Ronald L. Collison v. City of Milwaukee Board of Review ( 2021 )

2021 WI 48SUPREME COURT OF WISCONSIN
CASE NO.: 2018AP669
COMPLETE TITLE: State of Wisconsin ex rel. Ronald L. Collison,
Petitioner-Appellant-Petitioner,
v.
City of Milwaukee Board of Review,
Respondent-Respondent.
REVIEW OF DECISION OF THE COURT OF APPEALS
Reported at 388 Wis. 2d 621,935 N.W.2d 553(2020 – unpublished)
OPINION FILED: June 2, 2021
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: January 11, 2021
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Milwaukee
JUDGE: Glenn H. Yamahiro
JUSTICES:
ANN WALSH BRADLEY, J., delivered the majority opinion of the
Court, in which DALLET, HAGEDORN, and KAROFSKY, JJ., joined.
ROGGENSACK, J., filed a dissenting opinion, in which ZIEGLER,
C.J., and REBECCA GRASSL BRADLEY, J., joined.
NOT PARTICIPATING:
ATTORNEYS:
For the petitioner-appellant-petitioner, there were briefs
filed by James E. Goldschmidt and Quarles & Brady LLP,
Milwaukee. There was an oral argument by James E. Goldschmidt.
For the respondent-respondent, there was a brief filed by
James M. Carroll, assistant city attorney; with whom on the
brief was Tearman Spencer, city attorney. There was an oral
argument by James M. Carroll.
An amicus curiae brief was filed on behalf of The Wisconsin
Realtors Association and NAIOP-Wisconsin by Thomas D. Larson,
Madison.
2
2021 WI 48NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2018AP669
(L.C. No. 2017CV4572)
STATE OF WISCONSIN : IN SUPREME COURT
State of Wisconsin ex rel. Ronald L. Collison,
Petitioner-Appellant-Petitioner,
FILED
v.
JUN 2, 2021
City of Milwaukee Board of Review,
Sheila T. Reiff
Respondent-Respondent. Clerk of Supreme Court
ANN WALSH BRADLEY, J., delivered the majority opinion of the
Court, in which DALLET, HAGEDORN, and KAROFSKY, JJ., joined.
ROGGENSACK, J., filed a dissenting opinion, in which ZIEGLER,
C.J., and REBECCA GRASSL BRADLEY, J., joined.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 ANN WALSH BRADLEY, J. The petitioner, Ronald
Collison, seeks review of an unpublished per curiam decision of
the court of appeals affirming the City of Milwaukee Board of
Review's (Board) determination that his property was properly
No. 2018AP669
assessed at a value of $31,800.1 Collison argues that because
the property is contaminated he cannot sell it, and that
accordingly the assessed value should be zero dollars.
¶2 Specifically, Collison contends that the assessor
erred by basing the assessment on the property's income-
generating potential as a parking lot without reducing the value
to account for the contamination that is present. He further
argues that the City of Milwaukee Environmental Contamination
Standards (CMECS) conflict with Wis. Stat. § 70.32 (2017-18).2
¶3 We conclude that by utilizing the income approach to
value the property according to its highest and best use as a
parking lot, the assessor properly considered the impairment of
the value of the property due to contamination in arriving at a
valuation pursuant to Wis. Stat. § 70.32(1m). Further, we
decline to address Collison's challenge to the CMECS because the
assessor did not rely on the CMECS in the assessment of
Collison's property.
¶4 Accordingly, we affirm the decision of the court of
appeals.
1State ex rel. Collison v. City of Milwaukee Bd. of Rev.,
No. 2018AP669, unpublished slip op. (Wis. Ct. App. Aug. 27,
2019) (per curiam) (affirming the order of the circuit court for
Milwaukee County, Glenn H. Yamahiro, Judge).
2All subsequent references to the Wisconsin Statutes are to
the 2017-18 version unless otherwise indicated.
2
No. 2018AP669
I
¶5 Since 1979, Collison has owned a piece of property in
downtown Milwaukee. Located two blocks from Fiserv Forum, the
new Milwaukee sports arena, it includes a two-story steel and
wood framed commercial building and an asphalt parking lot with
space for approximately 12-15 vehicles. The building previously
housed a dry cleaning business that closed in 2005 and is
currently vacant.
¶6 In 2012, the City of Milwaukee issued a permit for the
removal of four underground storage tanks on the property.
After removal of the tanks, a subsequent soil analysis found
contamination from petroleum and perchloroethylene solvents.
The soil analysis did not include a statement regarding how much
it would cost to remediate the property, and the circuit court
ultimately determined that there was no evidence that the soil
analysis was presented to the Board during its proceedings.
¶7 For the 2016 assessment year, the City assessed the
property and determined the fair market value to be $31,800. As
part of this assessment, the City found that the building had no
value. In arriving at the $31,800 valuation, the City's
assessor used the "income approach," basing the assessment on
rental income that could be obtained from the property's
existing parking lot. The assessor examined other comparably
assessed downtown parking lots and observed that rental income
had indeed been collected from the property in the past, as
Collison had previously rented nine of the parking spaces,
generating $540 per month in income.
3
No. 2018AP669
¶8 Collison appealed the assessment to the Board. The
Board held a hearing, at which Collison and the assessor offered
testimony.
¶9 Before the Board,3 Collison contended "that the
property has no assessed value at this time because it has no
market value." He explained, "People are not interested in
purchasing a property, such as this one, simply because it has
contamination on it." Further, Collison asserted that the
amount of contamination on the property is such "that anyone
that would purchase the property would have to pay for the
remediation[,]" the cost of which could reach "perhaps even into
the millions of dollars."
