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Tax assessments challenged in town of Delavan

TOWN OF DELAVAN — A battle over the fairness of property tax assessments in the town of Delavan might reach its final act during a Walworth County Court hearing Thursday.

Seventy-five plaintiffs filed suit April 19 against the town of Delavan, alleging their properties were assessed too highly and unfairly in 2009 and 2010.

In June, Walworth County Judge James Carlson ruled in favor of the plaintiffs. At Thursday's hearing, Carlson will likely decide how the town should remedy the over-assessments.

Maureen McGinnity, an attorney with Milwaukee law firm Foley and Lardner who represents the 75 plaintiffs, said the over-assessment claim was based on the sale prices of homes in the area. The plaintiffs allege the assessment failed to take into account the "true market decline" in the area.

Walworth County Administrator Dave Bretl provided data indicating Walworth County's equalized value, the total value of all property in the county, has fallen 11 percent in the past three years. The decrease follows four straight years of runaway growth—10 percent to 12 percent increases from 2005 to 2007 and just over 5 percent in 2008, when the bottom fell out of the housing market.

"People are looking at their assessment rates and saying, ‘Wait a minute, this isn't reflective of market conditions,'" Bretl said.

John Olson, town of Delavan administrator, said foreclosures contribute to disagreements over fair market value. A foreclosure is not considered an "arm's length transaction," and therefore does not factor into an assessor's calculations.

"It is impossible for assessments to always follow the current real estate market perfectly when properties are not selling and yet remain listed for sale over long periods of time," Olson said.

The plaintiffs also claim a violation of the uniformity clause as laid out in the state constitution.

"What we were able to establish is that the assessor used discriminatory methodology," McGinnity said.

McGinnity said parcels in a different area were assessed below market value, while her clients' parcels along the lake were assessed above fair market value.

"The town's position is their assessor's values are correct and will do everything possible to defend the assessments against this litigation," Olson said in an email.

It was unclear whether the town will appeal the judge's June decision in favor of the plaintiffs.

Olson estimated the town could be on the hook for $50,000 to $100,000 in "charge-backs," which are basically property tax refunds paid to the plaintiffs.

Bretl said the county could absorb the payments easier than school districts, which rely more heavily on the property tax levy for funding. Three school districts would be affected by orders to refund property taxes, the Delavan-Darien School District most prominently.

"We'll comply with whatever the results are," said interim Delavan-Darien superintendent Robert Crist. "It's basically out of our hands, except we have to budget correctly, but that's nothing new to us. We do that every year."