Metro. Assocs. v. City of Milwaukee
| Decision Date | 10 January 2018 |
| Docket Number | No. 2016AP21,2016AP21 |
| Citation | 379 Wis.2d 141,2018 WI 4,905 N.W.2d 784 |
| Parties | METROPOLITAN ASSOCIATES, Plaintiff-Appellant-Petitioner, v. CITY OF MILWAUKEE, Defendant-Respondent. |
| Court | Wisconsin Supreme Court |
For the plaintiff-appellant-petitioner, there were briefs filed by Alan Marcuvitz, Nicholas J. Boerke, and Von Briesen & Roper, S.C., Milwaukee. There was an oral argument by Nicholas J. Boerke and Alan Marcuvitz.
For the defendant-respondent, there was a brief filed by Grant F. Langley, city attorney, and Allison N. Flanagan, assistant city attorney. There was an oral argument by Allison N. Flanagan.
An amicus curiae brief was filed on behalf of League of Wisconsin Municipalities by Claire Silverman and League of Wisconsin Municipalities, Madison.
¶1 The petitioner, Metropolitan Associates (Metropolitan), seeks review of an unpublished court of appeals decision affirming the circuit court's determination, which in turn affirmed the City of Milwaukee's (the City) tax assessment of property owned by Metropolitan.1 Metropolitan contends that the court of appeals erred in concluding that the City complied with Wis. Stat. § 70.32(1) (2013-14)2 in its assessment of Metropolitan's property.
¶2 Specifically, Metropolitan argues that the City contravened Wis. Stat. § 70.32(1) because it failed to utilize the "best information" available when it relied on mass appraisal, and not single-property appraisal, in determining the value of Metropolitan's property. Metropolitan additionally asks this court to reject the findings of the circuit court regarding the reliability of the competing assessment evidence and the weight and credibility the circuit court attributed to that evidence. Ultimately, it argues that the application of the presumption of correctness to the City's assessment based on a mass appraisal constitutes an error of law.
¶3 We conclude that the City's assessment of Metropolitan's property complied with Wis. Stat. § 70.32(1). The City permissibly utilized mass appraisal for its initial assessment and appropriately defended its initial assessment with single property appraisals demonstrating that the assessment was not excessive.
¶4 Next, we decline Metropolitan's request to upset the circuit court's findings of fact. As the court of appeals aptly stated, "[i]n asking us to reject the court's judgment as to the weight and credibility of the competing assessment evidence, Metropolitan effectively asks us to substitute our judgment for the circuit court's regarding the credibility of witnesses and the relative weights to assign to various pieces of the evidence at trial, neither of which we can do."3
¶5 We conclude that the circuit court's findings of fact regarding the reliability of the respective appraisals are not clearly erroneous. Because the circuit court's findings are sufficient to support its determination regardless of whether the presumption of correctness was employed, we need not address whether the presumption of correctness attached to the assessment based on the initial mass appraisal.
¶6 Accordingly, we affirm the decision of the court of appeals.
¶7 The facts presented arise from the City's assessments of seven properties owned by Metropolitan for the tax years 2008-2013. Metropolitan objected that the assessments were excessive, initially appealing to the City's Board of Assessors and Board of Review. The Board of Assessors and Board of Review both upheld the assessments. Metropolitan then brought an excessive assessment action in the circuit court.
¶8 Both parties agreed to present evidence on only one of the seven Metropolitan properties, the Southgate Apartments, and to focus exclusively on the tax years 2008-2011. They further agreed that the resolution of the Southgate Apartments assessment would control the resolution of Metropolitan's challenges to the other six properties' assessments.
¶9 The Southgate Apartments were initially assessed by the City using a "mass appraisal" technique. At trial, the City assessor, Peter Weissenfluh, testified that
¶10 Mass appraisal stands in contrast to single property appraisal. Weissenfluh testified that single property appraisal "is looking at the individual properties and determining the full fair market value of that individual property with more detail and more ... individual analysis ...."
¶11 Single property appraisals are conducted by what Weissenfluh described as a "three-tier valuation technique." The three "tiers" of analysis provide a hierarchy of what constitutes the best evidence of fair market value. Pursuant to a "tier 1" analysis, the best evidence of value is a recent sale of the subject property.