¶10 Legally, Collison argued that the assessment was in
error because it contravenes Wis. Stat. § 70.32(1m).4 In
Collison's estimation, the assessor did not follow the statute's
dictate to consider the impairment of the property's value due
to the contamination in arriving at a valuation, and instead
followed the CMECS,5 which indicate that a property is to be
Collison represented himself through the petition for
3
review stage of this case, appearing pro se before the Board,
the circuit court, and the court of appeals.
Wisconsin Stat. § 70.32(1m) provides: "In addition to the
4
factors set out in sub. (1), the assessor shall consider the
impairment of the value of the property because of the presence
of a solid or hazardous waste disposal facility or because of
environmental pollution, as defined in s. 299.01(4)."
5 In relevant part, the CMECS set forth:
Burden of Proof on Taxpayer . . . Contamination must
be substantiated through an independent environmental
(continued)
4
No. 2018AP669
valued as if it were uncontaminated unless the landowner pays
for a "phase II" environmental site assessment detailing the
contamination.
¶11 The assessor also testified before the Board. He
recognized that the property is contaminated, but stated that
"[i]t's just an unknown extent and/or cleanup costs associated
with the cleanup with the contamination." Regarding the
necessary documentation to establish the extent of the
contamination, the following exchange occurred between several
Board members and the assessor:
Mr. Evans [Board member]: So, if the contamination
was factually known, would that affect the assessment,
value assessment of the property?
Mr. Wiegand [Assessor]: Yes.
Mr. Volkman [Board member]: Will you accept only a
phase one, phase two? Or will you accept somebody
giving you a quote, as to what it takes?
Mr. Wiegand: Um, we will accept any written,
verifiable evidence done by an expert.
expert. This step is no different from providing
independent appraisals to defend values on appeal.
The minimum level of acceptable substantiation will be
a comprehensive Phase II Audit, setting forth (among
other pertinent information) the type, level and
source of contamination and the suggested method or
methods for remediation. Without this information,
property must be valued as if uncontaminated. All
information we obtain from owners/agents regarding
potential contamination will be considered open
records to the public.
5
No. 2018AP669
¶12 With regard to his use of the income approach and the
consideration of the rental income that could be generated by
the on-site parking lot, the assessor testified:
[T]here is a great need for parking in this area and
contaminated sites can be encapsulated and used as
parking lots. I think as long as there is potential
to——or the owner is using it as a parking lot, we
could consider using . . . the income approach, as
long as there's income being derived from the site.
¶13 He further explained, "I don't know if the
contamination is $50,000, or $800,000. We're valuing the, the
parking lot based on its income potential. The potential to
park the vehicles at this point, whether contaminated or
not . . . and that's how the city is assessing the property."
¶14 The Board ultimately upheld the assessment and
Collison sought certiorari review in the circuit court. He
renewed the same arguments he made before the Board, namely that
the CMECS conflict with Wis. Stat. § 70.32(1m) and that the
assessor did not consider the impairment of the property's value
due to the contamination as required by § 70.32(1m) and the
Wisconsin Property Assessment Manual (WPAM).
¶15 The circuit court affirmed the Board. It did not
squarely address Collison's contention that the CMECS conflict
with Wis. Stat. § 70.32(1m) because, in its estimation, the
record did not demonstrate that the Board or the assessor
actually relied on the CMECS requirements. In other words, the
circuit court determined that Collison's "arguments fail because
the assessor and the Board recognized the contamination even
though Petitioner has not completed or sought a Phase II audit."
6
No. 2018AP669
It further explained that "[w]hile the challenged CMECS
provision could conceivably result in an assessment that
disregards evidence of contamination if a Phase II Audit is not
provided, this did not occur with Petitioner's assessment."
¶16 Next, the circuit court determined that "[t]he record
does not reveal any error by the assessor in applying the WPAM
or the statutes, and Petitioner fails to establish how the
City's 2016 assessment deviates from either." In the circuit
court's estimation, Collison failed to bring forward "credible
evidence to challenge the assessor's conclusion that use of the
Income Approach results in an assessed value of $31,800." It
reached this conclusion because "Petitioner did not provide the
Board with any data contradicting the assessor's calculations,
nor did Petitioner suggest an alternative valuation method that
would have better reflected the property's fair market
value. . . . A mere assertion that no one will purchase the
property is insufficient."
¶17 The circuit court further stated that "[t]he assessor
did not fail to take into consideration the impairment of the
property's value due to contamination as required by Wis. Stat.
§ 70.32(1m)." Indeed, it concluded that the assessor's use of
the income approach was driven by the presence of the
contamination: "By determining that the property's highest and
best use was to produce income from existing parking spaces, the
assessor recognized the very poor condition of the land and
difficulty of future development for a better use such as a high
end apartment building or similar commercial use."
7
No. 2018AP669
¶18 Collison appealed, and the court of appeals affirmed.
State ex rel. Collison v. City of Milwaukee Bd. of Rev., No.
2018AP669, unpublished slip op. (Wis. Ct. App. Aug. 27, 2019)
(per curiam). The court of appeals determined that "Collison
has not shown why his unsubstantiated claim that the property
has a market value of zero dollars is more accurate than [the
assessor's] decision to use an income approach to determine
market value based on the best use of the property as a parking
lot." Id., ¶6. Further, the court of appeals agreed with the
circuit court's determination that the challenge to the CMECS
was not ripe for determination. Id., ¶7. It thus concluded
that "the assessor did not ignore the contamination of the
property in valuing it, and the Board did not ignore the
contamination in upholding that valuation." Id. Collison
petitioned for this court's review.
II
¶19 This case arrives here on certiorari review.
"Certiorari is a mechanism by which a court may test the
validity of a decision rendered by a municipality, an
administrative agency, or an inferior tribunal." Ottman v. Town
of Primrose, 2011 WI 18, ¶34, 332 Wis. 2d 3, 796 N.W.2d 411.
