Allright Properties, Inc. v. City of Milwaukee

• Decision Date: 10 March 2009
• Docket Number: No. 2008AP510.,2008AP510.
• Citation: 767 N.W.2d 567,2009 WI App 46
• Parties: ALLRIGHT PROPERTIES, INC., Plaintiff-Respondent,<SMALL><SUP>&#x2020;</SUP></SMALL> v. CITY OF MILWAUKEE, Defendant-Appellant.
• Court: Wisconsin Court of Appeals

767 N.W.2d 567

2009 WI App 46

ALLRIGHT PROPERTIES, INC., Plaintiff-Respondent,^† v. CITY OF MILWAUKEE, Defendant-Appellant.

No. 2008AP510.

Court of Appeals of Wisconsin.

Submitted on Briefs September 8, 2008.

Opinion Filed March 10, 2009.

On behalf of the defendant-appellant, the cause was submitted on the briefs of Grant F. Langley, city attorney and Vincent D. Moschella, deputy city attorney of Milwaukee.

On behalf of the plaintiff-respondent, the cause was submitted on the brief of Robert L. Gordon and Alan Marcuvitz of Michael Best & Friedrich LLP of Milwaukee.

Before CURLEY, P.J., and FINE and KESSLER, JJ.

¶ 1 KESSLER, J

Allright Properties, Inc., paid real property taxes assessed by the City of Milwaukee for the years 2004 and 2005, then sued, pursuant to WIS. STAT. § 74.37(3)(d) (2005-06),¹ "to recover that amount of general property tax imposed because the assessment of property was excessive." See § 74.37(1). After a long court trial, the trial court issued a detailed written opinion² concluding that the City's appraisal of $10,115,000 as the fair market value of the property was excessive and that Allright's appraisal of $3,300,000 as the fair market value of the property was "more credible." Based on Allright's valuation, the court awarded Allright a refund of the excess taxes paid. The City appealed.

¶ 2 We reverse. We disagree with the trial court's conclusion that the City failed to follow the applicable assessment rules, and its conclusion that Allright did follow them. We conclude that Allright has failed to rebut the statutory presumption that the City's assessment was correct, in part because it failed to consider income that appertains to the land. Further, we disagree with Allright's claim and the trial court's conclusion that the City's assessment violates the uniformity clause of the Wisconsin Constitution. For these reasons, we reverse and remand with directions to enter judgment in favor of the City, upholding its original assessment.

BACKGROUND

¶ 3 Allright owns 8.715 acres of real estate on South Howell Avenue, the main road on the west side of the entrance to General Mitchell International Airport in Milwaukee. Allright operates the property as a commercial surface parking lot that primarily serves those who are using the airport. The parking lot is fenced around the perimeter and has an asphalt surface, 1450 marked parking stalls, a ticket booth and ticket dispenser covered by a canopy, automatic gate arms and exterior lighting. Allright provides twenty-four hour locked and guarded security at the parking lot, and shuttle service to and from the airport. The property also contains a 1420-square-foot building containing an office and a warehouse/garage.

¶ 4 When the City conducted its assessment process for years 2004 and 2005, the City assessor concluded there had been no recent sale of this specific property, and no recent sales of comparable property. Thus, the assessor considered the "income approach" and the "cost approach" to value the property.³ The City assessed taxes on the property in the amount of $261,573.90 for 2004 and $247,817.51 for 2005, based on its conclusion that the value of the property for both 2004 and 2005 was $10,115,000.

¶ 5 Allright timely appealed these assessments, each of which was sustained by the board of review. Allright timely paid the taxes and served the City with a claim for excessive assessment pursuant to WIS. STAT. § 74.37(2)(a).⁴ The City disallowed the claim.

¶ 6 Next, Allright timely brought this action in the trial court to recover the excess taxes it paid, alleging that it should have paid taxes based on a fair market value of $3,300,000. See WIS. STAT. § 74.37(3)(d).⁵ The parties stipulated that the court's decision would also govern the 2006 assessment of the property.

¶ 7 The claim was tried to the court on December 18 and 19, 2006. Allright presented three witnesses: appraisers Lawrence Nicholson and S. Steven Vitale, and Michael Kenney, who is General Manager of Wisconsin Operations for Allright's corporate parent. The City presented testimony from City of Milwaukee Senior Property Appraiser Daniel R. Furdek and Chief Assessor Peter C. Weissenfluh.

¶ 8 After post-trial briefing, but prior to the trial court issuing its written decision, the City learned that Allright had sold the property on May 22, 2007, for $12,300,000. Allright had recorded the deed on July 26, 2007 and had filed an electronic real estate transfer tax return with the Wisconsin Department of Revenue on September 6, 2007.⁶ The City moved to reopen the record to include this evidence. Allright opposed the motion to reopen the record, claiming that the transfer was "far too remote" to be relevant to the property's value in 2004 and that the sale was not an arm's-length transfer because it was part of a sale to equity investors by Allright's parent company. The trial court heard arguments from the parties, but did not take testimony on this issue.

