Kohler Co. scores court wins in tax battle

The Kohler Co.'s lawsuits against the Village of Kohler — as complex, dense and voluminous as they are — boil down to one claim: the village overtaxed them.

And in the last two months, two judges have agreed with that claim.

In early February, Judge Timothy Van Akkeren ruled against the village in one lawsuit, ordering them to repay Kohler Co. more than $605,000 in property tax overpayments for the 2012 tax year, plus interest. In late March, Judge Terence Bourke made a similar ruling regarding the 2011 tax year, instead ordering the village to reassess the property.

Kohler Co. sued the village in 2012 after they failed to reach agreement on the assessed value of Kohler Co.'s property for the 2011 tax year. That year, the Village of Kohler assessed the American Club and its related properties at a value of $25.49 million. Kohler Co. contended that the property was only worth $18.6 million. Similar differences occurred with respect to Blackwolf Run, Riverbend and the Inn on Woodlake from 2011-13.

As a result, Kohler Co. was asking for compensation of approximately $600,000 in "overpayments" per year.

While there's a few issues up for debate in the case, the main issue is the concept of "business value" and how it relates to a valuation. In some cases, municipal assessors must deduct value that is tied into "intangible" elements of the property — management, branding, marketing, workforce, etc.

In Kohler's case, they argue that the value added to the property by their management and operations of the facilities should have been deducted by the village. If the American Club's value is enhanced by Kohler's high standards of quality and service, they argued, those should not be subject to assessment.

The village's counter argument is that you can't separate the business value from the property in these cases. For example, the village argued that while Kohler can tout its management of Blackwolf Run as enhancing the golf course's status, the course itself is a championship level course because of its placement and design. As such, the business value Kohler adds can't be separated from the course itself.

Furthermore, they argue that Wisconsin law stipulates that there's a "presumption of correctness" in assessment that can only be overturned with significant contrary evidence, which they said was not presented in this case.

A third lawsuit is pending before Judge Angela Sutkiewicz with similar claims for the 2013 tax year. A letter from Kohler's attorneys argued that Van Akkeren's ruling should be taken into consideration and that a summary judgment should be entered in favor of Kohler Co.

Village of Kohler attorneys contest that approach, noting that the village could appeal Van Akkeren's ruling.

Kristina Somers, an attorney for Kohler Co., said her client hopes the cases can still be resolved in a "timely manner."

"The company is willing and prepared to pay its fair share of property taxes to the Village of Kohler, and is committed to positively contributing to and fairly supporting all communities where it conducts its business operations," Somers said in an email to the Sheboygan Press.

Nicholas Boerke, an attorney for the Village of Kohler, said the village would not comment on "ongoing litigation."

— Reach Jason Smathers at 920-453-5167.