¶20 On certiorari review, we examine the decision of the
board of review, not the decision of the circuit court or court
of appeals. Sausen v. Town of Black Creek Bd. of Rev., 2014 WI
9, ¶5, 352 Wis. 2d 576, 843 N.W.2d 39; see Wis. Stat.
§ 70.47(13). Our review is limited to whether the board's
actions were: (1) within its jurisdiction; (2) according to
8
No. 2018AP669
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. Sausen, 352 Wis. 2d 576, ¶6.
¶21 In our review, we must engage in statutory
interpretation. The interpretation of a statute presents a
question of law this court reviews independently of the
determinations rendered by the circuit court and court of
appeals. Hinrichs v. DOW Chem. Co., 2020 WI 2, ¶26, 389
Wis. 2d 669, 937 N.W.2d 37.
III
¶22 We begin with a review of the statutory background
underlying this case, including general tax assessment
methodology pursuant to Wis. Stat. § 70.32 and this court's
precedent. Subsequently, we discuss the law related to
contaminated property and examine Collison's contention that the
assessment in this case contravened the statutory mandate that
contamination of property be considered in arriving at a
valuation.
A
¶23 Valuation of real estate for tax assessment purposes
is governed by Wis. Stat. § 70.32. Subsection (1) of this
statute dictates that property shall be valued "in the manner
specified in the Wisconsin property assessment manual" and
additionally sets forth a hierarchical valuation methodology.
Metro. Assocs. v. City of Milwaukee, 2018 WI 4, ¶31, 379
Wis. 2d 141, 905 N.W.2d 784.
9
No. 2018AP669
¶24 As clarified in State ex rel. Markarian v. City of
Cudahy, 45 Wis. 2d 683, 686, 173 N.W.2d 627 (1970), the text of
Wis. Stat. § 70.32(1) lists three sources of information in a
specific order, with this order being indicative of the quality
of information each source provides. Metro. Assocs., 379
Wis. 2d 141, ¶31. This methodology has been described by courts
as providing three "tiers" of analysis. Id. (citation omitted).
¶25 The best information of a property's fair market value
is an arm's-length sale of the subject property. Id., ¶32.
Examination of a recent arm's length sale is known as a "tier 1"
analysis. Id. This is the first source of information an
assessor should look to in conducting an assessment. If there
is no recent sale of the subject property, the appraiser then
moves to tier 2, examining recent, arm's-length sales of
reasonably comparable properties (the "sales comparison
approach"). Id., ¶33.
¶26 When both tier 1 and tier 2 are unavailable, an
assessor then moves to tier 3. Id., ¶34. Under tier 3, an
assessor may consider all the factors collectively which have a
bearing on value of the property in order to determine its fair
market value. Id. These factors include cost, depreciation,
replacement value, income, industrial conditions, location and
occupancy, sales of like property, book value, amount of
insurance carried, value asserted in a prospectus and appraisals
produced by the owner. Id. (citing State ex rel. Mitchell Aero,
Inc. v. Bd. of Rev. of City of Milwaukee, 74 Wis. 2d 268, 278,
246 N.W.2d 521 (1976)). As relevant here, the income approach,
10
No. 2018AP669
"which seeks to capture the amount of income the property will
generate over its useful life," fits under the umbrella of tier
3 analysis. Metro. Assocs., 379 Wis. 2d 141, ¶34.
B
¶27 With this necessary general background on assessment
methodology in hand, we address next the law related to
contaminated property and examine Collison's argument that the
assessor did not properly consider the contaminated nature of
the property in arriving at a valuation. Viewed within the
certiorari review framework, Collison's argument is one that the
Board did not act according to law when it upheld the
assessment.
¶28 The requirement that an assessor consider a property's
contamination arises from Wis. Stat. § 70.32, which contains a
provision directed at contaminated properties. Specifically,
§ 70.32(1m) sets forth: "In addition to the factors set out in
sub. (1), the assessor shall consider the impairment of the
value of the property because of the presence of a solid or
hazardous waste disposal facility or because of environmental
pollution, as defined in s. 299.01(4)."6
6 Pursuant to Wis. Stat. § 299.01(4), "environmental
pollution" is defined as "the contaminating or rendering unclean
or impure the air, land or waters of the state, or making the
same injurious to public health, harmful for commercial or
recreational use, or deleterious to fish, bird, animal or plant
life."
11
No. 2018AP669
¶29 Guidance on valuing contaminated property is provided
by the WPAM. See Wis. Stat. § 70.32(1) (explaining that
property "shall be valued by the assessor in the manner
specified in the Wisconsin property assessment manual"). It
acknowledges the "unique valuation problem" posed by
contaminated property due to the difficulty in identifying
contamination. 1 Wisconsin Property Assessment Manual 8-42
(2016).7 Despite the identified difficulty, the WPAM reinforces
that "[b]oth Wisconsin Statutes and appraisal principles require
the assessor to consider the effect of contamination on the
value of real estate." Id. at 8-43 (citing § 70.32(1m)).
¶30 Largely, the WPAM addresses "more common situations
where the extent of contamination and its effect on value are
readily identified and measured." Id. at 8-46. However, it
also recognizes that "there may be some situations where the
extent of contamination is unknown and thus the effect on value
is difficult to measure." Id. In such a situation, "it is not
possible to develop specific procedures for dealing with this
uncertainty," but the WPAM provides assessors with a framework
for gathering information "to help estimate the effect of
contamination on value." Id.
¶31 By way of example, the WPAM provides:
[A]lthough there may not be sales of truly comparable
contaminated property, there may be sales of other
contaminated property indicating a range of values or,
All references to the Wisconsin Property Assessment Manual
7
are to the 2016 version unless otherwise indicated.
