The city of Superior has reached a settlement with Walmart Real Estate Business Trust based in Bentonville, Arkansas.

The real estate arm of the retail giant filed suit in November against the city over its property assessments in 2017, 2018 and 2019.

Under the settlement, the city agreed to reduce the store’s assessment by about $750,000 for those three years, said City Attorney Frog Prell. In the year 2020, that value will be about $12.1 million.

Previously, the store and surrounding property owned by Walmart Real Estate Business Trust was assessed at just over $13 million.

“They submitted in their pleadings that it should be just over $8 million, and then their expert came back with just over $5.2 million,” Prell said. “We didn’t move much when you consider the range that was in play.”

The settlement is consistent with valuations the city assessor performs, Prell said.

The case filed in Douglas County Circuit Court in November is one of dozens of cases the retailer has filed against municipalities throughout Wisconsin since 2017.

The Superior City Council approved the settlement offer during a closed session meeting April 21. Walmart Business Trust accepted the offer, and the case against the city was dismissed April 27 by Judge Kelly Thimm.

The dark store theory is a tax avoidance strategy used by national big-box retail chains to argue their thriving businesses must be assessed for tax purposes as though they were a vacant property. The Wisconsin Legislature has declined to close the tax loophole since legislation was first introduced in 2017.

“Our settlement offer does not concede the dark store theory,” Mayor Jim Paine said.

The settlement means the city will have to refund a portion of the property taxes paid by Walmart in 2017, 2018 and 2019.

“We’re going to have to refund about $6,000 for each of the three years that are the focus of the lawsuit,” Prell said.

There won't be a refund for the 2020 assessment, which will be the new assessment value used when property taxes are calculated for 2021, he said.