State ex rel. Nudo Holdings, LLC v. Bd. of Review for Kenosha

• Decision Date: 12 April 2022
• Docket Number: 2019AP1618
• Citation: 401 Wis.2d 27,972 N.W.2d 544,2022 WI 17
• Parties: STATE of Wisconsin EX REL. NUDO HOLDINGS, LLC, Petitioner-Appellant-Petitioner, v. BOARD OF REVIEW FOR the CITY OF KENOSHA, Respondent-Respondent.
• Court: Wisconsin Supreme Court

401 Wis.2d 27

972 N.W.2d 544

2022 WI 17

STATE of Wisconsin EX REL. NUDO HOLDINGS, LLC, Petitioner-Appellant-Petitioner,

v.BOARD OF REVIEW FOR the CITY OF KENOSHA, Respondent-Respondent.

No. 2019AP1618

Supreme Court of Wisconsin.

Oral Argument: November 1, 2021

Opinion Filed: April 12, 2022

For the petitioner-appellant-petitioner, there were briefs filed by Paul W. Zimmer and O'Neil, Cannon, Hollman, DeJong & Laing S.C., Milwaukee. There was an oral argument by Paul W. Zimmer.

For the respondent-respondent, there was a brief filed by Robert I. DuMez, Gino M. Alia, J. Michael McTernan and Alia, DuMez & McTernan, S.C., Kenosha. There was an oral argument by J. Michael McTernan.

An amicus curiae brief was filed on behalf of the League of Wisconsin Municipalities, Wisconsin Towns Association and Wisconsin Association of Assessing Officers by Julie M. Gay and Law Office of Julie M. Gay, Waukesha.

An amicus curiae brief was filed on behalf of Wisconsin REALTORS® Association, Wisconsin Builders Association and NAIOP-WI by Thomas D. Larson, Madison.

HAGEDORN, J., delivered the majority opinion of the Court, in which ANN WALSH BRADLEY, DALLET, and KAROFSKY, JJ., joined. ROGGENSACK, J., filed a dissenting opinion, in which ZIEGLER, C.J., and REBECCA GRASSL BRADLEY, J., joined.

BRIAN HAGEDORN, J.

¶1 This is a property tax classification case. The property at issue was mostly raw and covered in underbrush, but also included several walnut and pine trees. The assessor classified the property as residential. Before the board of review, the landowner maintained the property should be classified agricultural (and therefore receive a lower tax rate). The board sustained the assessor's classification, which the circuit court and the court of appeals affirmed.

¶2 Before us, the landowner contends the board did not act according to law because the current use of the property met the definition of agricultural, and the board's consideration of prospective residential use was improper. The landowner further argues the classification is not supported by sufficient evidence. We hold: (1) The board acted according to law when it understood that the land should be classified as agricultural only if it is devoted primarily to agricultural use—meaning the property is chiefly given to agricultural purposes; (2) The board did not err when it considered the prospective residential use of the property; and (3) The board's determination to sustain the residential classification was supported by sufficient evidence.

I. BACKGROUND

¶3 On September 11, 2017, Nudo Holdings, LLC (Nudo) purchased an 8.9-acre parcel of wooded, unused land in the City of Kenosha from Kenosha County for $100,000. Anthony Nudo, the owner of Nudo Holdings, LLC, testified before the Board of Review for the City of Kenosha (the Board) that he purchased the property to develop it. The property was part of the St. Peter's Neighborhood Plan—indicating the City saw its highest and best use as residential. Indeed, the City was aware Nudo planned to subdivide the property into as many as 18 residential lots.

¶4 At the time of purchase, the property was zoned A-2 agricultural, lacked access to sewer and water service, and contained no habitable structures. It consisted mostly of underbrush with pine and walnut trees scattered across the land. The trees were not planted in rows; rather, they grew at random on the property.

¶5 By January 1, 2018—the relevant timeframe for the property assessment—Mr. Nudo testified that "a bit of tilling" was done, but when pressed for more detail, stated only "not much." Trails were cut on the property to reach the "walnut groves" and the pine trees (described by Mr. Nudo as "Christmas trees"). Mr. Nudo explained to the Board that he and his wife walked the trails to harvest walnuts. Mr. Nudo gave the walnuts to his mother, who distributed some to her clients and "made some stuff" with the rest. Mr. Nudo also stated that the property was registered as a livestock premises and that he obtained permits and licenses to cut timber and keep up to 25 chickens on the property. But as of January 1, 2018, no pine trees were cut, nor had any chickens or other livestock been kept on the property.¹

¶6 In 2018, the City assessor valued the property at $89,800 ($10,000 per acre) and classified the property residential for property tax purposes. The assessor testified before the Board that he classified the property this way because, "What we see is truly a -- a fairly, if not all raw piece of land. I don't see any effort, any action, any plan in terms of agricultural. This is a piece of land that has some things growing on it." The assessor further explained:

There is extremely heavy underbrush on a majority of this parcel, and it remains there. There is no evidence of livestock being allowed or able to roam free on the parcel. There is no evidence of furrows or harvesting of anything and no evidence was presented in terms of how much was done. There is no evidence, and in fact, I believe, in one of the documents we got, that any Christmas trees were taken from this property or how many nuts were taken from here.