12
No. 2018AP669
possibly, a percentage adjustment the assessor can use
to reflect the contamination. Similarly, although an
environmental engineer may not be able to estimate a
specific cost to cure the contamination, the engineer
may be able to estimate a range of costs and what are
the probabilities that the cost to cure lies on the
high or low end of the range. Properties with a great
deal of uncertainty should be closely monitored and
reviewed each year as more information becomes
available to reduce the degree of uncertainty.
Id.
¶32 In this case, the parties agree that the subject
property is contaminated, but the extent of that contamination
is unknown. As to the method of valuation, the assessor here
utilized the income approach to value Collison's property.
There had been no arm's length sale of the property, and the
assessor testified that "[t]he cost approach and the sales
comparison approach were not applicable."
¶33 Collison argues that the assessor did not properly
consider the property's contaminated nature in arriving at the
valuation of $31,800. In Collison's view, considering the
contamination cannot equate with merely using the income
approach instead of the sales approach, and it cannot equate
with merely assigning no value to the building. He argues,
contrary to the assessor's determination, that the property
actually has no value whatsoever because it cannot be sold.
¶34 We are unpersuaded by Collison's argument. Contrary
to Collison's contention, the fact that the property is
contaminated drove the entire assessment in this case, as will
be further explained below.
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No. 2018AP669
¶35 As we must, we begin with the language of Wis. Stat.
§ 70.32(1m) and its requirement that the assessor "consider the
impairment of the value of the property" due to contamination.
See State ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI
58, ¶45, 271 Wis. 2d 633, 681 N.W.2d 110. "Statutory language
is given its common, ordinary, and accepted meaning, except that
technical or specially-defined words or phrases are given their
technical or special definitional meaning." Id. We also
interpret statutory language "in the context in which it is
used; not in isolation but as part of a whole; in relation to
the language of surrounding or closely-related statutes; and
reasonably, to avoid absurd or unreasonable results." Id., ¶46.
¶36 In the context of this case, we must determine what it
means for the assessor to "consider" the impairment of the value
of the property caused by the contamination. Looking to an
established dictionary for assistance, we observe that
"consider" is defined as "to take into account."8 Thus, we must
determine whether the assessor here took into account the
impairment of the value of the property caused by the
contamination in arriving at the valuation of $31,800.
8Consider, Merriam-Webster Online Dictionary,
https://www.merriam-webster.com/dictionary/consider (last
visited May 27, 2021); see also State v. Sample, 215
Wis. 2d 487, 499, 573 N.W.2d 187 (1998) ("For purposes of
statutory interpretation or construction, the common and
approved usage of words may be established by consulting
dictionary definitions.").
14
No. 2018AP669
¶37 In this task, we begin with the proposition that "real
estate must be valued at its highest and best use." Allright
Props., Inc. v. City of Milwaukee, 2009 WI App 46, ¶18, 317
Wis. 2d 228, 767 N.W.2d 567. Applied here, the assessor
determined that, given the property's location and taking into
account the presence of contamination, the highest and best use
in its current state is a parking lot.
¶38 Indeed, the assessor testified about the potential for
income:
[T]here is a great need for parking in this area and
contaminated sites can be encapsulated and used as
parking lots. I think as long as there is potential
to——or the owner is using it as a parking lot, we
could consider using . . . the income approach, as
long as there's income being derived from the site.
Thus, as this testimony demonstrates, it was the contamination
that drove the assessor's decision to use the income approach to
value the property, and to value the property according to its
highest and best use as a parking lot.
¶39 The record reflects a recognition that the property
could have been valued much higher but for the contamination.
The property is in a prime location near the new Milwaukee Bucks
stadium. One of the Board members stated at the hearing that
"with all the development that's happening in that
area, . . . this property could be worth a lot of money once the
groundwater and the soil has been remediated."
¶40 It follows from this that if the property were not
contaminated, a parking lot would no longer be the highest and
best use of the property. By valuing the property as a parking
15
No. 2018AP669
lot using the income approach, the assessor took into account,
or "considered," the impairment of the value of the property due
to contamination in accordance with Wis. Stat. § 70.32(1m).9
¶41 Although the WPAM itself provides no specific
procedure for dealing with uncertainty like that presented here,
see 1 Wisconsin Property Assessment Manual 8-46, the assessor's
consideration of the impairment of the value of the property due
to contamination by valuing the property as a parking lot using
the income approach was consistent with the International
Association of Assessing Officers (IAAO) standards, which are
incorporated by the WPAM.10 Specifically, IAAO Standard on the
Valuation of Properties Affected by Environmental Contamination
§ 4.1 discusses the value in use of a contaminated property and
provides in relevant part that "[v]alue in use suggests that a
property which is still in use, or which can be used in the near
future, has a value to the owner." It further specifies that
"[t]his would be true even if costs to cure environmental
9The dissent contends that in order to "consider" the
impairment of the value due to contamination, the assessor's
report must demonstrate a reduction in value by a specific
number. See dissent, ¶¶68, 74. Such a requirement finds no
support in the text of Wis. Stat. § 70.32(1m). The statute
requires only that the assessor "consider" the impairment of
value due to contamination, not that he "reduce the value by a
certain number from the value of the property if it were not
contaminated." See Wis. Stat. § 70.32(1m).
"Whether or not the IAAO Standards appear in the WPAM,
10
the most current version in effect on January 1 of a given
assessment year is incorporated by reference in the manual." 1
Wisconsin Property Assessment Manual 1-3.
16
No. 2018AP669
problems exceed the nominal, unencumbered value. The value in
use will most nearly reflect the market value of the
property . . . ." Int'l Ass'n of Assessing Officers, Standard
on the Valuation of Properties Affected by Environmental
Contamination § 4.1 (2016).11
¶42 The assessment here is consistent with this principle.
It recognizes that the highest and best use of the property as a
parking lot has value to the owner even if the cost to cure
environmental problems exceeds the value of the property.
