The Saddle Ridge Corp. v. Bd. Of Review For Town Of Pac.

• Decision Date: 18 June 2010
• Docket Number: No. 2007AP2886.,2007AP2886.
• Citation: 325 Wis.2d 29,784 N.W.2d 527,2010 WI 47
• Parties: The SADDLE RIDGE CORPORATION, Plaintiff-Respondent,v.BOARD OF REVIEW FOR TOWN OF PACIFIC, Defendant-Appellant-Petitioner.
• Court: Wisconsin Supreme Court

325 Wis.2d 29

784 N.W.2d 527

2010 WI 47

The SADDLE RIDGE CORPORATION, Plaintiff-Respondent,v.BOARD OF REVIEW FOR TOWN OF PACIFIC, Defendant-Appellant-Petitioner.

No. 2007AP2886.

Supreme Court of Wisconsin.

Argued April 12, 2010.

Decided June 18, 2010.

For the defendant-appellant-petitioner there were briefs by Amie B. Trupke and Stafford Rosenbaum LLP, Madison, and oral argument by Amie B. Trupke.

For the plaintiff-respondent there was a brief by Anthony A. Tomaselli, Andrew M. Norman, Josephine K. Benkers, and Quarles & Brady LLP, Madison, and oral argument by Josephine K. Benkers.

An amicus curiae brief was filed by Jonathan B. Levine, Jessica L. Boeldt, and the Law Firm of Jonathan B. Levine, Milwaukee, on behalf of the Community Associations Institute Wisconsin Chapter, Inc.

An amicus curiae brief was filed by Debra P. Condrad and Thomas D. Larson, Madison, on behalf of the Wisconsin Realtors® Association.

¶ 1 SHIRLEY S. ABRAHAMSON, Chief Justice.

This is a review of an unpublished decision of the court of appeals,¹ which affirmed an order of the Circuit Court for Columbia County, James Evenson, Judge. The circuit court order granted Saddle Ridge Corporation's petition for a writ of certiorari pursuant to Wis. Stat. § 70.47(13) (2007-08),² and vacated the determination by the Board of Review of the Town of Pacific affirming a property tax assessment against Saddle Ridge.

¶ 2 The question presented is whether Saddle Ridge was properly assessed by the Town of Pacific for property tax due on 41 tax parcels in three condominiums developed by Saddle Ridge. These parcels correspond to 41 condominium units that are declared and platted in the condominium instruments but were not constructed at the time they were assessed by the Town. As stated by the Town, the issue is, “Who is responsible for paying property taxes on declared but unbuilt condominium units?” ³

¶ 3 For the reasons set forth, we conclude that the Board “acted according to law” in assessing Saddle Ridge for the unbuilt units. Saddle Ridge owns the declared but unbuilt condominium units and these unbuilt units are tax parcels, the assessment value of which is assessed to Saddle Ridge. Accordingly, we reverse the decision of the court of appeals, which affirmed the order of the circuit court. The Board of Review for the Town of Pacific got it right. Saddle Ridge's petition for a writ of certiorari should have been denied by the circuit court.

I

¶ 4 Before setting out the facts giving rise to this case, we briefly review the law of condominiums in Wisconsin.

¶ 5 The condominium form of ownership “is strictly a creature of statute in the United States and does not exist without enabling legislation.” ⁴ Chapter 703 of the Wisconsin statutes, entitled the Condominium Ownership Act, governs condominiums.

¶ 6 To create a condominium, a condominium declaration and a plat must be filed with the register of deeds.⁵ The condominium is defined as the property that has been subject to a condominium declaration under the statutes. Wis. Stat. § 703.02(4). Once the declaration and plat are properly recorded, the condominium exists regardless of whether any units have been constructed. Wis. Stat. § 703.07(1).

¶ 7 The Condominium Ownership Act establishes mandatory provisions for the contents of both the declaration and the plat. Wis. Stat. §§ 703.09, 703.11.

¶ 8 The person who creates a condominium by subjecting the property to a condominium declaration is referred to as the “declarant.” Wis. Stat. § 703.02(7).

¶ 9 The condominium property is made up of two legal components: “units” and “common elements.”

¶ 10 “Units” are defined by Wis. Stat. § 703.02(15) as the “part of a condominium intended for any type of independent use, including one or more cubicles of air ... or one or more rooms or enclosed spaces located on one or more floors, or parts thereof, in a building.” The declaration must contain a description of each unit and the condominium plat must designate every unit within the condominium at the time it is filed. Wis. Stat. § 703.11(3). Designating units creates tax parcels. Wis. Stat. § 703.21(1). Individual unit owners hold legal title to the condominium units. Wis. Stat. §§ 703.02(17), 703.05.

