Deutsches Land, Inc. v. City of Glendale

Plaintiff-Respondent-P Land, Inc., etitioner, † v. Defendant-Appellant. Glendale, Supreme Court 9, 1998. September argument No. 96-2489. Oral Decided 16,1999. April 583.) (Also N.W.2d reported 30,1999. for reconsideration denied June †Motion plaintiff-respondent-petitioner For there were by Hugh Jeffrey Godfrey, Braun, briefs R. L. Janik and argument by Frazier, & Braun and Milwaukee oral Hugh R. Braun. defendant-appellant by

For the there was a brief City Attorney, Fuchs, John F. Marcuvitz, Alan Robert Brady Weiss, Berzowski, Donahue, L. Gordon and & argument by LLP, all of Milwaukee and oral L. Robert Gordon. by

Amicus curiae was filed Sandra Stone Ruffalo, Milwaukee, Turners, for the Milwaukee Inc. Frinzi,

Amicus curiae was H. Mil- filed Dominic Community waukee, Center, for the Italian Inc. Langley, city

Amicus curiae was filed F. Grant attorney, Gregg attorney, Hagopian, city C. assistant Witynski League Municipal- Curtis A. Wisconsin of Meyer ities, John E. and Wisconsin Association of Assessing City all Officers, Milwaukee, of for the of League Municipalities Milwaukee, of Wisconsin Assessing Wisconsin Association of Officers. peti-

¶1. BRADLEY, J. ANN WALSH (Deutsches Land) tioner, Land, Inc. seeks published Appeals1 review of decision of the Court Glendale, v. 1 DeutschesLand 215 Wis. 2d (Ct. 1997) App. (reversing judgment N.W.2d 535 Circuit Haese, County, Judge). Court for Milwaukee William J. exemptions grant the circuit court's which reversed argues taxes. Deutsches Land from real to its is entitled as a association benevolent property taxes under Wis. from Wisconsin (1995-96).2 § find that Deut- 70.11 Because we Stat. to sufficient evidence sches Land has support offered exemptions, requested we affirm the сourt appeals. non-profit non-stock, is a 2. Deutsches Land chapter corporation organized 181 of in 1967 under the holding primarily serves as a Wisconsin Statutes. It corporation fixed of five the real estate and assets non-profit incorporated non-stock, benevolent associa- 501(c)(2). These five tions. See Internal Revenue Code (dancing), associations —DWendelstoana benevolent (sing- (dancing), Gesang Verein Bavaria D'Oberlandler (social), ing), Vergnuegungs and Bavarian Club (soccer) (collectively, "the benevolent Soccer Club associations") preserving purpose of Ger- for the —exist heritage manic and culture.

¶ 3. the benefit of the benevolent associa- For roughly 14 to acres of tions, Deutsches Land holds title Though in the of Glendale. located officially single parcel, comprises a property as if Land treats this 14-acre it were four buildings upon them "lots."3 Two of the lots have noted, to Unless otherwise all further references the Wis be to the 1995-96 version. consin Statutes will past at time in the The record indicates that some Deut- steps platting preliminary sches Land taken the to had reason, subdividing four For acres into lots. whatever Nevertheless, process completed. never the fiction of Was analysis for purposes four lots is immaterial to our of this case, single parcel if and we will treat the as it were divided four. remaining totaling approximately lots, two five and acres,

one hаlf are soccer fields. containing buildings ¶ 4. One of the two lots Heidelberg called "Old Park" which covers almost four Heidelberg and a acres. half Old Park is site at major which the benevolent associations conduct two public festivals, Volksfest and Oktoberfest. These festi- significant fund-raising vals are source of income for Additionally, the benevolent associations. 12,000 square outbuildings foot "Fest Hall" and other minor Heidelberg Any are located Old Park. one of the may park benevolent associations use the and the Fest Hall. In the months, winter Fest Hall is used at practice. various times the soccer club for indoor officially ¶ 5. While Deutsches Land does not park any entity, lease the Deutsches Land allows (Waldhaus) Waldhaus, Bavarian Inc. it to use on approximately annually. 20 occasions is Waldhaus for-profit corporation by created the benevolent for-profit associations to isolate their activities and by equal owned the benevolent associations five yearly occasions, shares. On those 20 Waldhaus uses park corporate picnics supplies the to host at which it beverage. corporations arrange and The food Heidelberg with Waldhaus to their hold event Old be, Park not need not, do to and as a are rule affiliated any way. with the benevolent associations in ¶ The 6. Bavarian Inn lot four acres contains a parking parcel area the entire 14-acre as as a well significant structure thаt houses the Bavarian Inn res- for-profit which taurant, full-service, is a bar and banquet facility open general public. to the The Bava- building rian Inn has two floors. The main floor banquet dining a bar, area, contains addi- hall in tion kitchen, rooms, coatroom, to the rest and other The space a restaurant. associated with

miscellaneous main floor from the both floor, is accessible which lower into separate entrance, divided outdoor and from (named "Rathskeller," banquet rooms three more "Edelweiss"), the Bava- the offices of "Weinstube," and storage for the benevolent area Inn, and a rian associations. Though land on owns the Land building as the Inn sits as well Bavarian

which operate the Bava- to it with Waldhaus itself, contracts past entered in the has Inn restaurant. Waldhaus rian for the entire Deutsches Land with into a formal lease although building, terms the lease Inn Bavarian required associa- the benevolent to allow Waldhaus charge. facility any part without use tions to expired However, the rela- in 1990. formal lease last tionship Waldhaus, benevolent between essen- has remained associations, Deutsches Land tially time. since that the same though altogether clear, indi- record, 8. The Inn are used at the Bavarian areas of cates that most associa- the benevolent members of certain times example, For Waldhaus. at other times tions and either most often use associations the benevolent while Edelweiss for their Weinstube, Rathskeller, gatherings, to also use the for them it is not uncommon Similarly, banquet main floor. while hall normally main on the uses the facilities Waldhaus occupy for Waldhaus floor, it is not uncommon banquets. Weinstube, or Edelweiss for Rathskeller, only space in the Bava- that the record indicates The solely by associations the benevolent Inn used rian building. storage All of the in the lower level area and benevo- used both Waldhaus other areas are associations. lent Although arrangement

¶ 9. this between Deut- place and sches Land Waldhaus has in been since sought exemption Land Deutsches first from Wis- Specifically, consin taxes 1993. Deutsches exemption Land seeks a full for now the soccer fields Heidelberg exemption Park Old and a 25% for the building years Inn Bavarian for the of 1993-95. Glen- applications dale denied the and Deutsches Land filed County. suit in the Circuit Court Milwaukee The circuit court ruled that Deutsches Land was entitled to exemption a full on the soccer fields and Old Heidel- berg exemption Park 25% for the Inn Bavarian building.4 appealed appeals

¶ 10. Glendale and the court of appeals reversed. court of determined that Deut- exclusively" sches had Land not satisfied the "used 70.11(4) requirement of Wis. Stat. and thus could not exemption Heidelberg for receive an Old Park and the Citing Inn subsection, Bavarian lot. the same it also concluded that there was no evidence the record that necessary the soccer fields fоr were the location and any building convenience of that was from tax- Accordingly, ation. it held that Deutsches Land was not exemption any entitled a real tax of its property. asking rule this court to that it is entitled exemption

to an taxes, from real necessarily requires Land us to construe Stat. Wis. question § 70.11. The construction of statutes is a independent legal law we which review conclu- part The circuit court determined that no of the land of the eligible exemption Bavarian Inn lot was such an because would exceed the maximum 10-acre 70.11(4). Wis. Stat. § appeals. the circuit court and court of reached