¶43 Additionally, Collison's argument that the property
has no value whatsoever is unpersuasive for two reasons.12
First, it ignores the established three-tiered valuation
methodology. By arguing that the value is zero because it
cannot be sold, Collison urges the court to require the assessor
to use either an arms-length sale or sales comparison approach
and go no further. Collison's proposed approach ignores the
tier 3 approaches that the law dictates the assessor must use in
the absence of information on tiers 1 and 2.
All references to the IAAO Standard on the Valuation of
11
Properties Affected by Environmental Contamination refer to the
2016 version unless otherwise indicated.
See also Bonnie H. Keen, Tax Assessment of Contaminated
12
Property: Tax Breaks for Polluters?, 19 B.C. Env't Aff. L. Rev.
885, 906-08 (1992) (explaining that "the majority of cases have
rejected taxpayers' assertions of zero or nominal value" and
collecting cases); Peter J. Patchin, Valuation of Contaminated
Properties, 56 Appraisal J. 7, 13 (1988) (stating that a
conclusion that contaminated property is "worthless" is
"unreasonable when the property is still being utilized by its
present owner for some useful purpose").
17
No. 2018AP669
¶44 Second, Collison's argument ignores that it is
Collison's burden to present evidence before the Board to
support his proposed valuation of zero, which he did not do.
See Sausen, 352 Wis. 2d 576, ¶10. Like our case law, the IAAO
standards make clear that in a case of contamination, the burden
is on the taxpayer to demonstrate the extent of the damage.
Int'l Ass'n of Assessing Officers, Standard on the Valuation of
Properties Affected by Environmental Contamination § 5.1 ("The
property owner must provide clear documentation of the nature
and extent of environmental contamination. Accurate and
detailed maps must be included as part of this documentation.")
By imploring the court to adopt a value of zero for his property
despite not presenting evidence to support such a theory,
Collison is asking the court to allow him to sidestep his
burden, which we will not do.
¶45 As a final matter, we decline to address the
additional issue presented in Collison's petition for review and
briefing, i.e., whether the CMECS conflict with Wis. Stat.
§ 70.32(1m).13 Although Collison asserts that the CMECS
unlawfully require a phase II assessment, the assessor testified
that he would have accepted "any written, verifiable evidence
The dissent states that "[w]e asked the parties to
13
address whether MECS were consistent with the statutes."
Dissent, ¶77. Such a statement could be read to indicate that
the court sua sponte asked the parties to brief the question.
That is not correct——the issue was raised in Collison's petition
for review.
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No. 2018AP669
done by an expert[,]" and not only a phase II assessment of the
property as evidence of contamination.
¶46 As both the circuit court and court of appeals
determined, the Board did not reject Collison's challenge on the
basis that he lacked a phase II assessment. The legal question
Collison presents, while interesting, is not reachable on the
facts of this case. We will therefore not depart from our
general practice that this court will not offer an advisory
opinion or make a pronouncement based on hypothetical facts.
State v. Grandberry, 2018 WI 29, ¶31 n.20, 380 Wis. 2d 541, 910
N.W.2d 214.
¶47 In sum, we conclude that by utilizing the income
approach to value the property according to its highest and best
use as a parking lot, the assessor properly considered the
impairment of the value of the property due to contamination in
arriving at a valuation pursuant to Wis. Stat. § 70.32(1m).
Further, we decline to address Collison's challenge to the CMECS
because the assessor did not rely on the CMECS in the assessment
of Collison's property.
¶48 Accordingly, we affirm the decision of the court of
appeals.
By the Court.—The decision of the court of appeals is
affirmed.
19
No. 2018AP669.pdr
¶49 PATIENCE DRAKE ROGGENSACK, J. (dissenting). As the
City of Milwaukee's appraiser, Jim Wiegand, said, "we recognize
the site is contaminated." Once the presence of contamination
is found on a property, Wis. Stat. § 70.32(1m) requires the
taxation assessor1 to consider the "impairment of the value of
the property" that is due to contamination. However, Wiegand's
appraisal, upon which the assessor relied, did not follow
§ 70.32(1m). Instead, it appears that Wiegand applied the
Milwaukee Environmental Contamination Standards (MECS), which
directed the appraiser to value the property "as if
uncontaminated" unless the taxpayer meets MECS's burden of
proving the costs of clean-up.
¶50 I respectfully dissent because the majority opinion
affirms the Board of Review's decision sustaining Wiegand's
appraisal, which appraisal did not follow the law.2 I also write
because I conclude that MECS do not comply with Wis. Stat.
§ 70.32(1m) and therefore, it is unlawful to apply MECS in
taxation appraisals of contaminated properties.
I. BACKGROUND
¶51 The City agrees that Ronald Collison's property is
environmentally contaminated. The contamination was caused by
leaking from underground storage tanks that once contained
1 The City of Milwaukee is the assessor of taxes due on real
estate within its boundaries. Wiegand is the appraiser for the
City who determined the market value of the property.
2 Majority op., ¶3.
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petroleum products and perchloroethylene, solvents used in a dry
cleaning business that operated on the property in 1979 when
Collison purchased it. As Board member, Volkman, pointed out,
the City has long been aware of the contamination because the
City built an alley on the edge of Collison's property and found
evidence of these pollutants leaching into city property. He
was surprised that the City did not do anything about cleaning
up the contamination.
¶52 Wiegand's appraisal recognized the contamination and
related that "owner has provided a copy of a Tank System Site
Assessment Report (TSSA) dated July 19, 2012 from Endpoint
Solutions. This report details the removal of four underground
storage tanks (UST's) and a comprehensive analytical soil sample
report."3 The appraisal continues to relate that the "Report [of
Endpoint Solutions] did not make any recommendations regarding
cost or remediation. . . . The owner has not provided any
report detailing clean-up costs. Lacking detailed, a Phase II
environmental study, it remains unclear as to the extent of
contamination that exists on the site or any associated clean-up
costs."4
3 Appraisal, Non-Electronic Record Item, p. 4.
4 Id.2
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II. DISCUSSION
A. Standard of Review
¶53 We review the decision of the Board of Review, not the
decision of the circuit court or the court of appeals.
