State ex rel. Collison v. City of Milwaukee Bd. of Review

397 Wis.2d 246

960 N.W.2d 1

2021 WI 48

STATE of Wisconsin EX REL. Ronald L. COLLISON, Petitioner-Appellant-Petitioner,

v.CITY OF MILWAUKEE BOARD OF REVIEW, Respondent-Respondent.

No. 2018AP669

Supreme Court of Wisconsin.

Oral Argument: January 21, 2021

Opinion Filed: June 2, 2021

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.

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.

ANN WALSH BRADLEY, J.

¶1 The petitioner, Ronald Collison, seeks review of an unpublished per curiam decision of the court of appeals affirming the City of Milwaukee Board of Review's (Board) determination that his property was properly assessed at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.

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.

¶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 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.

¶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." 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."

¶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., 2019 WL 4020253, 2019 WL 4020253 (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...