The La Crosse Common Council criticized the “dark store” loophole and tapped the brakes on the proposed pay-by-phone parking ban Thursday during its regular meeting.
The council unanimously approved a $35,000 payment to Menards Inc. to settle a lawsuit filed by the Eau Claire-based company alleging excessive taxation for its Lang Drive store; however, council members objected to the necessity of paying out for the lawsuit, made possible by what’s called the dark store loophole.
Council member David Marshall referenced 23 advisory referendums across the state asking whether the loophole should be closed, saying they all passed.
“For too long, the citizens of this city and the citizens of all the cities and towns and villages across the state have born the burden for those taxes that big box stores are not paying, so I call on Madison for change,” Marshall said.
The loophole, made possible by a U.S. Supreme Court decision, allows national retailers to appeal their property tax assessments, which are based on the property value of an active store, arguing that they should be taxed as a vacant building.
Supporters, which include business lobby Wisconsin Manufacturers and Commerce, say closing the loophole would amount to a tax increase on businesses.
However, council member Jessica Olson pointed out that both Democrats and Republicans in the state Legislature have shown support for the move toward closing the loophole.
“This is an unusual one that actually can cross party lines and get bipartisan support,” Olson said.
“It does hurt us and it is based upon some very faulty logic that unfortunately made its way into the court system and into court law, that does require state action to return it,” she added.
The tax appeal litigation with big box stores like Walgreen’s, Macy’s, Sears Holdings, Menards and Walmart have cost the city of La Crosse nearly $400,000 between refunded taxes and legal fees since 2014, and the problem is growing, La Crosse Mayor Tim Kabat told the Tribune in September.
The decision on whether to ban pay-for-parking zones on the streets immediately adjacent to University of Wisconsin-La Crosse and Western Technical College was put off for 60 days after a motion by council member Justice Weaver, who said he hoped the extra time would give the city and campus administration time to work on a consensus.
“The school administrators and the city haven’t had very good communication, and if there’s an opportunity to have that, I’d like to do that before we decide to vote on this,” Weaver said.
The La Crosse Board of Public Works, which governs the city’s parking resources, approved the zones Sept. 17. The pilot program would require drivers pay $1 an hour to park on select streets around UW-L and Western. Under the policy, they will be required to pay by phone, either using a mobile app called Passport Parking or calling 1-800-789-7593.
After students at both colleges objected, Weaver introduced a resolution to prohibit the pay-by-phone program from going into effect.
The council voted 13-0 to refer the resolution for two months.
While Weaver is not sure what the solution is, he said he’d like to see the program piloted in a different part of town.