Steenberg v. Town of Oakfield, 167 Wis. 2d 566, 571, 482 N.W.2d
326 (1992). Our review is under certiorari standards where we
determine 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 decision now under review. Sausen v. Town
of Black Creek Bd. of Rev., 2014 WI 9, ¶¶5, 6, 352 Wis. 2d 576,
843 N.W.2d 39.
¶54 Our review falls under the second certiorari standard
because Collison claims that the Board of Review did not act
according to the requirements of Wis. Stat. § 70.32(1m), i.e.,
that it did not act according to law. Although the Board
presumes that the valuation is correct pursuant to Wis. Stat.
§ 70.47(8)(i), there is no presumption that the Board acted
according to law when it adopted Wiegand's valuation. Rather,
"[w]hether the Board acted according to law is a question of law
that we decide independently." State ex rel. Peter Ogden Fam.
Tr. of 2008 v. Bd. of Rev., 2019 WI 23, ¶24, 385 Wis. 2d 676,
923 N.W.2d 837. In order to resolve whether the Board acted
according to law, we interpret and apply § 70.32(1m). Again,
these tasks present questions of law that we decide
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independently of the decisions of the Board, the circuit court
and the court of appeals. Id.
B. Relevant Statutes
¶55 Real estate is valued for taxation purposes by the
criteria set out in Wis. Stat. § 70.32. Provisions relevant to
Wiegand's appraisal of Collison's property provide:
(1) Real property shall be valued by the assessor in
the manner specified in the Wisconsin property
assessment manual provided under s. 73.03(2a) . . . at
the full value which could ordinarily be obtained
therefor at private sale. In determining the value,
the assessor shall consider recent arm's-length sales
of the property to be assessed . . . ; recent arm's-
length sales of reasonably comparable property; and
all factors that, according to professionally
acceptable appraisal practices, affect the value of
the property to be assessed.
. . . .
(1m) In addition to the factors set out in sub.
(1), the assessor shall consider the impairment of the
value of the property because of the presence
of . . . environmental pollution, as defined in
s. 299.01(4).
§ 70.32.
¶56 Collison claims that the City did not act in accord
with Wis. Stat. § 70.32(1m) because he provided proof that his
property was contaminated, but the City did not consider the
impairment of the value of the property because of contamination
as § 70.32(1m) requires. Rather, the City contended that
Collison was required to provide "verifiable written evidence
pertaining to the extent or cleanup costs" for the contamination
in order to have his property value reduced. Accordingly, the
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interpretation and application of § 70.32(1)(m) are central to
the case before us.
C. Wiegand's Appraisal
¶57 Wiegand used the income approach to value Collison's
property. He did so by following the 2016 Wisconsin Property
Assessment Manual (WPAM),5 as Wis. Stat. § 70.32(1) directs, and
by employing MECS to the acknowledged contamination. In order
to place issues in the context this case presents, a brief
review of principles that underlie taxation appraisals will be
helpful.
¶58 Assessments for taxation purposes are valid for the
current year, with Wis. Stat. § 70.10 establishing the
assessment date as January first. "The assessment is based on
the status of the property as of the close of that day."6
¶59 As WPAM explains, "There are three traditional
approaches to developing the opinion of value: the sales
comparison approach, the cost approach, and the income
approach."7 For taxation valuations, the "Markarian hierarchy"
is used.8 State ex rel. Kesselman v. Bd. of Rev. for Vill. of
Sturtevant, 133 Wis. 2d 122, 128-34, 394 N.W.2d 745 (1986). The
Markarian hierarchy requires:
5All references to the Wisconsin Property Assessment Manual
are to the 2016 version.
6 Wisconsin Property Assessment Manual (WPAM) at 7-21.
7 Id. at 7-22.
8 Id. at 7-23.
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[A]ssessors to first use a recent arm's length sale of
the subject property. If there is no such sale, the
next step is to use recent comparable sales of other
properties. Only if there are no recent comparable
sales of other properties should the assessor proceed
to other indicators of value that include the income
and cost approaches to value.[9]
¶60 Valuation by the income approach employs
capitalization of income, as explained in WPAM. "This method
assumes the gross rental under a ground lease is at current
market levels. Net rental after deduction of the owner's
expenses (insurance, management) is capitalized at an
appropriate rate into an estimate of land value."10 Direct
capitalization, as described in WPAM, was used by Wiegand to
determine the value of Collison's property.11
¶61 WPAM also addresses contaminated properties "where the
extent of contamination is unknown and thus the effect on value
is difficult to measure."12 In those circumstances, the
guidelines in ch. 8 of WPAM "provide a framework the assessor
can use to gather information to help estimate the effect of
contamination on value."13 Contamination attaches a stigma to
property "that makes it less desirable than comparable
properties."14
9 Id. (citing State ex rel. Markarian v. City of Cudahy, 45
Wis. 2d 683, 686, 173 N.W.2d 627 (1970)).
10 Id. at 9-11.
11 Id. at 9-15; Appraisal, Non-Electronic Record Item, p. 4.
12 WPAM at 8-46.
13 Id.
14 Id.
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¶62 There is nothing in Wiegand's income-based valuation
that refers to impairment of value, even though Wiegand's
appraisal confirmed both his knowledge of contamination and his
receipt of a detailed contamination report from Endpoint
Solutions. Rather, Wiegand supported using his $31,800
valuation as the appraisal for taxation with the following
statement: "As of January 1st 2016, The City of Milwaukee
Assessor Office did not have any verifiable written information
pertaining to the extent or clean-up costs associated with any
perceived contamination at the subject property."15
D. Wisconsin Stat. § 70.32(1m)
¶63 The purposes of statutory interpretation and
application are to apply the meaning of the words the
legislature chose to undisputed facts presented. Jefferson v.