sions Colby County, 342, 2d 349, 550 v. Columbia Wis. 202 (1996). grant we deference to 124 While N.W.2d findings, de novo the factual we review circuit court's Peplinski application v. Fobe's of those facts to law. (1995). Roofing, Inc., 6, 19, N.W.2d 597 193 Wis. 2d 531 interpreting primary pur statutes, our 12. In legislature's give pose ex effect to the intent. State is to Angela Kruzicki, 112, 121, 561 v. 209 Wis. 2d rel. M.W. (1997). end, look first to 729 To this we N.W.2d language language if is unam statute, biguous, the statute in accordance with its we construe statutory ordinary meaning. If, hand, other on the ambiguous, legislative language look to the his is we legislature's tory purpose in order to ascertain both enacting intent as to the stat the statute Department meaning. Stockbridge Dist. ute's School v. Instruction, 214, 219, 202 Wis. 2d 550 N.W.2d Public of (1996). 96 Wisconsin, In the taxation of is the exception. Engineers exemption & rule and City Milwaukee, Milwaukee, 38 Scientists Inc. v. of of (1968); 550, 553, 2d 157 Trustees Wis. N.W.2d 572 of 299, Rhine, 293, v. 170 Wis. 2d Indiana Univ. Town of 1992). (Ct. general, apply App. we 488 N.W.2d 128 exemption to tax "strict but reasonable construction" Hospital Association v. Mil- statutes. Columbia of N,W.2d (1967); waukee, 668, 2d 660, 35 151 750 Wis. City Madison, E. Madison Aerie No. 623 F. O. v. of (1957). 472, 476, 82 Since Wis. N.W.2d payment legislative grace, is an from the taxes act seeking party the proving bears the burden statutory exemption. that it falls Pul- within Leeds, 797, Farms v. 2d Town 149 Wis. sfus N.W.2d (1989). Consequently, any 329 doubt under the "strict but reasonable" construction rule must be against party seeking exemption. resolved Hospital, Columbia 35 Wis. 2d at 668. Heidelberg

Old Park ¶ § 14. The 70.11 bulk Wis. Stat. delineates organizations possibility and institutions have that exemption. requirement, organ- of an As a threshold an exemption § ization that seeks an under 70.11 must fall specified categories one within or more of the outlined Lloyd Wright statute. See Frank Foundation v. Wyoming, 599, 606-08, Town 267 Wis. 66 N.W.2d (1954). 642 exemption Land total Deutsches seeks a property Heidelberg from real taxes on Old Park and the Fest Hall. It that it claims is entitled to such an 70.11(4). § under Wis. Stat. The relevant statutory language as follows:

70.11 Property exempted from taxation. The property in this is exempted section .described general from property taxes....

(4) EDUCATIONAL, RELIGIOUS AND INSTITUTIONS; BENEVOLENT WOMEN'S CLUBS; ASSOCIATIONS; HISTORICAL FRA- TERNITIES; LIBRARIES. owned Property and by. used . exclusively .educational benevolent associations,. exceeding . .but acres of land necessary for location and convenience of buildings while such is not used profit.... for prior ¶ 16. that, We stated have occasions qualify for a total under Wis. Stat. (1) 70.11(4), organization facts: must show three

§ (2) organization, and that it owns it is a benevolent that (3) exclusively property, it uses the that and uses exempt purposes. Protes- See Milwaukee for 284, 293, Milwаukee, 41 2dWis. v. tant Home (1969). Deutsches Land Both N.W.2d agreement associations that the five are in Glendale purposes for associations above are benevolent noted 70.11(4).5 parties' agreement However, the Stat. Wis. Specifically, goes Glendale no further. requirements disagreement over Land are exclusively" "exempt "used be the purposes." argues Deutsches Land has 17. Glendale exclusively" requirement of Wis. the "used not satisfied 70.11(4) park to Waldhaus used Stat. because approximately corporate picnics for-profit 20 host appeals agreed, annually. stat- court of occasions ing that

[sjection 70.11(4), Stats., requires as condition it to "benevolent associa- grants the tax exclusively by" "used that be tions" profit. and not for those associations benevolent "exclu- ambiguous: is not the term This condition sively" exceptions. brooks no (citations omitted). Land, 215 Wis. 2d at 554 exceptions" appeals' "brooks no the court of While appealing pronouncement, rhetorical statement is an 5 the Bavarian Soccer Club Though dispute it does not that association, disputes playing that the Glendale is a benevolent educational teaching is done for a benevolent or of soccer assume, deciding, activity is without that such purpose. We will 70.11(4). covered Wis. Stat. § ultimately agree we interpretation. cannot with such ¶ 18. The fact ‍​‌‌‌​‌​‌‌‌​​‌​​‌​‌‌​​​‌‌​‌​​​​​​​​‌‌​‌‌‌​​​​‌‌​‌‍of the matter is that we have requirement exceptions exempted broоked to the exclusively organi be used benevolent "plain zation so intent of the statute" is not City frustrated. Catholic Woman's Club v. Green of (1923). Bay, 105, 192 Wis. N.W. 479 In North Publishing City western House v. Milwaukee, 177 of (1922), 401, 408-09, Wis. we N.W. exclusively" concluded phrase preclude that the religious "used did not occasionally engaging

association from publishing publishing commercial where that consti percent Similarly, tuted less one than business. Publishing City Madison, Cardinal Co. v. 205 Wis. (1931) (Cardinal 344, 347-48, 237 N.W. 265 Publish ing I), exclusively" we determined that "used did not "inconsequential preclude uses of incidental gain." Hospital, See also Columbia 35 Wis. 2d at 671. phrase our If construction of the "used

exclusively" exceptions, excep has brooked some those Gymnastic tions have not swallowed the rule. In Association South Side Milwaukee v. of 129 (1906), Milwaukee, Wis. 429, 109 N.W. 109 we con Gymnastic cluded that exclusively did Association property they their use entire when leased portions building purveyors public the to the of a out of barbershop. legitimate saloon and noted a We distinc promotive tion between use that is "incidental to and of primarily purpose building main is the for which a parts permanent leasing devoted and the of of the building having prin- no relation to owner's uses the

83 Similarly, cipal purpose."6 at 437. Cardinal Id. City Publishing 517, 519, Madison, 208 v. Wis. Co. of (Cardinal (1932) II), Publishing we 243 N.W. 325 roughly publishing income of stated that commercial exempt organization's percent income total ten of negligible, incidental, inconse- as or "cannot be claimed quential" result, not used and, as a the was еxclusively under the statute. question general, this: relevant is 20. the activity questionable consequential the when

How was e.g., activity property? compared See, to on the the total Publishing 347; Pub- I, 205 at Cardinal Cardinal Wis. fact-specific lishing question II, at 519. This 208 Wis. case-by-case on a basis. can be answered prior occasions, have, on held that 21. We non-exempt against comparison proper as is actual use City Post v. use. Alonzo No. 23 actual Cudworth (1969); 1, 13, 165 42 2d N.W.2d 397 Milwaukee, Wis. of see County, Lodge 224 v. also Trustees Clinton Rock of (1937). Requiring 168, 172, 5 a benevo Wis. 272 N.W. actually show is lent association to how merely part of association's burden used exemption." it of falls "within the terms show (quoting Cudworth, 42 at 13 Methodist Alonzo Wis. 2d City Episcopal Madison, 167 Baraca v. Church Club of (1918)). In order 167 N.W. 258 to sustain Wis. Gymnastic At the Association the South time we decided Milwaukee, 429, 109 N.W. Side Milwaukee v. Wis. (1906), partial exemption pro the statute did contain a completely completely exempt was either vision: provision, judicially create such a instead taxed. We declined to deferring legislature. Id. at consideration that task to proof, burden of Deutsches Land must show actual exempt use. ownership property

¶ 22. Benevolent of is not enough satisfy 70.11(4); to the dictates of Wis. Stat. property required. benevolent use is also State Richardson, ex rel. State Ass'n. v. 197 Wis. of Y.M.C.A. (1928); 390, 392, 222 N.W. 222 Dominican Nuns v. (Ct. La 142 Crosse, 577, 581, 419 Wis. 2d 263 N.W.2d 1987). App. Just as a benevolent can association own property actually using title to without it benevo purposes, lent a benevolent association own title can property actually using e.g., See, without it at all. Bay Mississippi Outagamie Green County, & Canal Co. v. (1890). 587, 591,

76 In Wis. 45 N.W. 536 either case, the benevolent association is not entitled to an property e.g., See, from Men's taxes. Halls County, Stores, 84, Inc. v. Dane 269 Wis. N.W.2d 69 213 (1955); Bay Mississippi Co., Green & Canal Wis. at necessary 591. It is therefore for a benevolent associa property tion to detail its use of the tax so any, types what if activities, assessors know occurring are property. on the many

