesota had been overassesed by at least 4 million dollars for a number of years. Robert Hill Law, in conjunction with Paradigm Tax Group, successfully prosecuted a reduction of approximately 16 million dollars on behalf of Menards.

Robert Hill said, “Today’s ruling reflects our Tax Court’s recognition that big box retail stores are being overassessed in general because, unlike other types of retail facilities, they are not typically income producing and suffer from various forms of obsolescence. I’m pleased to have represented Menards in this important case.”

If you’d like to read the official Minnesota Tax Court opinion, or Bob’s brief for the case, follow the links below.

Read the official Minnesota Tax Court opinion

Read the Robert Hill Law brief

Prosecuted for Whistleblowing

Over three years ago, to redress their grievances in having been maliciously prosecuted as revenge for their whistleblowing activities, Lawrence and Sinuon Leiendecker (Leiendeckers) sued Asian Women United of Minnesota (AWUM), its board of directors (“BODs”) and a number of their constituents for various claims including malicious prosecution.  The Leiendeckers survived rule 12 motions to dismiss with the District Court ruling in October 2012 that: “Plaintiffs have alleged facts that would clearly and convincingly show that Defendants’ conduct constituted a tort, i.e. malicious prosecution, and so are not entitled to immunity under Minn. Stat. § 554.03 at this stage of the proceedings.” (Dist. Ct. Oct. 1 2012 Order/Mem. at 13-14.)

Significantly, the Court found that the Leiendeckers: (1) had sufficiently alleged facts that any of the probable cause determinations that may have been made by courts in the underlying actions “were not ‘proper’ because they were based upon knowingly misleading statements made by Defendants” (id. at 15) and, (2) had “clearly alleged that the Conversion Case and the Malpractice Case were subjectively motivated by bad faith”, (id.).  Considering that they clearly and convincingly pled factual circumstances showing that Defendants’ conduct constituted intentional torts, this would have been more than sufficient under normal circumstances for the Leiendeckers to proceed in seeking redress from the Court.

However, the Leiendeckers’ case is not being litigated under normal circumstances.  Instead, because the Leiendeckers’ well-pleaded claims against Defendants allege public participation abuses, the Leiendeckers are being deprived of having their grievances developed through the normal civil litigation process afforded to all other civil litigants.  This is what anti-SLAPP statutes do to honest litigants seeking redress of their grievances – it summarily punishes them prior to a determination of any wrongdoing; and even when they otherwise survive motions to dismiss under the established rules.

The this past August, the Leiendeckers moved the District Court to declare that Minnesota’s anti-SLAPP statute section 554.02 is unconstitutional, both facially and as applied because it: (1) is a content-based restriction of First Amendment activity; (2) is an unconstitutional prior restraint; (3) is not narrowly tailored to further a compelling government interest; (4) is facially overbroad; (5) violates equal protection rights; (6) violates the jury-trial right; and (7) violates separation of powers. The Leiendekcers’ pray that the unconstitutional citadel of the Minnesota anti-SLAPP law falls so that they may be treated just like everyone else that comes before the courts in this state seeking redress of their grievances.

If you are interested, please read the brief submitted to the court regarding this case.

***If you have any information regarding the claims made against any named (or unnamed) defendant in this legal action please contact: Robert Hill at bob@roberthilllaw.com or (952) 426-7373.

Thank You!

 

Real Estate Newsletter from Paradigm Tax Group

Here are 4 articles highlighted in the most recent issue of the Paradigm tax Group newsletter.

Ohio Supreme Court Rules: Grain Storage Bins Are Not Taxable As Real Property

  • An Ohio Supreme Court decision made earlier this month ruled that grain storage bins are personal property pursuant to state law and may not be taxed as real property. Read the full article.

Pennsylvania School Districts Target Apartment Complexes for ‘Spot’ Tax Assessment Appeals

  • Under current law, Pennsylvania school districts have the authority to pursue a tax assessment appeal on a property that they believe is under-assessed, called a ‘spot’ appeal. Because school districts don’t have the education funding they need, especially with rising pension costs, they are increasingly relying on the method in order to generate more money. Read the full article.

Legislators Push to Eliminate Prop 13 “Loophole”

  • Once again, California legislators are fighting a “loophole” in Proposition 13 that some believe allow commercial property buyers to avoid paying higher property taxes. Read the full article.

Study Shows Economic Benefit of 1031 Exchanges

  • In an effort to dissuade Congress from eliminating 1031 Like-Kind Exchanges, a stipulation under the U.S. tax code that allows an investor to exchange a business or investment asset for another that is similar and to defer all capital gains taxes, The Real Estate Roundtable has just come out in support of a new study detailing the benefits of retaining the provision and the negative consequences of eliminating it. Read the full article.

The Institute for Professionals in Taxation

The Institute, founded in 1976, is a non-profit educational association serving over 4400 members representing approximately 1450 corporations, firms, or taxpayers throughout the United States and Canada. It is the only professional organization that educates, certifies and establishes strict codes of conduct for state and local income, property and sales & use tax professionals who represent taxpayers (government officials or organizations do not qualify for membership). The Institute also provides excellent educational programs in Value Added Tax (VAT) and Credits & Incentives.

Sign up to become a member, and you’ll have access to news and information, articles, and details on events.

Visit them at ipt.org.