Dane Cnty., 2020 WI 90, ¶21, 394 Wis. 2d 602, 951 N.W.2d 556.
Wisconsin Stat. § 70.32(1m) provides:
In addition to the factors set out in sub (1), the
assessor shall consider the impairment of the value of
the property because of the presence
of . . . environmental pollution, as defined in
s. 299.01(4)."[16]
¶64 I begin by interpreting the plain meaning of the words
that the legislature chose. State v. Mercado, 2021 WI 2, ¶43,
15 Appraisal, Non-Electronic Record Item, p. 7.
Wisconsin Stat. § 299.01(4) provides that "'Environmental
16
pollution' means the contaminating or rendering unclean or
impure the air, land or waters of the state, or making the same
injurious to public health, harmful for commercial or
recreational use, or deleterious to fish, bird, animal or plant
life."
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395 Wis. 2d 296, 953 N.W.2d 337. "'Statutory language is given
its common, ordinary, and accepted meaning, except that
technical or specially-defined words or phrases are given their
technical or special definitional meaning.'" Id. (quoting State
ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI 58, ¶45,
271 Wis. 2d 633, 681 N.W.2d 110).
¶65 The plain meaning of the words the legislature chose
for Wis. Stat. § 70.32(1m) places two duties on the assessor
when property is contaminated. First, the assessor is to apply
the assessment factors in subsection (1), which require the use
of WPAM and the Markarian hierarchy that I explained above.
Second, "the assessor shall consider the impairment of the value
of the property" due to contamination. Stated otherwise,
subsection (1m) places an affirmative obligation on the assessor
to act. It requires that the effect of contamination on the
value of the property be addressed by the assessor.
¶66 Focusing on the term, "impairment," I note that common
synonyms for impairment are: damage, injury, and loss.
Thesaurus, Microsoft January 27, 2021. A common dictionary
definition for impairment is that which is "diminished in some
material respect." Webster's New Collegiate Dictionary, 574
(1974).
¶67 The assessor is to "consider" the impairment.
Deliberate, ponder and think-through are all synonyms for
consider. Thesaurus, Microsoft January 27, 2021. All synonyms
require the assessor to take some action because of the
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impairment caused by contamination of the property. He is not
free to ignore the impairment.
¶68 However, Wiegand's appraisal never mentions
"impairment" or any other synonym to show that he considered the
effect of contamination on the value of the property. By
ignoring impairment, he failed to provide an appraisal in
compliance with the legislature's directive in Wis. Stat.
§ 70.32(1m). Stated otherwise, the value he found by the income
approach was not diminished in any respect because of the
presence of contamination.17
¶69 Instead of following the statutory directive,
Wiegand's appraisal placed additional requirements on Collison.
For example, Wiegand says that the owner should have provided
"verifiable written information pertaining to the extent or
cleanup costs associated with any perceived contamination on the
subject property." However, there is nothing in Wis. Stat.
§ 70.32(1m) that requires, or even suggests, that the owner do
so. The legislature placed all the duties found in § 70.32(1m)
on the assessor, not on the property owner.
¶70 Because the Board of Review sustained Wiegand's
appraisal, which was not prepared consistent with Wis. Stat.
§ 70.32(1m), the Board's decision was not made according to law.
I do not contest that the property owner must show that
17
the property is contaminated before the burden of Wis. Stat.
§ 70.32(1m) applies to the assessor. However, here, Collison
provided an environmental report from Endpoint Solutions showing
contamination, and all parties agreed that the property was
contaminated.
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Therefore, I would reverse its decision and remand to the Board
so that it can request an appraiser to consider the impairment
of value caused by contamination as § 70.32(1m) requires.18
E. Majority Opinion
¶71 The majority opinion asserts that the assessor did
consider the impairment due to contamination because the
appraiser valued the property based on the income approach.19 To
support this assertion, the majority quotes the appraiser's
statement that there is a "need for parking in this area and
contaminated sites can be encapsulated and used as parking
lots."20 The majority then concludes that "it was the
contamination that drove the assessor's decision to use the
income approach to value the property."21 This conclusion
ignores Exhibit 3, prepared by Wiegand, as his written valuation
report, and it also ignores the Markarian hierarchy that must be
used for taxation appraisals according to WPAM and Wis. Stat.
§ 70.32(1).
¶72 I begin with the appraiser's report. Prior to
calculating the market value under the income approach that is
before us in this review, Wiegand noted that he could not use
other valuation methods for this property. He explained that
18I take no position on the dollar valuation of the
impairment due to contamination. That is a matter left to the
professional expertise of an appraiser.
19 Majority op., ¶3.
20 Majority op., ¶38.
21 Id.10
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"the Direct Sales Comparison Approach was considered but not
applied due to difficulty finding sales of similar properties."22
He also considered the cost approach to value, but concluded it
was not "the most reliable indication of value for the subject
property given the age of the structure and difficulties in
estimating depreciation."23 It was only after determining that
other valuation approaches were not available that Wiegand moved
to the income approach where he applied direct capitalization of
income to determine value.
¶73 The appraiser's report contained a step-by-step
calculation from which he derived the market value of $31,800.