¶ 23. situations a benevolent associa- tion will demonstrate that its use of the is so pervasive that the should as if association be treated it property. say, is in continual use of the is to That likely school will not receive a 75% summer because classes are not held months. may unusual, While such treatment not be it is not as dissent have it automatic. at would Dissent every exemptions, aspect 119. As with tax use of burden to demonstrate the lies exemption. party seeking with the See Pulsfus Farms, 811; Cudworth, 2d at Wis. Alonzo Wis. Episcopal Club, Baraca 13; Church

2d at Methodist uses association that 211. The benevolent only occasionally 167 Wis. at it to lie fallow and allows its any exemption reflect its have at all other times will Similarly, usage. association benevolent actual occasionally only and allows uses it that any profit times have at other will others to use it for exemption usage. actual reflect its maintains, the dissent Land 24. Deutsches Heidelberg perva- agrees, Park is so its use of Old that corporate park for use of the that the occasional sive may inconsequential. picnics case, be the That fact record.7 it is not so based on this but days argues the 20 of Land 25. Deutsches ought against corporate to measured use be days year. remaining its To substantiate 345 of park corporate of use of the consisted claim that the approximately annually, Deutsches Land 20 occasions reflecting properly proffered copies records of business usage. records, and the cir- From these Glendale this suffi assuming that Deutsches Land had offered Even usage park was so evidence to show that cient days corporate use to comparison of 20 of pervasive to warrant use, dis days we maintain doubts with the of benevolent percentage for-profit of contention this sent's activity roughly inconsequential or incidental. Dissent 6% —is — City Publishing House v. Mil Compare Northwestern at 113. (1922) waukee, 401, 408-09, (for-profit N.W. 636 177 Wis. with inconsequential); income deemed income .00277% of total Madison, 517, 519, Publishing v. Cardinal Co. 208 Wis. (1932) (for-profit income 10.7% of total income not 243 N.W. 325 inconsequential). Heidelberg ineligible for a total

Even if Old Park was not, later, explain preclude Deut- exemption this would as we park. To do seeking partial Land from sches course, adequately prove its case. successfully, of it must so upon court cuit obtained concrete information which part this However, base ofthe calculation. to substanti- its claim ate that the benevolent рervasive societies' use of park was so so as to be calculated at 345 days, testimony offered Land genera- benevolent association members who made Although lized assertions about the associations' use. apparently keeps it a calendar other records of the park's usage, attempt Deutsches Land did not to solid- ify generalized by introducing those assertions those reports generated records from those As a records. nothing result, Glendale and the circuit court could do speculate park. but on the actual benevolent use of the fully

¶ 26. As is more detailed discussion unsupported opinion below, the Bavarian Inn such tes- timony, insufficiently more, absent demonstrates property satisfy actual use of order to Wis. Stat. § 70.11. Deutsches Land offered sufficient evidence corporate Heidelberg Park; actual use it of Old park. did not do so actual for the benevolent use of the ¶ 27. Alonzo Cudworth that dictates Deutsches Heidelberg exemption Land is not entitled to an for Old or the on Park Fest Hall this record. Wis. 2d at 13. allowing exemption, such the dissent overrules Alonzo replaces Cudworth sub silentio and it a instead with "benevolent test. at is control" Dissent 110—111. It where dissent its unclear derives contention that exercising property "control" entitles a benevolent exemption. to an a association supported Such new test is not existing our case law. repeatedly ¶ 28. We have stressed that a benevo- lent association must do more than own or control exemption; to claim an it must also use that purposes. e.g., See, for benevolent Alonzo Stores, 12-13; Men's

Cudworth, 42 2d at Halls Wis. Lodge, 172-73; 89; Clinton 224 Wis. at Inc., 269 Wis. at Bay Richardson, 392; 2d at & Missis- 197 Wis. Green Evangelical sippi 591; Lutheran Co., Canal 76 Wis. at Synod, Nuns, 142 n.3; 2d at 545 Dominican Wis. long- our 2d at 581. dissent's alteration of Wis. standing precedent Land, Deutsches is unwarranted. entity exemption, any seeking must other show like was for benevolent that its actual use purposes. ade- record, Land did not On this showing exemption quately must make be this denied. Inn

Bavarian sought property also a tax 29. Deutsches Land exemption It on activities at the Bavarian Inn. rec- activity ognized for-profit at that Waldhaus' qualify Inn Inn meant that the did not a Bavarian sought exemption. Instead, Deutsches Land total building partial of 25% of the based conduct at activities that the benevolent associations entitle- the Bavarian Inn. Deutsches Land claimed its partial under ment Wis. Stat. 70.11(8),8 part: provides in relevant which (8) TAXED IN PART. Property in part under this is used in a trade section the which the owner of is property or business for 8 1997, legislature repealed the and recreated Wis. Stat. 70.11(8) legislative as Act That § § 70.1105.1997 Wis. 35 243. § only placement statutory provision of the action altered the any way. did not alter its Since this case involves substance 1993-95, years placement provi will to the of the the we refer 70.11(8) statutory as rather than as its current § sion designation.

88 subject to taxation under sections to 515 of the code, 71.22(4m), internal revenue as defined in s. shall for portion be assessed taxation at that of the fair market of the is property value that attributa- ble to the is used in part property of that unrelated trade business. This subsection does not apply property by to is an exempt leased ,9 organization person... to another 1931, 30. Since this state has recognized ability organization of an exempt to receive property See tax of part 2, ch. property. § 302, statutory Laws of 1931. Under scheme in place 1991, from 1931 until determining the taxable part an was exempt organization's property accomplished much by calculating how was used property for 70.11(8) (1989-90); profit." See Wis. Stat. "pecuniary § Trustees Lodge, Clinton Wis. at 171-173. However, 1991, the legislature repealed "taxed in subsection and it with the part" recreated language above. Wis. appears Act 1706t. Two important changes were instituted § First, 1991 recreation. the legislature replaced the test with the "unrelated "pecuniary profit" business taxable income" Internal test borrowed from the Reve- 70.11(8) begins "Property

9 Wenote that Stat. with Wis. exempt literally, phrase that is under this section...." Read this may require totally be exempt to under the statute in (8) apply. for to order subsection This would mean that the exclusively" exempt organiza needs to be "used exempt However, an purposes. interpretation tion for such (8) meaningless. exempt render reason would subsection an precisely organizatiоn partial exemption seeks a because it exclusively purposes. use its Our does (8) interpretation give must effect to the subsection subsec purpose allowing exempt organization overall tion's partial exemptions. claim legislative report in a from the

nue Code. As noted by legislative history, change driven desire this was advantages exempt organizations were to remove pecuniary profit perceived test: under the to have the unrelated objective adopting primary [t]he eliminate a source of income tax law was to business unfair the unrelated busi- by placing competition exempt organizations upon of certain ness activities as the business nonexempt the same tax basis they compete. which endeavors with Property Report: Revenue, and Tax Shared Taxes 1706t). (drafting p. § file, 39, Act 5. Wis. Relief, legislature made Wis. Stat. Second, 32. 70.11(8) organization exempt inapplicable § where property. inescapable The conclusion drawn leases its (8) language is that an from the of subsection portion organization of its can- that leases (8). partial under subsection not claim a changes in These are embodied two Property post-1991 Assessment Manual versions Manual) (Assessment pub- Assessors Wisconsin Department lished Revenue.10 constitutes unre- Assessment Manual describes what examples income and offers lated business taxable for-profit activities that are considered taxable. (revised 12-95). Manual, 22-6, 22-7 See Assessment Notably, examples in the Assessment Man- offered charged Department legislature Because the of Reve area, nue, expertise light special of its this with 70.11(8), applying recreated Stat. interpreting § Wis. weight agency's interpretation in the Assess we accord to the LIRC, 20, Hagen v. 210 Wis. 2d ment Manual. See 18 — 39, 1897t, (1997); Act at Wis. N.W.2d 454 1991 Wis. codified 73.03(2a). Stat. § 70.11(8) § ual demonstrate that Wis. Stat. does not apply exempt organization to situations where an part property entity leases a of its to another engages (8) for-profit activity.11 Rather, subsection applies exempt organiza- to those situations where the engages for-profit activity. tion itself in the Department 34. In such situations, the of Reve- pursuant charge interpreting nue, to its applying 70.11(8), § Wis. Stat. has set forth three meth- calculating partial exemption ods of (8). a under subsection segregated part Where a defined and of the property for-profit partial is used in activities, by subtracting square can be calculated footage part for-profit ofthat of the used in the activity square footage property. from the of the entire Conversely, Assessment Manual, 6,22—7. where the 22— part for-profit entire is used of the time in partial exemption activities, the can be calculated in ways. partial exemption one of two can either be by comparing percentage determined of income couple 11 A of the examples adequately manual's demon point: strate the

