MIDDLETON — A 2-acre piece of commercial real estate along bustling Greenway Boulevard owned by T. Wall Properties is the latest example of an arcane state law that allows developers to dramatically reduce their property tax liability.
Dane County records show that two parcels off the Beltline owned by Wall Land Investment LLC were reclassified this year as agriculture property, saving the company about $34,000 in local taxes.
Owner Terrence Wall says he has been renting the land to a farmer, who this year planted a crop of pumpkins that were later sold to raise money for a Middleton youth group.
"If a parcel of land has an ag crop on it, it qualifies for ag use assessment under Wisconsin Statute," Wall said in an e-mail. "That's the law; we're following it. But I guess in this town, no good deed goes unpunished."
In 2008, the parcels at 8225 and 8235 Greenway Boulevard had assessed values of $1.04 million and $961,000, respectively. But after an appeal from Wall, the assessments were lowered to less than $1,000 under the state's "use value" law, which requires that land in active production be valued for tax purposes as farmland, not for its development value.
The issue was raised last week by the left-leaning group One Wisconsin Now, which had earlier criticized Wall for registering his real estate LLCs, or limited liability companies, at an address in Delaware.
The group has accused Wall — who recently announced he was running in the Republican U.S. Senate primary for the seat held by Democratic incumbent Russ Feingold — of using every loophole possible to reduce tax obligations.
"Between the Delaware 'office' and this phony pumpkin patch, Wall is determined to avoid taxes on its assets," says Scot Ross, One Wisconsin Now executive director. "Why should we have to pay more so companies owned by a multimillionaire like Terrence Wall can use creative tax laws to limit their obligations to taxpayers?"
Middleton officials, meanwhile, say they have little recourse aside from fighting with Wall in court.
"You hate to do it but it's one of those things," says Paul Musser, Middleton city assessor for the past 27 years.
Musser says Wall came in with documents showing the land was being rented to a farmer and asked for the tax assessment reduction. An even larger parcel owned by Wall on Airport Road is also qualifying for the agricultural assessment under the use value law, Musser says.
Musser says the depressed real estate market now has many large landowners looking for ways to lower their holding costs.
"A lot of guys are getting crushed so they are watching every dollar, dotting all their 'i's and crossing their 't's," he says.
According to the Legislative Fiscal Bureau, "the purpose of the (use value) law is to slow urban sprawl and allow farmers to keep their land in agricultural production without burdensome taxation."
The law has shifted millions in property taxes from farms to other types of property, including homes and businesses. The state Department of Revenue in 2003 estimated the change that year alone shifted $230 million in taxes from farms to other uses.
But although the law has been on the books in Wisconsin since 1995 and was upheld by the Supreme Court, there remain conflicts over what constitutes a legitimate farming operation.
The issue came to a head in Sun Prairie last year when city Assessor Jim Young balked at a use value assessment for real estate developers who had just sold land for a new Target store. Prairie Development Ltd. owners Jerry Connery and Ron Felder scored nearly $100,000 in reductions on their 2007 property taxes by planting a few rows of winter wheat along a roadway.
Young refused to allow the reduced assessment but was later overruled by the Sun Prairie City Council. Young has since left his position with the city.
One Wisconsin Now's Ross has also been critical of the interpretation of the use value law, saying it was meant to help farmers, not real estate developers.
"It wasn't so developers could avoid their tax obligations to the residents of already cash-strapped local communities," he says.
Middleton Mayor Kurt Sonnentag says there isn't much the city can do even though he laments the loss of $34,000 in tax collections.
"The city has no control over state statutes regarding how real estate is valued for property tax purposes," he says.
Wall says he is only using the assessment rules as written and says One Wisconsin Now is a group of "paid hacks" bent on derailing his campaign.
"Feingold's political operatives are just making hay because they view me as a credible threat," he says. "Instead of debating the issues on a substantive basis, they attack me and my company on peripheral issues."