Wisconsin Court of Appeals Upholds Statutory Changes to Procedures for Assessment Contests
Real Estate Update 10/12/09 Michael D. Zeka, Isaac J. Roang
The recent decision of the Wisconsin Court of Appeals in Metropolitan Associates v. City of Milwaukee overturned a lower court's ruling that found unconstitutional a provision enacted by 2007 Wisconsin Act 86 ("Act 86"), and in so doing upheld a state law change that had significantly modified the procedure for contesting a property tax assessment. If the Metropolitan Associates decision withstands appeal efforts, property owners in Milwaukee-and in any other municipality that adopts an "extension ordinance," as described below-will need to take special care when challenging property tax assessments.
Act 86 and Previous Challenges
Historically, Wisconsin taxpayers enjoyed the right to seek a circuit court's non-deferential, "de novo" review of a board of review's assessment decision. A de novo review allows taxpayers to challenge the assessment anew on any grounds and to present evidence not previously submitted to the board. Since 2008, however, when the Wisconsin Legislature passed Act 86, Wisconsin municipalities may enact an "extension ordinance"-i.e., an ordinance that, among other things, (1) allows a property owner to seek a 60-day extension of the period during which the property owner may have its property tax assessment objection heard, but that also (2) allows each municipality enacting such an ordinance to curtail the property owner's right to challenge the board of review's decision in a de novo refund action in circuit court. As part of the municipality's authority to curtail de novo refund actions, a property owner who wishes to object to a board of review's decision may be limited to a modified certiorari review of the board's valuation decision-a circuit court review of the decision which gives deference to the board. While Act 86 modifies the traditional certiorari review process by making rebuttable the presumption that the board of review acted correctly and by permitting the circuit court to review evidence outside of the board of review's record-both changes to the certiorari review process that favor the taxpayer-even such a modified process does not provide the taxpayer all of the procedural and evidentiary protections of a de novo refund action.
We note that, in 2001, the Wisconsin Supreme Court struck down, on equal protection grounds, a state statute that (like Act 86) limited the right of certain property owners in counties with more than 500,000 residents-in other words, in Milwaukee County-to commence de novo refund actions. However, the Metropolitan Associates decision distinguishes the Act 86 provision from the statute the Supreme Court struck down in 2001 on the dual grounds that the procedural modifications authorized by Act 86 afford taxpayers more of a "level playing field" and that such modifications are optional rather than compulsory. In effect, the Court of Appeals held in Metropolitan Associates that a municipality's discretionary decision to enact an extension ordinance avoids the equal protection concerns that troubled the Supreme Court in its 2001 decision-and, in so doing, found the City of Milwaukee's adoption of Act 86 procedures to be permitted under the Wisconsin and United States Constitutions.
We also note that, earlier this year, a bill was introduced in the Wisconsin State Assembly which, if enacted, would undo the Act 86 revisions to the property assessment review process. However, it appears that this bill was immediately referred to committee and that, to date, no committee hearings or other proceedings have taken place regarding the proposal.
If the Metropolitan Associates decision withstands appeal and the Wisconsin Legislature does not make further statutory revisions, taxpayers who have property in any Wisconsin municipality with an extension ordinance and who wish to challenge a board of review's decision on an assessment will be limited before the circuit court to a certiorari review of the board of review's decision. Although certiorari review under Act 86 does allow the circuit court to review evidence that was not available at the board of review's evidentiary hearing, the likelihood seems strong that such a review will focus for the most part on evidence provided at the original board of review hearing by the property owner and the tax assessor. The consequence seems clear: property owners in such localities-who frequently waited until their contest reached de novo review with the circuit court before mounting significant efforts to document valuation contests-must now be prepared with as much evidence as possible from the earliest steps in the process.
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For additional information regarding property tax assessment appeals and other real estate and land issues, please contact Michael Ostermeyer at 414-277-5521 / email@example.com, Michael Zeka at 414-277-5131 / firstname.lastname@example.org, Elizabeth Nowakowski at 414-277-5815 / email@example.com or your Quarles & Brady attorney.