When Lands’ End last month asked the city of Dodgeville if it could use Harris Park for no charge the day before its annual sale in the park, the City Council rejected the request on a 7-0 vote.

That’s not surprising.

A Richland County Circuit Court judge ruled in May that the city over-assessed the apparel retailer’s 202-acre corporate headquarters.

That means the governmental units that receive tax money from the company will likely be forced to make cuts in order to refund the excess amount.

Lands’ End has asked for a refund of $524,000 from its 2005 payment and $734,000 from 2006. It also wants interest on the money and is challenging the assessments from 2007 and 2008.

"It comes as a blow," said Diane Messer, superintendent of the Dodgeville School District. "It’s disconcerting but we have to keep in mind that Lands’ End as we knew it is not Lands’ End any longer. The Sears culture has had its impact."

Lands’ End is a major supporter in the Iowa County community of just over 4,000 people. It provides thousands of jobs, has a farmers’ market at its corporate campus and sponsored the recent blues festival in downtown Dodgeville. Its annual five-day warehouse sale, this year scheduled for Aug. 5-9, draws thousands of people to Harris Park.

Once locally owned by founder Gary Comer, who moved the company to Dodgeville from Chicago in 1979, Lands’ End was sold in 2002 to Sears, Roebuck & Co. for $1.9 billion. Lands’ End is now owned by Sears Holdings Corp., which was formed when Kmart Holding Corp. purchased the company in 2005.

In a lawsuit filed last year in Iowa County Circuit Court, Lands’ End claimed that its corporate campus had a fair market value — the amount it would sell for on the open market — of $25 million for each year from 2005 to 2008.

The city assessed the property, which includes six buildings with a total of 1.9 million square feet, at just under $40 million in 2005 and $47.3 million in 2006.

The city assessed the property at $53 million in 2008, which means the city has the potential to lose 8.7 percent of its $320 million tax base.

"It’s being talked about but not as much as it will be in the next few weeks and coming months, said Bob Berglin, executive director of the Dodgeville Area Chamber of Commerce. "But it needs to be (talked about) because this will have an effect on a lot of people."

Michelle Casper, a spokeswoman for Lands’ End, said the company does not comment on litigation.

The School District, the largest collector of property taxes, will likely have to find between $400,000 and $500,000 to cover the refunds for 2005 and 2006. It had a budget of $15.3 million for the 2008-2009 school year.

Messer said the budget for the 2009-2010 school year is being formulated. The School Board may be forced to use money that had been targeted for textbooks, technology, programs, furniture and maintenance repairs. The board has the authority to raise taxes outside of the state revenue limits to cover the refund, but Messer said that option is unlikely for the district of 1,400 students.

"I don’t think the board will take that action, given the economic times, so we’re searching for alternatives," Messer said.

Property taxes from Lands’ End go to the city, which last year accounted for 33.35 percent of the bill; School District (39.07 percent); Southwest Wisconsin Technical College (7.6 percent); Iowa County (19.3 percent); and the state forestry program (0.68 percent).

The city appears to be on the hook for more than $424,000 for the 2005 and 2006 refunds. And because it was in charge of making the assessment, it would be required to pay the interest on the collective $1.2 million refund and the interest on potential refunds for 2007 and 2008.

The city could appeal the judgment, which has not yet been finalized by Judge Edward Leineweber. The judgment would not set a specific deadline to pay the refund, said Ted Waskowski, an attorney for the city.

The City Council and city’s finance committee have scheduled a meeting for Tuesday at City Hall to hear from residents about potential cuts.

 "Everything is on the table," said Mayor Jim McCaulley. "There aren’t a lot of options. We can borrow, cut services or raise taxes and it’ll probably be a combination of those things."

IF YOU GO

What: The Dodgeville City Council and Finance Committee will hold a joint meeting to discuss potential cuts in order to refund tax money to Lands’ End.

When: 7 p.m. Tuesday

Where: Dodgeville City Hall, 100 E. Fountain St.