Creative Converting challenges assessment
City could lose $60,000 in revenue
By Bert Lehman
Hoffmaster Group Inc., the company that owns Creative Converting in Clintonville, has filed a personal property objection with the Wisconsin State Board of Assessors (BOA).
Members of the Clintonville Streets Committee first learned of the Creative Converting objection at its Sept. 5 meeting when it was discussing the bids received to resolve the Spring Street flooding issues in the industrial park.
The project would help solve flooding issues at Creative Converting and Walker Forge.
Plans for that estimated $460,000 project have been in the works for more than a year, but when the bids were received they came in double the estimated cost. The lowest bid was $845,000.
While discussing the high bids, Clintonville City Administrator Sharon Eveland informed the committee that the city had received the objection.
“We absolutely need to make sure that we are supporting our businesses, especially the manufacturers in our industrial area,” Eveland said. “But we also need some give from them as well. I have a hard time supporting a (project) of $850,000 when it impacts two businesses in a small section of the city when we are, I can’t even say we are scraping by because we very clearly are not able to do what we need to do.
“Something I want to make you aware of in connection to Creative Converting. We’ve received notification that they’re contesting their tax assessment. They want to drop their valuation from about $9 million to about $2 (million).”
Eveland said the city is aware of the flooding situation in that area, and something needs to be done to resolve it. She added that she has reservations about spending that amount of money when one of the companies the project would help wants to take $7 million of value out of the city.
Eveland said she believed Creative Converting was trying to use the “Dark Store Theory” to justify the objection of its assessment.
Under the dark store theory, a factory or a big box retail store seeks lower property taxes by basing its assessment on its market value if the building was vacant, instead of an actively operating business.
“I bring this up because I want you guys to have the full picture and understand what’s going on down there,” Eveland said.
The tax assessment issue needs to be part of the Spring Street project decision moving forward, Eveland told the committee.
Committee Chairman Jim Supanich said Walker Forge was planning to build a retaining wall and re-slope its parking lot so the water drains better.
“They really don’t care if this goes through,” Supanich said. “If it does, they’re happy. But if it doesn’t they have a solution that they’re going to take care of. So this all comes down to (Creative) Converting.”
Supanich said he wasn’t in favor in moving forward with the Spring Street project until the tax situation is clarified.
Eveland said that could take a couple of years.
“I realize that, but until that’s resolved I wouldn’t move forward much with this,” Supanich said. “But the problem at Converting is that they’re losing product and shutting equipment down because their factory is flooding. We have to show some concern to the manufacturers we have. Converting could have moved this facility to Appleton instead of Appleton to here, so we have to try to work with them a little bit.”
After discussing how badly the estimate for the project was missed, the committee approved having Eveland and Clintonville Public Works Director Kray Brown work with whomever necessary to look for a cost effective and short term solution for the flooding that takes place at Creative Converting.
The Spring Street project and the property tax assessment objection were also discussed at the Sept. 11 Finance Committee meeting.
At this meeting Eveland told the Finance Committee that because of the high bids for the project the city is looking at different options to solve the flooding issues on Spring Street. Eveland also updated the committee regarding the property tax assessment objection by Creative Converting.
“The way it was explained to me was that if this goes to court, which is likely, this could get dragged out a couple of years like the Sturm Foods one got dragged out,” Eveland said.
She added, “This could be a very significant hit to the city.”
As she did at the Streets Committee meeting, Eveland said it is important for the city to support its businesses, but she had reservations about moving forward with the Spring Street project knowing that the company that is the primary beneficiary of the project is contesting its property taxes.
Eveland said if Creative Converting is successful in its property tax assessment objection, the city would lose roughly $60,000 in revenue. Waupaca County, the Clintonville School District and Fox Valley Technical College would also lose out on revenue.
The Clintonville Tribune-Gazette received a copy of the Personal Property objection that the city received from the State Board of Assessors. According to the document, parcel number 30 24 14 1 is assessed at $3.3 million, and Creative Converting feels its value is $1.5 million.
Parcel number 30 24 42-24 is assessed at $6.3 million, and Creative Converting feels its value is $1.7 million.
For both parcels, the reason stated for the objection is, “The 2017 assessed value overstates the actual market value of the property based on sales of similar plants, and significant market and functional obsolescence associated with the plant.”
The basis for the opinion in both cases is, “Sales of comparable properties of similar size and construction type indicate that the market value of this property should be reduced.”
In another section of the objection it shows that machinery and equipment is assessed at $935,900, all other personal property at $1,400 and buildings on leased land at $3.6 million. Creative Converting is objecting to the assessed value of buildings on leased land, which it says should be $1 million.
The reason for the objection is, “The 2017 assessments overstates the value of the improvement portion of the personal property.”
The basis for the opinion is, “Sales of comparable properties of similar size and construction type indicate that the market value of this property should be reduced.”