Exаmples of activities that are considered unrelated trade or busi- ness are:

(cid:127) lodge operates a regularly open a restaurant which is to the public. (cid:127) university printer primarily prints owned which material university regularly printing public. for the also does for the (Revised 12/95). Manual, Assessment any 22-6 example Neither any general nor principles statement of set forth in the manual even hints apply that the subsection would to a situation where exempt organization part facility leases a of its to another person engages Instead, who in for-profit activity. lodge if the operates itself exempt a restaurant or an printer itself does (8) printing, commercial apply. subsection can for-profit activity to the versus total attributable organization, by comparing exempt income of the percentage activity for-profit time to the attributable Id. the total time the is used. versus get organization's ability An partial exemption under the recreated Wis. Stat. 70.11(8) substantially limited that subsection's testimony However, both of the "no lease" sentence. City assessor, chief Peter Weissen- of Milwaukee's joint fluh,12 and the amicus brief League Municipalities, Milwaukee, the of Wisconsin Assessing Officers and the Wisconsin Association ("the amici"), joint process who indicate assessors partial exemption applications beyond look subsection (8) analysis. According to and in their Weissenfluh the joint practice it is amici, the well-establishеd the methodology to standard additionally of in this state look assessors introductory phrase of 70.11, the by parties "pream- which is also referred to the as the language The relevant is as ble." follows: exempted taxation. Property 70.11 from in this property exempted described section is Leasing part the general from taxes. property of in this section not render it property described does the all the income taxable lessor uses leasehold if of maintenance leased property, construction for of property debt retirement leased both and if exempt the lessee would under this be taxation from chapter property. Any it owned the lessor who if claims that from taxation property exempt leased by particular 12 Weissenfluh's noted expertise was both Deutsches Land and the has Glendale. Not Weis- years, senfluh an he has been assessor for also been chief city largest annually in the which receives assessor state's 7,000 applications exemptions. and administers shall, under this chapter upon request the tax assessor, provide relating records to the lessor's use income from the property. (Emphasis leased added.) Construing "pream- what we refer to as the partial exemption provision"

ble impression is a matter of first preamble explic-

for this court. The does not itly exempt organization part allow an to lease a of its property for-profit organization to a and still maintain exemption part. on the non-leased However, that consequence reasonably expressed follows from the language. preamble language

¶ 37. The states that an exempt organization may part lease a of its and still be from taxes on that leased part long so as certain conditions are met. Those condi- (1) exempt organization tions are must use the property, leasehold income for maintenance of the con- (the struction condition") retirement, debt ‍​‌‌‌​‌​‌‌‌​​‌​​‌​‌‌​​​‌‌​‌​​​​​​​​‌‌​‌‌‌​​​​‌‌​‌‍or both "rent use (2) the lessee would itself be entitled to (the exemption if it owned the "lessee iden- condition"). tity exempt organization If the uses the ways provided rental income in other than part statute, no can be claimed on the leased property. Likewise, of the exempt if the lessee itself is not an

organization for-profit organiza- but rather a part tion, no can be claimed on the leased property. the preamble

¶ § 38. Under 70.11, the to Wis. Stat. organization exempt part prop- an erty that leases a of its exemption long a retains total so as it meets both identity the rent use condition and the lessee condi- exempt Consequently, an if a lease tion.13 organization conditions, the these two fails either of exemption organization exempt but loses its total partial exemption that is not on the retains a leased. reality, material distinction the 39. 70.11(8) exemption partial § the Wis. Stat.

between provi- partial exemption preamble provision and the If a lease is not is in existence. a lease sion is whether partial organization exempt present, should seek a the (8). Conversely, exemption if lease a under subsection par- organization present, a should seek the preamble. exemption In other under the tial respects exemp- sufficiency proof partial as — —such they are derived the same whether tions are treated 70.11(8). preamble § from joint According amici and brief methodologies testimony set Weissenfluh, the calculating par- a Manual for in the Assessment forth 70.11(8) are the same under Wis. Stat. tial methodologies calculating par- used assessors preamble. Therefore, under under tial (8), preamble ofthe the amount or subsection either 70.11(4) non-dis adds a third "racial Stat. § Wisconsin preamble: in the "in to the two contained crimination" condition introductory in the requirements specified addition to the section, does not discriminate on phrase this the lessee basis of race." exemption under sub-

Thus, organization that claims its (4) satisfy must three part of its section and leases (1) exemption: the rent use con- to maintain its total conditions (3) (2) identity condition; and the "racial non- dition; the tenant exempt organization's condition. Should the discrimination" conditions, part any the leased fail of these three lease exemption. property loses its

partial exemption by calculating can be determined percentage space for-profit or time in used activities percentage or the of income that is attributable to the for-profit activity. Manual, 22-6, See Assessment 22-7. practical

¶ 41. The dissent fails to discern that in terms, the existence of a lease makes little difference in organization the ultimate determination of whether an partial exemption. is entitled to a It contends that if a present, ineligible lease were Deutsches Land would be 70.11(8) § for an under either Wis. Stat. preamble. § the 70.11 Dissent at 118 n.7. This misses purpose preamble. the full of the If the dissent were correct, a benevolent association could lease "a part" apparently meaning geo- discrete a discrete — graphical part completely of its —without destroying exemption. According dissent, Id. to the geog- the benevolent association that leases entire (and raphy property only part of its of the time uses the geography entire of its the balance of the time) part" does not lease its "in and therefore hope any exemption. cannot to claim Curiously, ¶ 42. the dissent fails to articulate why "part" preamble only the word in the references geographic subdivision of the benevolent association's property. "Part" is not so limited its context in the preamble. "part" Moreover, in word Wis. Stat. 70.11(8) encompasses meaning a broader than the willing dissent is it as attribute to seen the word's interpretation Why Manual, the Assessment 22-7. legislature's "part" preamble should the use of in the bе 70.11(8)? differently "part" §in treated than its use of The dissent fails to offer an answer. Additionally interpretation,

¶ 43. the dissent's language aside from its failure to consider the preamble relationship and its with Wis. Stat. 70.11(8), repercussions practical have serious would many organizations exempt in this

for ple, state. For exam- interpretive scheme,

under the dissent's one of the organizations Peter three benevolent Weissenfluh offering identified at trial as sufficient documentation exemption application years for its would in future ineligible any categorically exemp- nonetheless be tion because it leased its entire to whatsoever for-profit entity úsing prop- a at limited times while the erty for its activities at all other times. The dissent category organizations a leaves whole ineligible benevolent any exemption par- to sort of obtain —full approach represents tial —in the future. That significant departure and unwarranted from both the statutory provisions practices. as well as the current Regardless partial

¶ 44. of which of the two exemption provisions applicable particular in a case, organization seeking exemption the retains the evidentiary to burden show that it has satisfied the requirements record, of the statute. On this sufficiently prove Land did not entitlement partial exemption partial under either of the two provisions. sought It and received from the circuit court a 25% on the Bavarian Inn building primarily square based on two facts: the foot- age of the main and lowеr floors of the Inn Bavarian testimony by general manager and the of the Bava- detailing percentage usage by rian Inn evidentiary offerings benevolent associations. These partial are not sufficient to entitle Deutsches Land to a exemption. First, 45. since the record reflects that both the

main and lower floors were used both benevolent Waldhaus, associations and both floors were used for for-profit activity.14 and for Therefore, under comparing square footage facts, these of the main square footage floor with the provide support of the lower floor does not exemption.

for its claim of Second, Deutsches Land's evidence of the percentage for-profit Bavarian Inn's quately did use not ade- actually demonstrate how the Inn was used. primarily Deutsches Land's evidence consisted of the testimony general manager of the Bavarian Inn. every facility She testified that in the Inn was used at part public. opining least of the time that the approximately benevolent associations used 40% of the public approximately Bavarian Inn and the used 60%, general she relied on her observations and recollec- Reviewing excerpt testimony tions. of her demonstrates its deficiencies:

Q. you Do keep any records of many how events these clubs as clubs have in the —the main banquet room...? Yes,

A. I do. Q. How does that break down as between the use by the public?

A. For the ballroom only?

Q. For the ballroom only. A. I really that, know, don't you have the knowl- edge right now. I'd have at my to look records.

