Lowe’s Home Centers, LLC v. City of Delavan

Lowe’s Home Centers, LLC (LHC) (plaintiff) owned property in the City of Delavan (city) (defendant) that consisted of land and a large Lowe’s Home Improvement Store. The city fully reevaluated the property’s value in 2013 using the cost approach, meaning the property’s replacement value, and assessed it to be $8,922,300. In the following years, including 2016 and 2017, the valuation remained the same because the property was subject only to maintenance assessments. However, LHC filed an action in circuit court to challenge the city’s 2016 and 2017 assessments, claiming that the assessments, which were supported by appraisers’ affidavits, were excessive. As evidence, an expert for LHC testified that the proper valuation of LHC’s property was $4.6 million using a sales-comparison approach. The expert relied on six sales of similar commercial properties. However, three of the properties were in receivership when sold, and the other three had been on the market for two to four years before being sold. A countering expert for the city testified that the value of LHC’s property using a sales-comparison approach was $9.2 million. The city’s expert based its analysis on different properties, believing that relying on sales of distressed or long-vacant properties was inappropriate. The expert instead relied on comparable sales involving properties occupied at the time of sale and with ongoing market-rate leases. The expert further testified that the usual sale time for commercial properties in the area was two to 18 months. The circuit court deemed the city’s evidence significantly more credible than LHC’s and therefore upheld the city’s 2016 and 2017 assessments. LHC appealed.