The assessor asked Nudo for additional evidence of harvesting, furrows, crops, or fencing, but Mr. Nudo indicated he did not have any additional information to provide.

¶7 Nudo timely objected to the residential classification, contending the property should be classified agricultural. The Board unanimously sustained the assessor's classification. Nudo petitioned for certiorari, and the circuit court² ordered the Board to reconvene and reconsider the classification in light of our decision in Ogden.³ On remand, the Board reconsidered and again sustained the assessor's residential classification, this time by a vote of 4 to 1. Both the circuit court and court of appeals affirmed the Board's determination. State ex rel. Nudo Holdings, LLC v. Bd. of Rev. for City of Kenosha, 2020 WI App 78, ¶1, 395 Wis. 2d 261, 952 N.W.2d 816. We granted Nudo's petition for review.

II. DISCUSSION

A. Challenging the Classification of Real Property

¶8 Property assessment for taxation purposes takes place "as of the close of January 1 of each year."

Wis. Stat. § 70.10 (2019-20).⁴ This assessment involves both valuation and classification of property. Wis. Stat. § 70.32. Wisconsin law requires the assessor to segregate land "on the basis of use" into one of the following eight classifications: (1) "Residential"; (2) "Commercial"; (3) "Manufacturing"; (4) "Agricultural"; (5) "Undeveloped"; (6) "Agricultural forest"; (7) "Productive forest land"; and (8) "Other." § 70.32(2)(a). Nudo's petition for certiorari challenges the Board's determination to sustain the residential classification.

¶9 An aggrieved property owner like Nudo may file an objection to an assessment with the municipal board of review. Wis. Stat. § 70.47(7). When the board receives an objection within the statutory time frame, the board sets a hearing. § 70.47(7) - (8). At the hearing, the assessor is required to "provide to the board specific information about the validity of the valuation to which objection is made" and "provide to the board the information that the assessor used to determine that valuation." § 70.47(8)(h). The assessor's valuation is entitled to a presumption of validity by the board, but "may be rebutted by a sufficient showing by the objector that the valuation is incorrect." § 70.47(8)(i). If the property owner desires to challenge the board's decision, it may, among other options, seek certiorari review by the circuit court. § 70.47(13) ; State ex rel. City of Waukesha v. City of Waukesha Bd. of Rev., 2021 WI 89, ¶17, 399 Wis. 2d 696, 967 N.W.2d 460 (listing the three options for appeal).

¶10 This court sits in the same posture as the circuit court, and therefore we review the Board's determination, not that of the circuit court or court of appeals. Our review "is limited to whether the board's actions were: (1) within its jurisdiction; (2) according to law; (3) arbitrary, oppressive, or unreasonable and represented its will and not its judgment; and (4) supported by evidence such that the board might reasonably make the order or determination in question." State ex rel. Collison v. City of Milwaukee Bd. of Rev., 2021 WI 48, ¶20, 397 Wis. 2d 246, 960 N.W.2d 1.

¶11 Nudo asserts that the Board's determination was not according to law for two independent reasons and that it was not supported by sufficient evidence.

B. According to Law

1. Devoted Primarily to Agricultural Use

¶12 Nudo first argues that the Board did not act according to law because it improperly discounted the agricultural use present on the property. Nudo contends that because those activities were the only uses the property was put to, the property was devoted primarily to agricultural use. That is not, however, what the law says.

¶13 Wisconsin Stat. § 70.32(2)(c) provides two key definitions that assist in determining whether Nudo's land could be classified as agricultural. " ‘Agricultural land’ means land, exclusive of buildings and improvements and the land necessary for their location and convenience, that is devoted primarily to agricultural use." § 70.32(2)(c)1g. (emphasis added).

"Agricultural use" is also a defined term. Its meaning is "defined by the department of revenue by rule and includes the growing of short rotation woody crops, including poplars and willows, using agronomic practices."⁵ § 70.32(2)(c)1i.

¶14 Following the statutory instruction to promulgate a rule, the Department of Revenue defines "agricultural use" as "any of the following":

(a) Activities included in subsector 111 Crop Production, set forth in the North American Industry Classification System (NAICS), United States, 1997, published by the executive office of the president, U.S. office of management and budget.

(b) Activities included in subsector 112 Animal Production, set forth in the North American Industry Classification System, United States, 1997,

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