¶ 9 The trial court issued its written decision on January 16, 2008, which addressed both the trial and the motion to reopen the evidence. First, it denied the City's motion to reopen the trial record to introduce evidence of the 2007 sale. Second, it found that the fair market value of the property was $3,300,000 and that the City's assessment was invalid because "the assessor failed to consider comparable sales in the assessment process as required by Wisconsin law." Thus, the court found that taxes should have been paid based on a fair market value of $3,300,000 and ordered a refund of excess taxes paid by Allright. Finally, the court concluded that the assessment also violated article VIII, section 1 of the Wisconsin Constitution because it was not made on a uniform basis with other properties in the City. This appeal follows.

LEGAL STANDARDS

¶ 10 The rules for real property assessment begin with WIS. STAT. § 70.32(1), which provides in pertinent part:

Real property shall be valued by the assessor in the manner specified in the Wisconsin property assessment manual provided under s. 73.03(2a) ... at the full value which could ordinarily be obtained therefor at private sale. In determining the value, the assessor shall consider recent arm's-length sales of the property to be assessed[;] ... recent arm's-length sales of reasonably comparable property; and all factors that, according to professionally acceptable appraisal practices, affect the value of the property to be assessed.

Id. This statute requires adherence to the Wisconsin Property Assessment Manual for Wisconsin Assessors (hereafter "Property Assessment Manual"),⁷ absent conflicting law. Walgreen Co. v. City of Madison, 2008 WI 80, ¶ 3, 311 Wis.2d 158, 752 N.W.2d 687. Thus, we analyze the applicable statutes "in conjunction with basic principles of real property assessment as described by case law, treatises, and the Property Assessment Manual." Id., ¶ 19.

¶ 11 The Property Assessment Manual and case law set forth a three-tier assessment methodology to determine a property's full value. Adams Outdoor Adver., Ltd. v. City of Madison, 2006 WI 104, ¶ 34, 294 Wis.2d 441, 717 N.W.2d 803. Adams explained:

Evidence of an arm[']s-length sale of the subject property is the best evidence of true cash value. [Tier 1] If there has been no recent sale of the subject property, an assessor must consider sales of reasonably comparable properties. [Tier 2] Only if there has been no arm[']s-length sale and there are no reasonably comparable sales may an assessor use any of the third-tier assessment methodologies. [Tier 3]

Id. (citations omitted).

¶ 12 A party that is dissatisfied with an assessment may bring an excessive tax assessment claim under WIS. STAT. § 74.37(3)(d). "This is not a certiorari review." Bloomer Hous. Ltd. P'ship v. City of Bloomer, 2002 WI App 252, ¶ 11, 257 Wis.2d 883, 653 N.W.2d 309. Acting pursuant to § 74.37(3)(d), the trial court makes determinations concerning excessive tax assessment claims "without giving deference to any determination made at a previous proceeding," including a proceeding before the board of review. Nankin v. Village of Shorewood, 2001 WI 92, ¶ 25, 245 Wis.2d 86, 630 N.W.2d 141. "The court must only give presumptive weight to the assessor's assessment." Id. (citing WIS. STAT. § 70.49(2)). The assessor's assessment "`is presumed correct only if the challenging party does not present significant contrary evidence'" and "`[n]o presumption of correctness may be accorded to an assessment that does not apply the principles in the Property Assessment Manual.'" Walgreen, 311 Wis.2d 158, ¶ 17 752 N.W.2d 687 (citations omitted; bracketing supplied by Walgreen). Stated differently, when a city assessor correctly applies the Property Assessment Manual and Wisconsin statutes, and there is no significant evidence to the contrary, courts will reject a party's challenge to the assessment. See id.

¶ 13 On appeal, we defer to the trial court's findings of fact. See Adams, 294 Wis.2d 441, ¶ 27, 717 N.W.2d 803 ("Where there is conflicting testimony the fact finder is the ultimate arbiter of credibility."). However, "[a]pplying the law to the facts presents a question of law that we review independently." Id. "Failure to make an assessment on the statutory basis is an error of law" and we review de novo "[w]hether the [c]ity followed the statute in making its assessment." Id., ¶ 26. In addition, we independently review the trial court's conclusion that the City violated article VIII, section 1 of the Wisconsin Constitution. See Duesterbeck v. Town of Koshkonong, 2000 WI App 6, ¶ 10, 232 Wis.2d 16, 605 N.W.2d 904 (case involving uniformity claim presented questions of statutory and constitutional interpretation that court reviewed de novo); see also Northwest Airlines, Inc. v. DOR, 2006 WI 88, ¶¶ 25, 62-66, 293 Wis.2d 202, 717 N.W.2d 280 (applying de novo review to "questions of law involving statutory interpretation and a...