14The record does storage indicate that a area of some sort only by exists on the lower floor that is used the benevolent However, nothing associations. in the record indicates the size Land, ofthis room. Deutsches if it desired to claim an space, provide proper based on the size of this needed to support evidence to Again, claim. it has not done so. manager's opinion general of 40%

¶ 47. The for-profit exempt not documented use was use and 60% general by supporting man- Rather, as the evidence. entirely her ager stated, it was based herself year employment as the Bava- from "observations" general manager. general While Inn's rian manager informed her were hinted that observations did not offer into Deutsches Land records, business any any reports those created from or records evidence Unfortunately, exists, we are as this record records. accurately general way how no to know left with manager's usage. memory corresponds the actual with insufficiency evi- of Deutsches Land's compared amplified to the evidence it is dence is when support proffered exempt organizations have other partial exemptions. applications trial, At their the docu- testified about Weissenfluh Chief Assessor organizations in Milwaukee certain mentation support applications. A few of the their hаve offered to enlightening: responses are 20,000 usa- feet of

Q. square there were to be [I]f [exempt building, in the did space ble 20,000 square say, of that organization] come 15,000 building, square for use feet available exclusively is what is feet or some such number 5,000 feet is square purposes used for our something like that? purpose to another devoted than down in more detail They A. had it broken that. words,

Q. by room room detail? In other hall, room, banquet room but Maybe A. museum, building areas of the gift shop, separate percent- with those sizes with specifically it used for. age of time was

98 Q. now, get Well let me percentage of time. What kind of information did they give you as to percent that supported percentages of time? They

A. actually spelled out percentages time that used for-profit was for—for activities and then corollary would the not-for-profit, be their own use.

Q. And. . you .how were able to determine the question of area of use degree of use? Again,

A. the —I requested full documentation [exempt organization] relative to the amount of space used by [exempt organization]. And what they gave me was a breakdown how often facility used, the —the—the by whom, was specifi- cally [exempt organization], and other not-for- profit organizations....

Q. it, As I understand the applicant for exempt organization's [the property] provided a calendar which every accounted for minute every day by every entity; is that correct? right,

A. That's it was a very detailed document. In comparison, we conclude the gen eral manager's "recollections" and "observations" fail to satisfy Deutsches Land's burden proof. An exempt organization must base its claim for an exemption on more than merely unsupported opinion testimony. The circuit court erroneously exercised its discretion in facts. Brabec v. awarding partial on these (Ct. Brabec, 270, 283, 181 Wis. 2d 510 N.W.2d 762 App. 1993); see also Hartung v. Hartung, 66, 2d Wis. (1981). N.W.2d Fields

Soccer sought exemption ¶ 50. Deutsches Land a full on fields fields. that because those are the soccer It asserts exclusively by organization, used the benevolent soccer exemption they are entitled to a total under Wis. Stat. 70.11(4). § may

¶ fields 51. While the soccer be used exclu- sively by club, that does the soccer fact alone automatically exemption. an Stat. dictate Wisconsin 70.11(4) requires § even if a associa- that benevolent exclusively its for benevolent tion uses purposes, the association is entitled to benevolent exceeding exemption an on "not .necessary acres. . for location and convenience of buildings profit." is not used for while such exemption to, 52. The of land is tied follows exemption buildings. from, the This means land buildings qualify an devoid cannot for 70.11(4). Richardson, under Wis. Stat. See 197 Wis. Bay Mississippi 392; Co., at Green & Canal 76 Wis. at Similarly, building part qualifies if of a for no an exemption, part "necessary [the] land then no ‍​‌‌‌​‌​‌‌‌​​‌​​‌​‌‌​​​‌‌​‌​​​​​​​​‌‌​‌‌‌​​​​‌‌​‌‍building qualify location and convenience" of that will exemption. for an record, 53. Based on this Deutsches Land is not

entitled to soccer fields. No build- ing reasonably fields exists on soccer that could be require expanse considered to such an land for necessity convenience. dissent contends that a square facility 1,500 foot locker room/rest room apparently is located near one of soccer fields satis- fies the statute. Dissent at 107-108. It is odd that willing hang relatively its hat on this dissent building facility minor when the existence of the was only tangentially Indeed, mentioned at trial. in its brief to this court Deutsches Land does not even mention building, this let alone contend that it satisfies the 70.11(4). § dictates of Wis. Stat. imagine expansive

¶ 54. It is hard to soccer "necessary fields are for location and convenience" of a facility. reasonably locker room/rest room One would facility assume that such a was constructed for the way convenience of the soccer fields and not the other exemp- around. However, the statute does not allow "buildings necessary tions for for the location and convenience of lands." satisfy building require- result, 55. As a to necessary

ment, the soccer fields would need to be for building location convenience of some located parcel qualifies elsewhere on the 14-acre for an exemption. However, as above, discussed under this any exemption record Deutsches Land is not entitled to Heidelberg on either Old Park or the Bavarian Inn. buildings eligible Since there are no for an necessarily record, on this it follows that the soccer exemption.15 fields are not entitled to an 15 dispose Because we of Deutsches Land's claim on these grounds, we do not need to resolve other issues raised parties. E., 592, Courtney 603, In Interest 184 Wis. 2d of (1994). Namely, N.W.2d 422 play we do not decide whether the ing teaching of soccer are indeed benevolent or educational 70.11(4). contemplated by activities Wis. Stat. See Kickers § of Wisconsin, City Milwaukee, Inc. v. 197 Wis. 2d (Ct. 1995). App. Also, N.W.2d 193 we do not decide whether the acreage "necessary of the soccer fields was land for location and building convenience" of the Bavarian Inn or Fest Hall. See Milwaukee, Friendship Village Milwaukee v. 194 Wis. 2d (Ct. 1995). 787, 795, App. 535 N.W.2d

Conclusion summary, Deutsches conclude that we sufficiently that it is entitled to shown has not Land exemption years taxes for the real from association Land is a benevolent 1993-95. 70.11(4). dispute. This was never Wis. Stat. under produce did not sufficient However, Deutsches Land showing corporate use of Old Heidel- that the evidence comparison berg to the incidental Park was Similarly, park. Deutsches Land use benevolent proving entitlement did not sustain burden Inn. It the Bavarian tax real produce to measure a com- sufficient evidence failed to parison exempt space, for-profit use of

between evidentiary failure to income. Because of its time, or building, any support exemption Deutsches for exemption on the soccer is not entitled to an Land fields are "neces- that the soccer fields. It failed to show any building sary [the] for location convenience" although Accordingly, exempt we under 70.11. is disagree rationale, the deci- we affirm with some of appeals. the court of sion of appeals

By decision of the court the Court.—The is affirmed. (concurring

¶ PROSSER, in T. J. 57. DAVID majority's part, dissenting part). I in the con- concur Land is not entitled to a 25 clusion that Deutsches exemption percent property Inn; tax on the Bavarian exemptions 1, 3, Lots I from its denial of but dissent highly fact-intensive, some and 4. Because this case of the facts will be restated. Land, Inc. is a associ- 58. Deutsches benevolent in the holds acres of

ation which Glendale for five other benevolent associations. Under may law, Wisconsin benevolent associations seek exemption up from tax for to 10 acres of their property, they satisfy but must the conditions set out the statute.

