Lowe's Home Ctrs. v. City of Delavan
| Citation | 2023 WI 8 |
| Decision Date | 16 February 2023 |
| Docket Number | 2019AP1987 |
| Parties | Lowe's Home Centers, LLC, Plaintiff-Appellant-Petitioner, v. City of Delavan, Defendant-Respondent. |
| Court | United States State Supreme Court of Wisconsin |
Submitted on Briefs: oral argument: September 28, 2022
REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 400 Wis.2d 542, 970 N.W.2d 568 (2022 - unpublished)
Circuit Court Walworth county, L.C. No. 2016CV589 & 2017CV432 Daniel Steven Johnson Judge
For the plaintiff-appellant-petitioner, there were briefs filed by Thomas R. Wilhelmy, Daniel P. Deveny and Fredrikson & Byron,. P.A., Minneapolis. There was an oral argument by Daniel P. Deveny.
For the defendant-respondent, there was a brief filed by Lori M. Lubinksy, Danielle Baudhuin Tierney, and Axley Brynelson, LLP, Madison. There was an oral argument by Danielle Baudhuin Tierney.
An amicus curiae brief was filed by Jason P. Gehring, Dustin T. Woehl, and Kasdorf, Lewis & Swietlick, S.C., Milwaukee, on behalf of the Village of Plover, Wisconsin.
An amicus curiae brief was filed by Misha Tseytlin, Kevin M. LeRoy, and Troutman, Pepper, Hamilton, Sanders LLP, Chicago, on behalf of the Chamber of Commerce of the United States of America.
An amicus curiae brief was filed by Scott E. Rosenow and the WMC Litigation Center, Madison, on behalf of Wisconsin Manufacturers and Commerce, Inc.
An amicus curiae brief was filed by Amy R. Seibel, Claire Silverman, and Seibel Law Offices, LLC, Mequon, and the League of Wisconsin Municipalities, Monona, on behalf of the League of Wisconsin Municipalities. There was an oral argument by Amy R. Seibel.
¶1 The petitioner, Lowe's Home Centers, LLC, seeks review of an unpublished per curiam decision of the court of appeals affirming the circuit court's determination that the City of Delavan's assessments of Lowe's' property for the 2016 and 2017 tax years were not excessive.[1]Lowe's contends that the City's assessments should not have received a presumption of correctness and that the assessments improperly excluded comparable properties for the sole reason that those properties were unoccupied.
¶ 2 Specifically, Lowe's contends that the City's assessments should not have received a presumption of correctness because, it argues, they were conducted in violation of the dictates of the Wisconsin Property Assessment Manual (the Manual). Further, it asserts that the vacant big-box retail locations it presented to the circuit court are comparable to the subject property and thus should have been considered in the City's assessments.
¶ 3 The City argues to the contrary, contending that the presumption of correctness was appropriately afforded to its assessments. It additionally asserts that the unoccupied properties Lowe's presented as comparable properties were properly excluded from the analysis.
¶ 4 We determine that the assessments in this case were properly afforded a presumption of correctness. Pursuant to Wis.Stat. § 70.49(2) (2019-20),[2] the presumption attaches upon the filing of the assessment along with the assessor's affidavit.
¶ 5 We further determine that Lowe's failed to demonstrate that the City's assessments were excessive. Giving deference to the circuit court's factual findings, including its credibility determinations, we conclude that Lowe's did not provide significant contrary evidence sufficient to overcome the presumption of correctness.
¶ 6 Accordingly, we affirm the decision of the court of appeals.
¶ 7 Lowe's is the owner of property in the City of Delavan. The property consists of 14.525 acres on which sits a 134,574-square-foot Lowe's Home Improvement store. Construction on the building was completed in 2005, and Lowe's has occupied the building since that time.
¶ 8 In 2013, the City assessor conducted a revaluation of the property, and arrived at an assessed value of $8,922,300. No changes were made to this value for purposes of the 2016 and 2017 assessments.
¶ 9 Lowe's challenged the City's assessments for 2016 and 2017. It sought a waiver of its hearing before the City's Board of Review and the Board granted the waiver thereby disallowing the claim.[3] After its claim was disallowed, Lowe's filed this action under Wis.Stat. § 74.37(3)(d),[4] asserting that the assessments of its property for the 2016 and 2017 tax years were excessive and seeking to recover the excess amount it believed it had paid.
