Metropolitan Associates v. City of Milwaukee
2016AP000021
| Wis. | Jan 10, 2018Background
- Metropolitan Associates challenged the City of Milwaukee’s property tax assessments for seven properties (focus on Southgate Apartments for tax years 2008–2011), alleging assessments were excessive.
- The City initially used a mass appraisal to set values; City assessor later defended the assessment with single-property (tier 2 sales-comparison and tier 3 income) analyses at trial.
- Metropolitan presented its own appraiser who produced lower tier 2 and tier 3 valuations, adjusting for net operating income (NOI).
- The circuit court found the City complied with Wis. Stat. § 70.32(1), found the City’s tier 2/3 analyses more reliable, and upheld the assessments.
- The court of appeals affirmed; the Wisconsin Supreme Court affirmed, holding mass appraisal is permissible for initial assessments and the circuit court’s factual findings were not clearly erroneous.
Issues
| Issue | Metropolitan's Argument | City of Milwaukee's Argument | Held |
|---|---|---|---|
| Whether Wis. Stat. § 70.32(1) requires single-property appraisal (Markarian tiers) such that mass appraisal is impermissible | Mass appraisal does not use the “best information” (three-tier Markarian hierarchy) and thus violates § 70.32(1) | § 70.32(1) requires following the Manual, which authorizes mass appraisal for initial values; "practicably" permits mass appraisal where single-property appraisal is impracticable | Mass appraisal is permissible for initial assessments under § 70.32(1) and the Manual; it can constitute the assessment so long as it is not excessive |
| Whether the presumption of correctness under Wis. Stat. § 70.49(2) applies to an assessment based on mass appraisal | Presumption should not attach because mass appraisal is not a statutorily authorized Markarian method | The City relied on Manual-authorized mass appraisal and defended it with single-property analyses; presumption applies unless rebutted | Court did not decide whether the presumption attaches to mass appraisals because circuit court’s fact findings independently support the result; affirmed without resolving presumption question |
| Whether the circuit court erred in weighing credibility and reliability of competing appraisals (trial factfinding) | Circuit court misweighed and should have accepted Metropolitan’s appraiser and adjustments based on NOI | Circuit court reasonably found City appraiser’s analyses more reliable (City accounted for market expense trends; Metropolitan conflated sales-comparison and income approaches) | Circuit court’s credibility and weight determinations were not clearly erroneous and will not be disturbed on appeal |
| If neither party’s single-property appraisal complies with statute, what remedy is required | (Dissent) If mass appraisal invalid, neither party’s sales-comparison complied (City omitted economic adjustments; Metropolitan used NOI rather than listed economic elements), so remand for statutorily-compliant valuation | City: its tier 2/3 analyses complied and supported initial mass appraisal; no remand needed | Majority: because circuit court findings support result, no remand; dissent would reverse and remand for statutorily-compliant sales-comparison appraisal |
Key Cases Cited
- State ex rel. Markarian v. City of Cudahy, 45 Wis. 2d 683 (1970) (establishes three-tier hierarchy for single-property appraisal)
- Regency W. Apartments LLC v. City of Racine, 372 Wis. 2d 282 (2016) (assessor must use the best information particular to the property; improperly generalized mass-appraisal inputs can violate § 70.32(1))
- Trailwood Ventures, LLC v. Village of Kronenwetter, 315 Wis. 2d 791 (2009) (action under Wis. Stat. § 74.37 is a de novo trial; court reviews circuit court findings)
- Adams Outdoor Advert., Ltd. v. City of Madison, 294 Wis. 2d 441 (2006) (tier-three/income approach may be used only when comparable sales are not available)
- Walgreen Co. v. City of Madison, 311 Wis. 2d 158 (2008) (sales-comparison approach principles and need to consider operating expenses, lease terms, management, tenant mix)
- Metropolitan Holding Co. v. Board of Review, 173 Wis. 2d 626 (1993) (Manual directions must still produce statutory fair market value; Manual cannot authorize methods inconsistent with statute)
- Darcel, Inc. v. City of Manitowoc Bd. of Review, 137 Wis. 2d 623 (1987) (arm’s-length sale is best indicator of fair market value)