¶12 Weissenfluh explained that there were no recent sales of the Southgate Apartments. Because no tier 1 evidence was available, he then moved to a "tier 2" analysis, also known as a "sales comparison" approach.
¶13 A tier 2 analysis examines any sales of reasonably comparable property. Under this approach, as Weissenfluh testified, an assessor The assessor then selects comparable properties relying on such factors as location and use, adjusting the sale price based on particular physical characteristics of the properties.
¶14 Weissenfluh testified that he completed a tier 2 analysis to assess the Southgate Apartments. Through this analysis, he ultimately arrived at a value higher than that produced with the initial mass appraisal.
¶15 If there is no information from which to conduct either a tier 1 or tier 2 analysis, the assessor moves to a "tier 3" analysis. A tier 3 analysis takes into account other characteristics of the property, such as the amount of income it generates and the cost to maintain it.
¶16 Weissenfluh conducted a tier 3 income analysis "to confirm that the sales comparison approach made sense." He further testified that his income analysis validated the results of the sales comparison analysis, confirming that the initial mass appraisal was not excessive.
¶17 Metropolitan responded by presenting the testimony of its appraiser, Lawrence Nicholson. He also conducted both tier 2 and tier 3 analyses of the Southgate Apartments. Nicholson concluded, contrary to Weissenfluh's determination, that the Southgate Apartments had a value lower than that reflected in the City's initial mass appraisal.
¶18 After a two-day bench trial, the circuit court rendered a written decision affirming the City's initial assessments. The circuit court determined first that the City complied with Wis. Stat. § 70.32(1) and the Wisconsin Property Assessment Manual (the Manual) by conducting a mass appraisal of the Southgate Apartments.
¶19 Second, the circuit court found that the City's tier 2 and 3 valuations were "more reliable" than Metropolitan's. Specifically, the circuit court determined that "[t]he City's sales comparison approach is more reliable than Metropolitan's approach" because Metropolitan made "adjustments based solely on the properties' net operating income[ ]." In so doing, Metropolitan "conflate[d] the sales comparison and income approaches."
¶20 Further, the circuit court found that "[t]he City's income approach was more reliable than Metropolitan's approach." The City's income approach correctly adjusted for Metropolitan's expense ratio, which was "markedly higher than the expense ratios for similar properties in the market." As the circuit court highlighted, "[t]he market trend is to maintain a lower expense ratio, and the City's income approach accounted for this."
¶21 On appeal, Metropolitan argued that the circuit court erred in concluding that Metropolitan failed to rebut the presumption of correctness to which City assessments are entitled. Specifically, it asserted that (1) the City's initial assessments were invalid as a matter of law because the City assessor used the mass appraisal method and not the three-tier technique; (2) the City assessor's tier 2 and 3 assessments were conducted in a manner contrary to Wisconsin assessment law in that the City assessor ignored the individual economic characteristics of the Southgate Apartments property; and (3) the circuit court erred in its determination that the City assessor's methods were more reliable than those of Metropolitan's assessor.
¶22 The court of appeals rejected Metropolitan's arguments. It concluded that the Wisconsin Property Assessment Manual explicitly encourages assessors to use mass appraisal. Metro. Assocs. v. City of Milwaukee, No. 2016AP21, unpublished slip op., ¶ 20 (Wis. Ct. App. Dec. 8, 2016). Next, it determined that the City assessor's sales comparison and income analyses were conducted in accordance with Wisconsin law. Id., ¶ 33. Finally, it opined that the circuit court's determination regarding the reliability of each assessor's methods was a credibility determination that the court of appeals would not upset on appeal. Id., ¶ 35.
¶23 In this case we are asked to review a tax assessment made in an action for refund of excess property taxes paid pursuant to Wis. Stat. § 74.37(3)(d).4 An action under § 74.37 is a new trial, not a certiorari action. Trailwood Ventures, LLC v. Vill. of Kronenwetter, 2009 WI App 18, ¶ 6, 315 Wis. 2d 791, 762 N.W.2d 841. Accordingly, we review the circuit court's determination, not that of the assessor or Board of Review. Id.
¶24 In review, we interpret and apply Wis. Stat. § 70.32 to determine whether the appraisal at issue followed the statutory directives. Regency W. Apartments LLC v. City of Racine, 2016 WI 99, ¶ 22, 372 Wis. 2d 282, 888 N.W.2d 611. Statutory interpretation and application present questions of law that this court reviews...
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