It shows in clear terms that he did not employ an income-based
valuation due to his consideration of contamination. Rather, he
employed direct capitalization of income because he was
following the Markarian hierarchy required by WPAM, and it was
the one valuation method available for this property. First, he
determined projected annual revenue based on what Collison had
been paid in the past. Next, he deducted an amount equivalent
to a 30 percent vacancy rate as an expense. Then, he
capitalized the resulting number, $4,082, by 12.841 percent,
which was "a market derived capitalization rate of 10.00% plus
an effective tax rate of 2.841%."24 Under the Markarian approach
22 Appraisal, Non-Electronic Record Item, p. 5.
23 Id.24Report of Jim Wiegand, Senior Property Appraiser, Exhibit
3, p. 6.
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to taxation valuation, the income method is appropriate when
recent sales or comparable sales are not available.25 State ex
rel. Markarian v. City of Cudahy, 45 Wis. 2d 683, 686-87, 173
N.W.2d 627 (1970). That is what happened here.
¶74 I have no problem with the value the appraiser
calculated through direct capitalization of income. His
calculations were properly done. My objection is that he did
not reduce the $31,800 value by any amount based on "impairment
of the value of the property because of the presence of []
environmental pollution" as Wis. Stat. § 70.32(1m) requires.
¶75 There simply are no facts from which to conclude that
Wiegand used the capitalization of income approach to consider
the effect of environmental contamination on the value of
Collison's property as the majority opinion has done. In order
to come to its conclusion, the majority opinion ignored
Wiegand's step-by-step valuation that is set out in Exhibit 3.
His testimony and the exhibit he prepared belie the majority
opinion's conclusion.
¶76 Furthermore, the majority's conclusion that Wiegand
used the income approach to consider impairment of the
property's value due to contamination is new law, without
citation to authority or reasoning to support it. The majority
opinion will create unending confusion in what has been a
consistent approach to taxation valuations where capitalization
of income has been well accepted as part of the Markarian
25 WPAM at 7-23 (citing Markarian, 45 Wis. 2d at 685-86).
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hierarchy when comparable sales are not available,26 but never
before used to "consider the impairment of the value of the
property because of . . . environmental pollution." Wis. Stat.
§ 70.32(1m).
F. MECS Validity
¶77 We asked the parties to address whether MECS were
consistent with the statutes. Because they give burdens to
property owners that are inconsistent with the plain meaning of
Wis. Stat. § 70.32(1) and (1m), I conclude that they are
unlawful and their use should be discontinued in regard to
valuations of contaminated property.
¶78 As foundation for the following discussion, I review
what MECS require of the taxpayer and the appraiser in regard to
valuing contaminated property. First, MECS place a "BURDEN OF
PROOF ON TAXPAYER."27 MECS require the taxpayer to prove that
contamination exists: "The appraiser should not assume that a
specific property type has contamination without appropriate
substantiating evidence."28 Second, "[c]ontamination must be
substantiated through an independent environmental
expert. . . . The minimum level of acceptable substantiation
will be a comprehensive Phase II Audit, setting forth (among
other pertinent information) the type, level and source of
26 WPAM at 7-23.
Milwaukee Environmental Contamination Standards (MECS) at
27
A-App. 057.
28 Id.13
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contamination and the suggested method or methods for
remediation."29 Third, "[w]ithout this information, property
must be valued as if uncontaminated."30 Fourth, reductions in
valuations are tied to clean up costs: "Adjustments to the
assessments will be based on clean up costs with consideration
of discounting these costs for time."31 Fifth, "[p]roperty
assessments which have been adjusted for contamination shall be
designated as unfinished ("U" symbol) assessment."32
¶79 Here, Collison provided a contamination report from
Endpoint Solutions. It detailed the removal of four underground
storage tanks and provided "a comprehensive analytical soil
sample report"33 of environmental contamination. In addition,
all parties agreed that Collison's property was contaminated.
Therefore, despite MECS's Phase II requirement, the assessor's
duties under Wis. Stat. § 70.32(1m) were clearly triggered in
this case.
¶80 In his Appraisal Report, Wiegand explained that one of
the purposes of his appraisal was that it be in accord with
"procedures of the City of Milwaukee Assessor's Office," i.e.,
MECS.34 He also said that the City Assessor's Office did not
29 Id.30 Id.31 Id. at A-App. 058.
32 Id.33 Appraisal, Non-Electronic Record Item, p. 4.
34 Id., p. 2.
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have any verifiable written information pertaining to the clean-
up costs associated with contamination of Collison's property.
From this statement and his failure to address impairment of
value due to contamination, it appeared that he applied MECS's
requirement that without a Phase II report showing the costs of
clean-up the property is to be assessed as if uncontaminated.
¶81 Wiegand's appraisal ignored all impairment of the
value of Collison's property due to contamination, as his
written report, Exhibit 3, explained in step-by-step detail.
This is confirmed by the MECS directive set forth in the
following footnote.35 And finally, under MECS, if Wiegand had
considered an impairment due to contamination, he would have
specially marked his assessment because MECS provides that
property assessments "adjusted for contamination shall be
designated as unfinished ("U" symbol) assessment." The
assessment for Collison's property did not have a "U" symbol
showing that it had been adjusted for contamination.
III. CONCLUSION
¶82 In conclusion, I respectfully dissent because the
majority opinion affirms the Board of Review's decision
sustaining Wiegand's appraisal, which appraisal did not follow
the law.36 I also write because I conclude that MECS do not
As MECS provides, "The starting point for determining
35
market value for properties affected by contamination is the
unencumbered, or unimpaired value. This is the value that a
property would have if no adjustment were made for any
environmental problems. Unencumbered value is obtained using
standard appraisal methods." MECS at A-App. 064.
36 Majority op., ¶3.
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comply with Wis. Stat. § 70.32(1m) and therefore, it is unlawful
to apply MECS in taxation appraisals of contaminated properties.
¶83 I am authorized to state that Chief Justice ANNETTE
KINGSLAND ZIEGLER and Justice REBECCA GRASSL BRADLEY join this
dissent.
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1