Posted on December 00, 0000 in Business Law

The Wisconsin Supreme Court has paved the way for many Milwaukee businesses and retailers to take advantage of a number of benefits associated with the sale-leaseback transaction and business model. In Walgreen Co., v. City of Madison, 2008 WI 80, the Court made two major rulings: 1) the assessor was required to determine the value of leased properties under the income approach using the market rent terms rather than contract rent terms; and 2) the assessor could not include real estate's atypical financing or above market rent when assessing the property under the income approach.

In so doing, the Court also confirmed that assessors must use and adhere to the Wisconsin Property Assessment Manual in the absence of other conflicting law. (Id. at ¶3). What the manual did, and what the Court found, is that the analysis required "an income approach assessment of a leased retail property's fair market value of the fee simple interest to be based on market lease rates, not actual contract rates, as long as encumbrances to the property do not cause its leased fee value to fall below a market rate value." Id.

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