¶ 59. On 30, 1994, December Deutsches Land brought an action in the circuit court of Milwaukee County seeking declaratory judgment it was entitled to a total tax 1, 3, on Lots and 4 of partial its Glendale and a tax improvements property. to Lot ofits Glendale action was commenced after Deutsches Land had filed city attempted an unsuccessful claim with the and had partial exemption through to secure a full or negotiation. Judge 60. After a bench trial, Circuit William prop-

J. Haese determined that 1, 3, "Lots and of the erty of Land, Inc. located at 700 W. Lexington exempt [sic] prop- Boulevard.. .are form real erty 70.11(4), years taxation tinder sec. Stats., for the 1993, 1994 and 1995." The court also ruled that 25 percent of the Bavarian Inn on Lot 2 was from property taxation. These determinations were all . appeals, reversed the court of and it is that decision which is under review this court.

rH ¶ 61. 1 Lots and 4 of Deutsches Land's Glendale Together, they are soccer fields. total about property, 4, 5.6 acres. Lot on the north end of the con- square tains a 1,500 full-sized soccer field and a foot locker room with showers and washroom facilities. Lot property, practice 1, on the south end of the is a soccer 1 area. Lots and 4 are used the Bavarian Soccer 103 own associations which Club, of the five benevolent one that: circuit court found Land. The and founded in 1929 Club was Soccer The Bavarian mem- for its 600 program year-round conducts played primarily from soccer progressed It has bers. activity a recreational members to by its own adult to include an immigrants for male German of choice for the recently developed youth program elaborate an to other and as outreach of members children teams Today youth 13 community. children in the partici- team per 15 members approximately with Lexington the fields located in soccer on pate team, teams, a women's six adult There are Avenue. team, and team, over-30 major competitive team. The club's an under-100 interestingly, perpetu- and serve to purpose activities announced of the part as game in the of soccer ate an interest youth and to train Germanic Bavarian tradition a whole- and them with provide of soccer game languages outlook. The recreational some daily It makes and German. English are both club 4 Lots 1 and soccer facilities on use of the outdoor fall. early spring to mid season from during the throughout continue Practices and tournaments prac- sessions. Winter year require practice and Hall], located [Fest Fest place tice takes Garden at Appendix Park. Petitioner's Heidelberg in Old 112-13.

A. Land that Deutsches contends city Lots because claim may are not activities of soccer teaching playing §70.11(4). proposition, For this Wis. Stat. under Wisconsin, Mil- Inc. v. Kickers city relies on (Ct. waukee, 197 Wis. App. 2d 541 N.W.2d 1995). majority deciding, assumes, without playing teaching by the and of soccer are covered 70.11(4). § I would determine that the activities here by are covered distinguishable. the and statute that Kickers is organization seeking Kickers, the a tax exemption sought not land it did own the for which exemption. Rather, it the the leased land from Robert City Uihlein, A. Jr. Trust. Chief Milwaukee Weissenfluh Assessor C. Peter advised Kickers of Wis- reviewing consin, after the materials the submitted organization "and law," the case relevant assessment prop- that he had "no if doubts that Kickers owned the erty qualify exemption. it ten would for the acre I still ownership have about the issue, doubts and have July denied 20, basis." Letter Timothy 1993, C. Appellant's Appendix from Peter Weissenfluh to C. Fraut- C, schi. Exhibit Kickers of supra. Wisconsin, court, 64. When Kickers to went position

Milwaukee that a took soccer club did not qualify exemption; agreed, for the circuit court holding qualify that Kickers did as an "educational association" entitled to the tax 70.11(4). under This decision was affirmed appeals majority court of a 2 decision. The to "presents relatively declared that case 'close call' determining 'substantially in primarily whether Kickers is purposes.'" Kickers,

devoted educational organization 197 Wis. 2d at 685. But the court said the two-step failed test to meet for "educational Community Day set out in associations" Janesville Spoden, Ctr., v. Care Inc. 126 Wis. 2d 376 N.W.2d 1985).1 (Ct. App. also noted that while The court 78 qualified as a it benevo- Wisconsin claimed Kickers of specifically support association, fails to "Kickers lent argument associa- to a benevolent with reference its n.2. Kickers, 197 Wis. 2d. at 681 tion." this differences between There are clear is one of The Bavarian Soccer Club and Kickers.2 case lots; the and Land which owns owners of Deutsches the Club are Bavarian Soccer Land and the both Deutsches indisputably These benevo- associations. benevolent exactly using 1 and 4 for are Lots lent associations purpose expected sta- intended their benevolent and Consequently, not control Kickers case does tus. deny pressed to a court be hard here, and this would 4 to Deutsches Land on on Lots tax satisfy organization grounds the cri- does not dissent, Judge Ralph Adam Fine wrote: 1 1nhis evidentiary view, my submissions establish the uncontroverted In Wisconsin, Inc., an "educa- that the Kickers of is without a doubt 70.11(4), .It § term is used in STATS... tional association" as that " academic is not limited to 'formal is settled that "educational" teaching have an admirable record of curricula.'". . .The Kickers soccer, but, principles youngsters more our state's teamwork, principles sportsmanship, significantly, and life. call,'" view, "relatively Majority my 'close as the In this is not a believes. Wisconsin, Milwaukee, 675, 197 Wis. 2d Inc. v.

Kickers 1995). (Ct. 541 N.W.2d 193 App. a for Deutsches Peter C. Weissenfluh testified as witness explained of the differences between Land in this case. He some organizations and Land and Kickers of Wisconsin as Deutsches directly applied Kickers had not to Milwaukee stated that appeal. rather had raised the issue on tax but engaging teria for a benevolent association appropriate activity.3

B. though ¶ 66. association, Even it is benevolent satisfy Deutsches Land must another condition (Lots 4) "necessary statutes, i.e., that its "land" buildings for location and convenience of such while 70.11(4). profit." is not used for Wis. Stat. argument, ¶ 67. Land attempted to establish Inn Bavarian was a partially exempt building and that the soccer fields necessary were building for location and convenience of this frequently congregates. the

where soccer club argument This fails Inn becаuse Bavarian did not qualify exempt. as buildings

¶ are, however, 68. There two other may as the serve foundation for the square 1 First, 1,500 Lots and 4. there is the foot "rest- room" room-locker players with shower facilities for soccer building on This in located Lot 4. is listed Exemption Reports Tax filed Deutsches Land with city 1993, 1994, 1995, and it and was described testimony Second, Hall, at trial. there is Fest square building 12,000 foot used for indoor soccer dur- ing building months. on winter This is located Lot substantially contiguous 3, which is 1 and to Lots 4. ¶ Club, 69. For the Soccer soccer is Bavarian a year-round activity. "daily.. played It is outdoors .from

3 recognizes Peter C. Weissenfluh testified that Milwaukee exempt activity boccie ball as an authorized at the Italian Com munity gymnastics and exempt Center as an authorized activity Gymnastic at Turner Hall. Association South Cf. Milwaukee, 429, 109 Side v. Milwaukee 129 Wis. N.W. (1906). 109

107 during played early spring It is indoors to mid fall." winter. seeks to A association which benevolent likely activity year-round

promote would soccer as building practice near land available for indoor locate a practice competition. addition, and for outdoor building practice in win- is used for indoor soccer practice theoretically for indoor soccer ter is available during Hall Fest on Lot in summer inclement weather. provides storage any building on Lot 3 which 3 and equipment 1 and are convenient to Lots outdoor soccer conversely, 4 are convenient to Fest 4; and, Lots any storage buildings. Lоts are Hall and to clearly relatively building to the new with convenient washroom, room, and shower facilities Lot locker purposely near the out- have been located which would relationship the land areas. The between door soccer buildings symbiotic. Hence, Lots 1 and and these wholly partially from taxation are or any buildings they are convenient are if to which wholly partially exempt.

hHi—I A. room" with show- 71. The new "restróom-locker designed exempt players to advance the ers for soccer is purpose association; and it is used of the benevolent not building any purpose. The is not used inconsistent for profit by It is not for either members or non-members. why no reason this soccer- leased. The record reveals exempt building not from taxation related should be thereby exemption. qualify 1 and 4 for Lots B. ¶ 72. The exact of Fest Hall status is more diffi- question. played, Hall, cult Fest where indoor soccer is part Heidelberg is of Lot Old Park. Lot 3 has 4.4 buildings acres and includes a number small in addi- tion to Fest The Hall. five benevolent associations use Lot in activities, 3 their and Lot 3 is the site of two major organizations. festivals raise funds for these dispute 73. The status of 3 is in Lot because permits Deutsches Land Inn, Inc., Bavarian Waldhaus profit-making entity operates which the Bavarian Inn on 2 associations, Lot for the benevolent to use Old Heidelberg including approxi- Park, Hall, Fest on mately annually for Inn occasions such Bavarian Mortgage Clinic, customers as the Milwaukee Medical Guaranty Corporation, Brady Insurance Co., W. H. Master Lock, and Johnson Controls. requirements

