The Wisconsin Supreme Court in the case of Walgreens v. City of Madison ruled that in assessing the value of leased commercial property, an assessor must take into account the actual rent and terms of a lease applicable to the property in determining its value under the income approach. The lease is question in that case imposed rents significantly below market rates, and the City of Madison had argued that market rates were to be used in assessing the property. The Budget Bill as adopted by the legislature would have in effect "reversed" the Wisconsin Supreme Court’s decision, making market rental rates applicable.
Governor Doyle has used his veto power to veto this portion of the Budget Bill. Therefore, the court’s decision will stand. This will allow lessors and lessees of property to structure creative lease arrangements without fear that the lease terms will be disregarded in determining the property’s assessed value and, therefore, the property tax to be imposed.