¶ 10 The circuit court held a three-day bench trial on the matter. At trial, City Assessor Luke Mack testified, as did the City's expert appraiser Scott Chapko. Lowe's offered testimony from two experts, Michael MaRous and Brett Harrington.[5]
¶ 11 Mack testified regarding the method he employed for valuing the property for 2016 and 2017. He described those assessments as "maintenance" assessments, which means that the property was not subject to a full revaluation.[6] Mack further testified that the prior assessment of the property, completed in 2013, was done using the cost approach,[7] that replacement costs were based on "Marshall and Swift cost data, "[8] and that market adjustments were applied for depreciation and additional obsolescence. He also compared the assessments to recent revaluations in other communities.
¶12 Lowe's' expert, MaRous, testified that the property should have been valued at a much lower level than the City had offered. In MaRous's opinion, the subject property had a fair market value of $4.6 million-just over half of the City's assessed value.
¶ 13 To arrive at this valuation, MaRous used the sales comparison approach. In doing so, he compared the Lowe's property to six other recently-sold properties that he had determined to be "comparable" to the Lowe's property.
¶ 14 Three of the six comparable sites MaRous identified (what MaRous termed sales one, three, and six) were former American TV locations. Two of these sites were sold to Steinhafel's furniture and one was sold and converted into a go-kart racing track, bar, and restaurant. All three were in receivership[9] when they were sold.
¶ 15 MaRous's comparable sale number two was a former K-Mart store that, by MaRous's testimony, had been vacant and marketed for "2 to 3 years" prior to being sold. Comparable sale number four was a former Lowe's store in Brown Deer. The property had been built in 2006 and vacated by Lowe's just five years later. It sat vacant for two years before being purchased by Walmart in 2013. MaRous further advanced that the "exposure time," or the length of time it takes a property to sell on the open market, for properties similar to the subject property in the same geographical area is two to three years.
¶ 16 Finally, MaRous offered comparable sale number five, a vacant former Target store. This property was "vacant before the purchase for about four years." It was ultimately purchased by a developer who "broke it up into two [lots] . . . because that's where the demand was."
¶ 17 The City countered Lowe's' expert with its own expert, Scott Chapko. Chapko valued the property at $9.2 million, slightly higher than the assessed value. Like MaRous, he arrived at this valuation using the sales comparison approach, although Chapko used different properties as comparables than MaRous used.
¶ 18 Chapko testified that he did not think it was appropriate to use "dark" stores or "distressed" properties to compare to the occupied Lowe's property.[10] Accordingly, Chapko did not use any such properties in his analysis. All of Chapko's submitted comparable sales were occupied at the time of sale and had market-rate leases in place. None was sold under "duress," such as a bankruptcy or foreclosure. Chapko additionally testified that the exposure time for a property like the subject property is in the "overall range of 2 to 18 months."
¶ 19 The circuit court ultimately upheld the City's assessments. Specifically, it determined that "the evidence presented by Lowe's in this case is significantly less credible than that presented by the City when it comes to a proper value to be attached to this real estate for the years 2016 and 2017." In discussing MaRous's appraisal, the circuit court discounted MaRous's claimed comparables two and five in that they "were both vacant beyond the 2-3 year window that Mr. MaRous apparently identifies as the normal exposure time for the Delavan area," classifying those properties as "dark" for this reason. It further explained:
In that these two properties are dark they have a major deficiency when compared with the Lowe's store in question. Further, the fact that they were considered comparable sales at all is in apparent direct conflict with the [principles] outlined in the Manual stating not to use dark properties in performing an appraisal unless the subject property is also dark.
¶ 20 The circuit court also found unpersuasive MaRous's reliance on what it considered "distressed" properties. It observed:
[H]alf of the comparable sales used by Mr. MaRous were in receivership. The Court might be able to overlook one comparable sale in receivership or under possible duress as an outlier if it was able to put that outlier in the context of five other properties without significant flaws, not in receivership, with similar adjusted values. However, the Court cannot do so here because of the number of properties in receivership and the flaws of the other non-receivership comparable sales.
¶ 21 Due to the "significant deficiencies" in MaRous's appraisal, the circuit court concluded that...
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State v. Jacobson
...is against the great weight and clear preponderance of the evidence. Lowe's Home Ctrs., LLC v. City of Delavan, 2023 WI 8, ¶25, 405 Wis.2d 616, 985 N.W.2d 69. It is the role the circuit court, not the appellate court, to determine "the weight and credibility" of the evidence, Metropolitan A......