Columbus Park Housing v. Kenosha, No. 02-0699.

• Court: United States State Supreme Court of Wisconsin
• Citation: 267 Wis.2d 59,671 N.W.2d 633,2003 WI 143
• Decision Date: 19 November 2003
• Parties: COLUMBUS PARK HOUSING CORPORATION, Plaintiff-Respondent, v. CITY OF KENOSHA, Defendant-Appellant-Petitioner.
• Docket Number: No. 02-0699.

267 Wis.2d 59
2003 WI 143
671 N.W.2d 633

COLUMBUS PARK HOUSING CORPORATION, Plaintiff-Respondent,
v.
CITY OF KENOSHA, Defendant-Appellant-Petitioner

No. 02-0699.

Supreme Court of Wisconsin.

Oral argument September 11, 2003.

Decided November 19, 2003.

267 Wis.2d 63

For the defendant-appellant-petitioner there were briefs by Robert I. DuMez and O'Connor, Willems, DuMez, Alia & McTernan, S.C., Kenosha, and oral argument by Robert I. DuMez.

For the plaintiff-respondent there were briefs by David L. Kinnamon, Anthony A. Tomaselli, David C. Swanson, and Quarles & Brady LLP, Madison, and oral argument by David L. Kinnamon.

An amicus curiae brief was filed by Gregg C. Hagopian and Genevieve O'Sullivan-Crowley, assistant city attorneys, and Grant F. Langley, city attorney, on behalf of the City of Milwaukee.

An amicus curiae brief was filed by Claire Silverman, Madison, on behalf of League of Wisconsin Municipalities.

267 Wis.2d 64

¶ 1. JON P. WILCOX, J

City of Kenosha (Kenosha) seeks review of a published court of appeals decision, Columbus Park Housing Corporation v. City of Kenosha, 2002 WI App 310, 259 Wis. 2d 316, 655 N.W.2d 495, that affirmed an order of the Kenosha County Circuit Court, David M. Bastianelli, Judge, granting summary judgment in favor of Columbus Park Housing Corporation (Columbus Park), finding that Columbus Park was exempt from certain real property taxes under Wis. Stat. § 70.11(4) (1999-2000).¹ Because we determine that Columbus Park has failed to satisfy the lessee identity condition in the preamble of § 70.11, we reverse the court of appeals' decision.

I. FACTUAL BACKGROUND

¶ 2. The parties to this action have stipulated to the essential facts. Columbus Park is a nonstock, nonprofit Wisconsin corporation that acquires blighted property in Kenosha, rehabilitates the property, and makes the property available for rent to qualified low-income families. The parties agree that Columbus Park is a benevolent association, within the meaning of Wis. Stat. § 70.11(4), whose mission is to improve the living conditions of the poor and underprivileged in Kenosha by providing safe, affordable housing.

¶ 3. Columbus Park seeks to fulfill its mission by engaging in two principal activities. First, Columbus Park rehabilitates dilapidated buildings by providing work and training opportunities to several at risk groups, including Kenosha County Jail inmates, who restore the buildings. Once the buildings are refurbished,

267 Wis.2d 65

Columbus Park rents units to qualifying lowincome families who might otherwise be homeless. All of Columbus Park's rental units, with the exception of one unit occupied by its executive director and resident manager, are occupied by individuals with annualized income below the federal poverty level. Columbus Park then uses the rental income from its leased properties, in part,² for maintenance and construction debt reduction of its leased properties

¶ 4. Columbus Park participates in the federal rent subsidy program under section 8 of the Federal Fair Housing Act. 42 U.S.C. § 1437f (1999).³ Columbus Park charges its tenants 30% of their income and receives subsidies from the federal government through the Kenosha Housing Authority (the Authority), which bring the rents to reasonable market rates. The disputed taxes were levied on properties that had been rehabilitated and were rented to low-income individuals or awaiting occupancy.

¶ 5. The affidavit of Kathy Rippon, Executive Director of Columbus Park, provides that in 1998 and 1999 Columbus Park "used all of the leasehold income received from its tenants and all the lease subsidies received [from the federal government] for maintenance of the leased property, construction debt retirement of the leased property or both." Further, it states, "[g]ifts, grants and contributions made to [Columbus Park] by individuals, corporations, charitable organizations

267 Wis.2d 66

and governmental entities covered net losses incurred by [Columbus Park] on properties leased to low-income lessees in both 1998 and 1999."

II. PROCEDURAL POSTURE

¶ 6. Columbus Park instituted this declaratory judgment action, seeking a determination that taxes assessed and levied on certain real property of Columbus Park by Kenosha in 1998 were illegal and that Columbus Park was entitled to a refund for taxes assessed by Kenosha and paid by Columbus Park on certain pieces of real estate in 1999. The circuit court granted Columbus Park summary judgment, finding it exempt from taxation under Wis. Stat. § 70.11(4); Kenosha appealed.