¶ 74. The for total are 70.11(4): set out in

. . from .Property exempted general property taxes is:

(4) . . .Property exclusively owned used by. . .benevolent . .but exceeding associations. not land necessary acres of for location and conve- buildings nience of while not such is used profit. .Property exempt . . from taxation under this subsection leased and is remains if, require- from taxation in addition to the in specified introductory ments of this phrase section, the lessee does discriminate added.)4 (Emphasis basis of race. "introductory requirements phrase of this sec following: "Leasing part

tion" include section render it if described this does not taxable the lessor qualify 3 for total ¶ Fest Hall and Lot To 75. Land was subsection, Deutsches this under key statutory satisfy required criteria. several The. city brief, in its draw summarized criteria were language v. ing Home Milwaukee Protestant from City 284, 293, 164 N.W.2d Milwaukee, 41 2dWis. claiming exemp (1969), property owner to wit: "... (1) that it is to demonstrate has the tion burden (2) used association; benevolent purpose; exclusively benevolent for the association's (3) profit." Defen is not used for that the and dant-Appellant's here are concerned at 11. We

brief points. third the second and with "USED EXCLUSIVELY" appeals ¶ declared The court 76. 70.11(4) requires exclu- § sively by' be 'used "that the and not

those associations benevolent ambiguous: profit. term is not . .This condition . 'exclusively' exceptions." Land, no brooks 552, 557, 573 Glendale, 215 Wis. 2d Inc. v. (Ct. 1997). App. N.W.2d 535 disagrees majority properly with this 77. Majority op. Instеad, ‍​‌‌‌​‌​‌‌‌​​‌​​‌​‌‌​​​‌‌​‌​​​​​​​​‌‌​‌‌‌​​​​‌‌​‌‍at 83. of the law. characterization question is, "How conse- that the relevant it declares activity compared questionable quential when was Majority op. activity property?" at on the to the total 84. answering question, the facts are In this Heidelberg

completely Park was 1993, Old clear. times; Inn 17 of the Bavarian used customers for maintenance of the leased of the leasehold income uses all property or debt retirement of the leased property, construction under this be from taxation and if the lessee would both property." chapter if it owned the in 1994, times; 1995, 21 20 times. The customers major corporations included not several also but a high union, reunion, labor a school class and wed- two dings. The benevolent associations controlled 3 at Lot all other In 1993, times. the benevolent associations property days; over 1994, exercised control their 348 in days; days, during days, in 1995, and these property exclusively may was available for their use. It have for been available their use some non-exclusive days. During of the other months, winter Fest was Hall daily daily practice. used for almost indoor soccer During months, summer the entire was lot used for a variety including of benevolent association activities picnics, festivals, fish fries, ceremonies, and and Fest prac- Hall could have been used for occasional soccer Heidelberg tice. There was no use of Old Park non- January, February, in the months March, mеmbers April, May, October, November, 1993, in December 1994, or 1995. help

¶ 79. Several cases define the element of Publishing use.5 In exclusive Cardinal Co. v. (1931) Madison, 347-48, Wis. 237 N.W. 265 ("Cardinal Publishing I"), this court said: segregation

If there is property no and devotion of to portion purposes corporate of it outside of the objects, but if the whole in physical sense primarily purposes organiza- is devoted to the tion, then fact there are occasional or Bay, 5 See also Catholic Club v. Woman's Green 180 Wis. (1923). 102, 192 operated profit, N.W. 479 The club was not for but the club was used non-members and its auditorium was frequently organizations "private rented other for to danc ing parties." nullify The non-member not activities did exemption.

Ill is gain, which uses of the incidental society claiming purposes to the devoted destroy exemption. will not exemption, Publishing v. House case, In another Northwestern (1922), 401, 409, 188 Milwaukee, 177 N.W. Wis. court said: so as slight case is to be departure

. . . the this .[It] . disregarded. therefore to be negligible and departure to a sufficient war- does not amount used saying rant us pur- and benevolent exclusively for educational is done as poses, particularly where such work purpose. incidental to its main Applying I find non- above, to the facts these cases inconsequential de or of Lot were member uses minimis. FOR PROFIT

USE separate profit a element. 80. Use for profit did found that Deutsches Land not circuit court by uses of its non-mem- from the occasional Heidelberg Inn used Old It found that Waldhaus bers. charge." It stated: Park "without Inn, Inc., in yeаrs question, held Waldhaus in Old Hei- 20 non-member events approximately charge. Park Waldhaus Inn delberg without by duly reported realized income which was Inn, Waldhaus Inc. on its tax returns. None of events was distributed to income non-member from Land, any of United German Societies added.) (Emphasis the five societies. July, Appendix in June, at 114. The

Petitioner's dates August, September year when Lot 3 used and each was by produced non-members no revenue for Deutsches They produced percent Land. zero of Deutsches Land's budget. explicitly

¶ 81. The court circuit found that Deut- sches Land's sources income of were rent obtained from Inn, Waldhaus Inc. and from income Volksfest and Heidelberg Moreover, Oktoberfest Old Park. all this purpose maintaining income ings used was for the of build- grounds complex payment of of taxes and insurance. Id. During years

¶ 82. the three at issue, there was no lease from Deutsches Land which authorized the Heidelberg days Bavarian per Inn use Old Park year. simply Deutsches Land had an understand- ing permitted with Bavarian Waldhaus which the Park by to be used from time to time Deutsches affili- Land's organization. ated These occasional uses Old Heidelberg Park non-member customers of the paid Bavarian Inn did increase rent not to Deut- profit Land, sches fact which relates to element. average up, ¶ 83. To sum on an of 20 out of 365 days per year, Heidelberg Old Park was used organization charge affiliated which did its custom- money pay ers extra for use the Park and did not money Deutsches Land extra for use the Park. Deut- portion Heidelberg sches Land did not lease Old entity. Park to some other The occasional uses of its property by a non-members did not constitute conse- quential percentage of Deutsches Land's income compensated Deutsches Land not because was for these uses.

¶ 84. I believe these facts show that Deutsches exemption Land was entitled to total Lot 3 a for as a by matter of law. The uses of Lot 3 were non-members "comparatively inconsequential." Alonzo Cudworth 1, 12, 165 42 Wis. N.W.2d Milwaukee, 23 v. 2d

Post No. (1969). inconsequential not uses did result These exemption. gain destroy any explicit not the and did provide any ¶ event, the facts 85. established court to determine whether a basis for this sufficient eligible Land for a total was any "questionable" activi- non-member Lot 3 because conversely, inconsequential, or, whether it ties were ineligible those for a total because was regarded "consequential." must as No activities be necessary. proof additional was majority ¶ tack, takes different as 86. The a beneficiary though a of Deutsches Land were direct every Heidelberg by Old Park customers of the use of Land Inn. It that Deutsches did not Bavarian asserts question answer the of how offer sufficient evidence to consequential majority writes, the 20 uses were. The only Land sufficient evidence the "Deutsches offered corporate Heidelberg Park; it of Old did not actual use park." Major- the use the do so for actual benevolent ity op. at 87. majority position takes that, 87. The the exemption,

analyzing a claim total once benevo- any property by permits lent association use of required prove not extent of others, it is the property's prop- use but also the extent of others erty's use. use This means actual The itself. ownership and the association's availa- bility use count for for association any any nothing, property, while non-use of inactiv- against agree ity, I counts the association. cannot this is a correct statement of law. claiming exemp- sure, To be purpose. must

tion property be used for benevolent may undeveloped "quite land, which be long buildings distance" from and "had never been Bay Mississippi used at all." Green & Canal Co. v. Outagamie County, 587, 590, 76 Wis. 45 N.W. 536 (1890). premises may "wholly not be vacant and unoccupied." State ex rel. State Assoc. Y.M.C.A. v. of (1928). Richardson, 392, 222 390, Wis. N.W. 222 fully An cannot even be claimed for devel oped property multiple buildings with which has been occupants "perma "vacated" and whose former have nently City relocated elsewhere." Dominican Nuns v. of (1987). LaCrosse, 577, 581, 419 Wis. 2d N.W.2d 270 Exempt property must be used. support proposi- But these cases do not developed property