¶ 11 The “common elements” are “all of a condominium except its units.” Wis. Stat. § 703.02(2). The condominium declaration must contain “a general description” of the common elements. Wis. Stat. § 703.09(1)(d). Every unit owner owns an undivided percentage interest in the common elements. Wis. Stat. § 703.13(1). The declaration must set out the percentage interest “appurtenant to each unit.” Wis. Stat. §§ 703.09(1)(e), 703.13. The percentage interests must “have a permanent character” and generally may not be changed without the written consent of all unit owners and their mortgagees. Wis. Stat. § 703.13(4).

¶ 12 A declarant may establish the condominium as “expandable” by following the requirements set out in Wis. Stat. § 703.26. The declarant may then add property and additional units to the condominium. To do so, the declarant must record an amendment to the declaration that states the new percentage interests of the unit owners and must record an addendum to the condominium plat that includes detail and information about the new property, as required in the original plat, including a survey of the added property, building plans, and information about the units and common elements. Wis. Stat. § 703.26(3), 703.11(2).

¶ 13 Other statutory provisions will be discussed below. We now set out the facts giving rise to the dispute.

II

¶ 14 Saddle Ridge developed three condominiums at issue in the present case and is the declarant of each condominium.⁶ Saddle Ridge recorded the condominium declarations and plats showing all the units, including the presently unbuilt ones. The record before us contains only undated excerpts of the condominium instruments, but at least one of the three condominiums was apparently first declared as a condominium in 1968. Saddle Ridge has the sole right to develop and sell the unbuilt units.

¶ 15 In 2006, each of the three condominiums included some unbuilt units. In the three condominiums, 41 units are included in the declarations and plats but are not yet constructed.⁷ These 41 declared condominium units correspond to the 41 tax parcels Saddle Ridge contests.

¶ 16 The condominiums are subject to property tax assessment by the Town of Pacific. In 2005, and apparently in preceding years, the Town assessed these parcels to Saddle Ridge. The 2005 assessment value for each of the 41 parcels was $5,000.⁸

¶ 17 In 2006, the assessment value for each of the unbuilt units increased. The Town sent Notice of Assessment to Saddle Ridge, assessing each of the 41 parcels at $32,000. The table identifying the parcels and assessment values is titled “Real Estate Sites.” It identifies which condominium each parcel is within and gives both a unit number and a tax parcel number for each. The Assessment table lists the size of each parcel as “0.0000” acres.

¶ 18 Saddle Ridge contested the 2006 assessments. In its objection, Saddle Ridge explained its reason for challenging the assessment values of the 41 parcels: “These parcels are bare land and will not become a unit until a structure is added. These parcels cannot be sold.” Where it was required to state an opinion of the “fair market value of the property,” Saddle Ridge stated: “The land is owned by Saddle Ridge Estates Association.” ⁹ Saddle Ridge then added, “$00.00 should be taxed.” ¹⁰

¶ 19 Saddle Ridge signed a stipulation with the Board of Review, waiving the right to have a separate hearing on each parcel and agreeing that the 41 objections would be consolidated together into one hearing.

¶ 20 The Board of Review held a hearing on Saddle Ridge's consolidated objections on November 2, 2006. At the hearing, the Board heard from representatives of Saddle Ridge and from the Assessor.¹¹ Saddle Ridge's representatives maintained that each parcel was not a condominium “unit” and would not become a unit “until it is four walls or a cubicle of air or a building.” Saddle Ridge relied on Wis. Stat. § 703.21, which states in part that “[n]either the building, the property nor any of the common elements shall be deemed to be a parcel separate from the unit.”

¶ 21 In particular, one Saddle Ridge representative argued: “We are being taxed ... [for] units that do not exist. All there is there is land.... it's bare land owned by the condominium association.... I cannot sell that land. They own it. I have developmental rights through the Saddle Ridge Corporation. When I develop a building and make a cubicle of air around it, I can sell it....” Saddle Ridge urged that “we should get no tax on those parcels ... because the association owns them....” At one point in the hearing, the Board chair asked a Saddle Ridge representative, “You're saying it doesn't become value until it's sold[?]” The response was, “Until it becomes a unit.”

¶ 22 Saddle Ridge acknowledged at the hearing that the parcels are declared as units by the condominium declarations, with tax parcel numbers assigned by the county. One board member queried, “[W]hy are these even separate tax parcels when they don't exist?” And Saddle Ridge responded, “We have to declare how many units we're going to build in there when you declare a condominium.... And that's when the county picks it up and assigned [sic] separate tax parcels.”

¶ 23 The discussion at the hearing also addressed how the assessor had arrived at the $32,000 assessment value. Two qualified assessors were present. The board was informed that the assessor's office used software approved by the Wisconsin Department of Revenue and used throughout the state and that the assessment for the parcels had been derived using “comparable vacant sales of condo land that is marketable.” These comparable sales were described as “land condominiums,” in which the vacant lots were available for sale...