¶ 7. The court of appeals affirmed the circuit court's grant of summary judgment, determining that Columbus Park "exclusively used the properties in question for benevolent purposes in both 1998 and 1999." Columbus Park, 259 Wis. 2d 316, ¶ 16. The court of appeals also determined that Columbus Park met the rent use condition in the preamble of Wis. Stat. § 70.11. Id., ¶ 24. Finally, the court of appeals held that Columbus Park satisfied the lessee identity condition in the preamble of § 70.11. Id., ¶ 28.

III. ISSUES

¶ 8. Kenosha raises three issues on appeal to this court: (1) whether a benevolent association satisfies the lessee identity condition in the preamble of Wis. Stat. § 70.11 when it rents property to low-income individuals participating in section 8 of the Federal Fair Housing Act; (2) whether a benevolent association meets the requirement in § 70.11 that it use all leasehold income for the purposes of maintenance of the

267 Wis.2d 67

leased property, debt retirement, or both when it applies a portion of the leasehold income from one property to the maintenance and/or construction debt retirement of another property; and (3) whether a benevolent association meets the requirement in § 70.11(4) that the benevolent association "exclusively use" the properties in question when it leases such property to individual tenants. Because we conclude that Columbus Park has not satisfied the lessee identity condition in the preamble of § 70.11, we do not address the other two issues raised by Kenosha

IV. STANDARD OF REVIEW

[1-3]

¶ 9. This case arises from the circuit court's grant of summary judgment to Columbus Park. We review the grant of summary judgment de novo, applying the same standards as the circuit court. Voss v. City of Middleton, 162 Wis. 2d 737, 748, 470 N.W.2d 625 (1991). This court reverses a grant of summary judgment if it was based on an incorrect interpretation of a legal issue. St. John's Lutheran Church v. City of Bloomer, 118 Wis. 2d 398, 400, 347 N.W.2d 619 (Ct. App. 1984). The resolution of this dispute involves the interpretation of Wis. Stat. § 70.11(4) and the application of this statute to a particular set of facts. These are questions of law that this court reviews de novo. Deutsches Land, Inc. v. City of Glendale, 225 Wis. 2d 70, 79-80, 591 N.W.2d 583 (1999).

[4, 5]

¶ 10. In construing a statute, our primary purpose is to give effect to the legislative intent embodied in the language of the statute. Id. at 80. However, when the language of a statute is unambiguous, "`[s]tatutory

267 Wis.2d 68

interpretation . . . is confined to [] the language of the statute[.]'" Burg ex rel. Weichert v. Cincinnati Cas. Ins. Co., 2002 WI 76, 254 Wis. 2d 36, ¶ 16, 645 N.W.2d 880 (citations omitted). Pursuant to Wis. Stat. § 990.01(1), all words and phrases shall be given their ordinary and accepted meaning but technical words shall be given their accepted legal meaning.

[6-9]

¶ 11. In addition, in construing tax exemption statutes, "taxation of property is the rule and exemption is the exception." Deutsches Land, 225 Wis. 2d at 80. See also Wis. Stat. § 70.109. Thus, this court applies a "strict but reasonable" interpretation to tax exemption statutes. Id. "Since exemption from the payment of taxes is an act of legislative grace, the party seeking the exemption bears the burden of proving that it falls within a statutory exemption." Id. Thus, any ambiguity in the statute is resolved in favor of taxation. Id.

V. ANALYSIS

¶ 12. In resolving whether Columbus Park is entitled to a tax exemption under § 70.11(4), this court must answer a single question: Does Columbus Park fall within the plain language of Wis. Stat. § 70.11(4)? Wisconsin Stat. § 70.11(4) exempts from taxation "[p]roperty owned and used exclusively by . . . benevolent associations . . . but not exceeding 10 acres of land necessary for location and convenience of buildings while such property is not used for profit." Further, § 70.11(4) provides: "Property that is exempt from taxation under this subsection and is leased remains exempt from taxation only if, in addition to the requirements specified in the introductory phrase of this section, the lessee does not discriminate on the basis of race."

267 Wis.2d 69

¶ 13. The introductory section of Wis. Stat. § 70.11—the preamble—provides:

Leasing a part of the property described in this section does not render it taxable if the lessor uses all of the leasehold income for maintenance of the leased property, construction debt retirement of the leased property or both and if the lessee would be exempt from taxation under this chapter if it owned the property.

Wis. Stat. § 70.11 (emphasis added).

¶ 14. In Deutsches Land, this court construed the preamble of § 70.11 as containing the following requirements:

(1) the exempt organization must use the leasehold income for maintenance of the property, construction debt retirement, or both (the "rent use condition") and (2) the lessee would itself be entitled to an exemption if it owned the property (the "lessee identity condition"). If the exempt organization uses the rental income in ways other than provided for by the statute, no exemption can be claimed on the leased part of the property. Likewise, if the lessee itself is not an exempt organization but rather a for-profit organization, no exemption can be claimed on the leased part of the

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