Rosen v. City of Milwaukee
| Decision Date | 02 June 1976 |
| Docket Number | No. 75--26,75--26 |
| Parties | Michael D. ROSEN et al., Appellants, v. CITY OF MILWAUKEE, Respondent. |
| Court | Wisconsin Supreme Court |
Peregrine, Marcuvitz, Cameron,Peltin, Hersh & Lensky, S.C., Milwaukee, on brief; Robert L. Hersh, Milwaukee, argued, for appellants.
James B. Brennan, City Atty., and Walter J. Schutz, Asst. City Atty. (argued), Milwaukee, on brief, for respondent.
The appellant-landowners contend that the assessor and the board of review did not make the valuations in accordance with the statutes, and that there was no credible evidence to sustain the decision of the board of review.
The appellants are the owners of three parcels of improved real estate located in the city of Milwaukee. Parcel A, owned by Michael D. Rosen, is a 48-unit apartment building locatd at 4635 South 20th Street. Parcel B, owned by Horace J. Rosen and Sidney J. Grossman, is a 24-unit apartment building located at 1400 East Warnimont Avenue. Parcel C, also owned by Horace J. Rosen and Sidney J. Grossman, is a 12-unit apartment building located at 3615 South 60th Street.
In July of 1969, the appellants filed written objections to the real estate tax assessments on their properties for 1969. The tax assessment roll for 1969 shows that the appellants' properties were originally assessed as follows:
Parcel A: Land--$47,520; Improvements--$286,650
Parcel B: Land--$21,120; Improvements--$147,900
Parcel C: Land--$11,000; Improvements--$ 67,650
The testimony presented at the hearing before the board of review, held on September 22, 1970, was substantially as follows: 1
Bernard Kristal, a certified public accountant, testified on behalf of the appellants. He stated the owners' records indicated that the total cost of parcel A, including land, building, landscaping, appliances, carpeting and parking lot, was $514,829.39. Of that amount, $67,838.60 was attributed to the land. The gross rental income from the property for 1969 was $92,417.50 and the net income before depreciation on the property and before interest on the indebtedness was $48,155.42.
With respect to parcel B, Kristal testified the total cost was $253,745.37. $29,220.10 was attributed to the land. The gross rental income for 1969 from parcel B was $45,940, and the net income before depreciation and interest was $24,312.44. The total cost of parcel C was $113,227.63. Of that amount, $17,251.50 was attributed to the land. The gross rental income from parcel C for 1969 was $21,253.83 and the net income, before depreciation and interest, was $10,273.10.
Lewis Gral, an investment real estate broker with thirteen years of experience, also testified on behalf of the appellants. Gral stated that, based upon testimony by Kristal as to the net income produced by the properties, he could express an opinion as to the fair market value of each parcel. This estimation of value, Gral stated, was derived by 'using the gross multiplier of 11 times the net income or a cap rate of 9.1 per cent.' Employing this method as to each of the parcels, Gral gave the following estimates of market value: Parcel A--$529,709; Parcel B--$267,436; Parcel C--$113,000.
William F. Wieseler, an assessor for the city of Milwaukee, testified that he assessed each of the parcels in question. Wieseler stated that he made a visual inspection of each of the properties. His estimation of the market value of each parcel was obtained by adding the estimated replacement cost of the improvements to the estimated market value of the land and deducting any depreciation on the improvements. Wieseler estimated the cost of replacing the improvements on parcel A to be $521,180 and the market value of the land to be $86,400, giving a total estimated market value of $607,580, which served as the basis for the assessment value. Wieseler considered the improvements on parcel A at full reproduction cost because they were completed in 1968, the base year for the 1969 valuation.
Wieseler estimated the replacement cost of the improvements on parcel B to be $268,900 and the market value of the land $38,400. Since the improvements on parcel B were also completed in 1968, they too were considered new for assessment purposes and the total estimated market value was $306,300. Wieseler estimated the replacement cost of the improvements on parcel C to be $129,550. Wieseler considered the improvements, built in 1965, to be 95 percent of condition new, giving an estimated sound value of $123,070. This amount was added to the estimated market value of the land of $21,600 to give a total estimated market value for parcel C of $144,670.
At the board of review hearing Wieseler stated that he confirmed his estimates of market value by reference to sales of comparable property and the income-producing capacity of each parcel. No specific testimony in this regard was offered with respect to parcel A.
With respect to parcel B, Wieseler described two sales of property occurring in May of 1970. The first was of a 20-unit apartment building located at 4619 South Howell. That property sold for $250,000. The gross annual rent from the property was $34,800, indicating a gross multiplier of 7.18. The other property, located at 4920 South 14th Street, was a 21-unit apartment building which also sold for $250,000. Based upon a gross rental income of $39,060, Wieseler derived a gross multiplier of 6.4. Based on the figures provided by the appellants as to the gross rental income from parcel B. Wieseler noted that his estimated fair market value for the parcel was 6.19 times the gross income.
As to parcel C, Wieseler compared the sale, in January of 1969, of a 20-unit apartment building, located at 7607 West Waterford, about one mile west and three blocks south of parcel C. The sale price of that property was $285,000, indicating a gross multiplier of 6.7 times the annual gross potential income of $42,480. The gross multiplier for parcel C, based upon the testimony as to the gross annual income and Wieseler's estimates of fair market value was 6.08.
Following the hearing, the board of review sustained the assessed values assigned to each of the properties and confirmed the assessor's estimates of fair market value.
The valuation of real estate for tax purposes is governed by sec. 70.32(1), Stats. 1971, which provides:
This court has consistently construed the statute to mean that real property must be assessed on the basis of its 'fair market value.' That is, the amount it will sell for upon negotiations in the open market between an owner willing but not obliged to sell and a buyer willing but not obliged to buy. 2
The court has also set forth the standards for review on certiorari of a valuation of real property for tax purposes. It is not the function of the courts in such cases to make an assessment of property or to order that an assessment be entered on the assessment roll at any fixed sum. Their sole function is to determine, from the evidence presented to the board of review, whether the valuation was made on the statutory basis.
In State ex rel. Evansville Mercantile Asso. v. Evansville, supra, at pages 42, 43, 82 N.W.2d at page 900, this court summarized the principles to be observed by the courts in determining whether a valuation has been made upon the statutory basis:
Sec. 70.32(1), Stats.1971, requires that the valuation of real property for tax purposes be made 'from actual view or from the best information that the assessor can practicably obtain.' This court has enunciated the method and considerations which assessors must utilize in order to comply with the statutory requirement that the fair market value be ascertained on the basis of the 'best information' available. In State ex rel. Markarian, supra, this court stated at 45 Wis.2d page 686, 173 N.W.2d page 629:
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