tion that of owner is which steadily frequently exempt purposes used for must document the amount of time devoted to use as non-exempt well as the amount of time consumed non-exempt use, and then have added to the use the total time which is used in order to percentage exemption. arrive at a reduced of assessing "questionable ¶ 90. whether activ- ity" consequential inconsequential, assessors and courts have often looked to the revenues derived from "questionable activity" in relation to total revenues. Publishing Company City See Madison, Cardinal v. of ("Cardinal (1932) 517, 208 Wis. ing IF); 243 N.W. Publish- Publishing House, Northwestern 2d 177 Wis. may percent- 401. Assessors and courts also look to the age space in a been has leased or non-exempt Gymnastic committed to use. Association Milwaukee, South Side Milwaukee v. (1906); 129 Wis. 109 N.W. 109 Cardinal Publish- ing theory, I, 205 Wis. at 347. In 2d assessors space courts may either who cannot evaluate revenue or exempt prop- have examine the amount of time non-exempt purposes. erty it for But does not is used against the unused time should be counted follow that against space any is counted more than unused owner day per A rural church used one week an owner. exemption. A its tax tax not lose full does exempt lose status on field does not its soccer days spring has to be winter and when soccer those respect played Hence, to the "use" ele- indoors. with regular long exempt property as is used ment, so appropriate exempt purpose, is for it entitled basis exemption, non-exempt for a total unless use to purposes "inconsequential." not is

I—I HH h*H argument, ¶ If, for this court 91. the sake of were exemption question to find a for Lot unable total Deutsches Land is entitled to a would become whether 70.11(8) partial exemption § § or the 70.11 under either preamble. willing At Land to trial, Deutsches was agree partial to of Lot 3 in order to resolve It the case. Petitioner's brief at 22-23. everything should lose simply the circuit court awarded because percent. these association Under benevolent remedy appropriate circumstances, be to would case court for a determination remand the to circuit exemption. precise percentage partial city 92. contends that Deutsches Land any ineligible partial of Lot 3 under 70.11(8) Deutsches Land leases Old Heidel- because berg Inn, Inc. This Park to Bavarian Waldhaus position finding with the of the court of is consistent appeals that: Inn and Old Heidel- "Both Bavarian berg Waldhaus, Park leased to Bavarian for the for- are profit corporation." Land, 215 Wis. 2d at added.) (Emphasis 558. my finding view, however, this is not

supported the record. The circuit court found that Inn, Bavarian Waldhaus Inc. "leases the first floor of Inn Bavarian from Deutsches Land. lease is This Appendix an oral lease." Petitioner's at 113-14. The circuit court never Inn, found that Bavarian Waldhaus Heidelberg Inc. leases Old Park. expired

¶ 94. Deutsches Land's last written lease Heidelberg in 1990. That lease did not mention Old (unless prepared Park one is to construe the term "res- banquet facility" singular—as applying taurant and — Park). Heidelberg Fest Hall Old § Wis. 95. Stat. 704.01 defines "lease" sev- By eral оther terms in a "landlord and tenant" context.6 comparing statutory appropriate terms, these the most

6704.01 Definitions.... (1) written, agreement, "Lease" means an oral or whether for possession property, personal transfer of of real both real or property, period period for a of definite time. A lease is for a definite expiration time if it has a fixed and a commencement date fixed expiration by if date or the commencement and can he ascertained event, completion building. reference to some as of a such A lease is may chapter though included within this even it also be treated as conveyance agreement posses- a under ch. An for 706. transfer of personal sion of is not a lease. (2) possession tenant" a "Periodic means tenant who holds with- pays periodic out a valid lease and rent on It a a basis. includes day-to-day, week-to-week, month-to-month, year-to- tenant from year time, recurring period being other interval deter- circumstances, parties mined the intent of the with under rent-paying normally evidencing the interval between dates intent.... (5) any holding permis- "Tenant at will" tenant with means sion of his landlord without a valid lease and under circumstances involving periodic rent; person holding pos- payment not abut purchase real under or an session of a contract employment chapter. (Emphasis this contract is not tenant under added.) involving use of the оccasional the situation term for By defini- Inn "tenant at will." the Bavarian Lot 3 If the lease. not have a valid at will does tion, a tenant Heidelberg in Old a tenant at will Inn was Bavarian appeals Deu- mistaken and was the court of Park, then exemption eligible partial under for a Land is tsches 70.11(8). majority hand, the believes § If, on the other Heidelberg actually "leased" Old Land it should Inn, Inc., then to Bavarian Waldhaus Park Land say situation, Deutsches If that were so. exemption ineligible under either an for would be 70.11(8) preamble,7 not § and this would § or the 70.11 sufficiency case. of evidence abe proof required majority notes that may quite partial applicant be from 3] [Lot "[W]here entire detailed. It writes: par- for-profit part activities, the time is used ways. of two calculated one can be tial alleged, covering all of Lot as a lease If there were exemption under the ineligible for the be Deutsches Land would (Bavarian Inn, Waldhaus the lessee preamble because 70.11 Inc.) if it chapter this exempt from taxation under would "be Moreover, probably could Deutsches Land property." owned the for mainte the leasehold income it used "all of not show that retirement of debt property, the leased construction nance of Land would be ..." Deutsches property or both. the leased 70.11(8) because, by Lot 3 under ineligible § for for (8) property that is definition, apply to "does not subsection agree ..." I person another by exempt organization to leased to the part of Lot 3 Land leased a discrete that if Deutsches subject to tax and the Inn, "part" would be Bavarian addition, a benevolent exempt. remain part unleased would may property to Land lease its entire like Deutsches association if the lessee satisfies retain its another and still preamble as well as the non-discrimina out in the two tests set 70.11(4). tion test partial exemption by can either be determined

comparing percentage of income attributable for-profit activity income versus total organization, by comparing percentage of time for-profit activity to the attributable versus the total Majority op. time the is used." at 92-93. approach ¶ 97. Here the income would not work because Deutsches Land no Hence, received income. employed. the time method But, would have to be as already above, noted Deutsches Land has established days many how the Bavarian Inn and its non-member used All customers Lot 3. other time should attrib- be uted to the benevolent associations. trial, At 98. Peter Weissenfluh asked was calculating

about the issue of time at the Italian Com- munity Center:

Q: Well, me get now let to the percentage

time. What kind of they give information did you supported ‍​‌‌‌​‌​‌‌‌​​‌​​‌​‌‌​​​‌‌​‌​​​​​​​​‌‌​‌‌‌​​​​‌‌​‌‍as to percent percent- ages of time? They

A: actually spelled out the percentages

time that for-profit was used for-for activi- corollary ties and then the would not- be the added.) for-profit, (Emphasis own their use. - There are three classifications of time (1) (2) associatiоns, actual time used actual time (3) by others, time, used dead which is counted against they the benevolent when are not associations using property. their There are two classifications apportioning percent- of time. In time to determine the age partial exemption, of a a benevolent association may prove the time used its was others corollary, remaining then, as a sensible claim the time long actively using Any property. itself, so as it is using penalize an for not result would association other day, days a week, a 52 weeks its 24 hours a year. satisfy 1 and 4 100. I dissent because Lots 70.11(4). They

statutory § are criteria of Wis. Stat. by its association and used for owned exempt purposes. benevolent necessary lots are for location

These facility on of the locker/shower Lot and convenience played. The Hall, indoor soccer is and Fest where facility including exempt; is and Lot locker/shower Hall, leased, it is not use is also because its Fest compensated, and its infre- non-members not quent use non-member customers of occasional organization negligible, minimis, is so de and affiliated destroy comparatively inconsequential it does exemption. impair If did the de minimis use Lot 3 clearly exemption, entitled to total the lot would be 70.11(8) partial under substantial have to remanded for a determina- the case would be percentage. tion the exact I am to state that Justice Jon authorized dissenting joins concurring opin- P. Wilcox this ion.

Case Details

Case Name: Deutsches Land, Inc. v. City of Glendale

Court Name: Wisconsin Supreme Court

Date Published: Apr 16, 1999

Citation: 591 N.W.2d 583

Docket Number: 96-2489

Court Abbreviation: Wis.