COURT OF APPEALS DECISION DATED AND FILED July 8, 2010 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL
and CROSS-APPEAL from a judgment of the circuit court for
Before Dykman, P.J., Lundsten and Higginbotham, JJ.
¶1 LUNDSTEN, J. The City of
¶2 We agree with the circuit court that the City’s assessments were not proper under Adams I. We also conclude that the City’s appeal is not frivolous.
Background
¶3 This dispute concerns the City of
¶4 The present dispute began when
¶5 After the circuit court affirmed the City’s 2002 and 2003 assessments,
¶6 The City reassessed
¶7 In a consolidated action addressing all of the assessments,
the circuit court agreed with
Discussion
A. Adams’ Billboard Permits
¶8 The City purports to embrace Adams I and take
advantage of its clear holding that the billboard permits owned by
¶9 In the following paragraphs, we detail the City’s specific arguments and explain why we cannot reconcile them with Adams I.
¶10 The City argues that Adams I contemplates that it may, for real-property-taxation purposes, allocate the value attributable to a billboard permit between the owner of the permit (here, Adams) and the owner of the land underlying the related billboard (here, entities other than Adams). As its starting point, the City quotes statements from Adams I saying that billboard permits are taxable interests in real property. A representative example is the City’s reliance on the following quote from Adams I:
The City erred by including
the value of billboard permits in the assessment of
Adams Outdoor Advertising,
294
¶11 Next, the City seeks to establish a connection between the observation that billboard permits are taxable as real property and the City’s particular contention—that it may tax Adams for a portion of the value of related permits. The City points to footnote 18 in Adams I:
Our conclusion does not mean
that the City can include 100 percent of the income derived from Adams’
billboards in the real property tax assessment of the land that is leased to
Adams and upon which
¶12 We agree with the City to a certain extent—footnote 18 is
worded in a manner suggesting that Adams’ ownership of the permits imposes a real
property tax burden on Adams that “does not shift 100 percent” to the
landowner. This wording implies that
¶13 The City suggests, without an accompanying developed argument, that a portion of the permits is taxable as stand-alone real property, untethered to either the billboards or the land under them. This may or may not be a viable approach, but it is not an issue here because it is not what the City did.
¶14 The City’s approach on remand fails because it is the same taxation
mechanism rejected by Adams I. That is, the City continues to insist that it
may tax the value of the permits as a component of the value of the billboards,
in essence asserting that the billboards are more valuable because of the value
added by the permits. For example, the
City, pointing to its assessor’s report, asserts that “the permit itself, under
existing
¶15 The City asserts that it is obligated to tax all property that is not exempt from taxation and, when doing so, it is to tax “in the name of the owner” (citing Wis. Stat. §§ 70.01 and 70.17(1)). The City relies on a portion of § 70.17(1) that provides that improvements on leased land may be assessed either as real property or as personal property. Yet, in describing its use of § 70.17(1), the City states that “there is no question that a permit is a property interest that adds value to the billboard” and that this “value-added nature of the permit makes it appropriate to consider it as either an additional improvement or part of the improvement to leased land.” The City—although it engages in some relabeling and now relies on certain statutes to support its methods—remains wedded to the rejected bundle of rights approach. This would have been a feasible method if the dissenting opinion in Adams I had captured a majority, but it did not. See id., ¶¶120-21 (Abrahamson, C.J., dissenting) (“Although the cases addressing the inextricably intertwined rule are real property cases, I agree with the circuit court that the same rationale applies to personal property taxation.... It is clear from the case law, from the record in the instant case, and from a commonsense perspective that the cash value (the fair market value) of a billboard is based on income, which is inextricably intertwined with the billboard permit.”).
¶16 While there is reasoning in the decision of the Adams I majority that we find difficult to track, the majority states that the permits do not add value to the billboard structures, but, rather, add value to the real property under the billboards:
We conclude that because billboard permits are real property, as defined in Wis. Stat. § 70.03, the income attributable to them is properly included in the real property tax assessment, not the personal property tax assessment.… The primary value of the permits is unrelated to the structures; rather, the primary value of the permits appertains to the location of the underlying real estate.
¶17 We acknowledge that it appears that, under Adams I, some portion of the fair market value of real property escapes taxation. Understandably, the City feels obligated to tax that value to more fairly spread the tax burden among entities that own interests in personal and real property. We conclude, however, that the City’s reassessment does not tax the value of the permits in a manner consistent with Adams I.
¶18 Having rejected the City’s general approach to taxing a portion
of the value of the billboard permits, we note that the City does not otherwise
challenge the assessment values adopted by the circuit court. Accordingly, we affirm the circuit court’s
rejection of the City’s assessments and the court’s adoption of
B. Frivolous
Appeal
¶19
an appeal is frivolous if “[t]he party or the party’s attorney knew, or should have known, that the appeal or cross-appeal was without any reasonable basis in law or equity and could not be supported by a good faith argument for an extension, modification or reversal of existing law.” Sec. 809.25(3)(c)2. Whether an appeal is frivolous is a question of law. An appellate court considers “what a reasonable party or attorney knew or should have known under the same or similar circumstances.”
Larson v. Burmaster, 2006
WI App 142, ¶45, 295
¶20 We disagree with Adams that Adams I so clearly
prohibits the City’s effort to impose a tax on
Conclusion
¶21 For the reasons stated above, we affirm the judgment of the
circuit court and deny
By the Court.—Judgment affirmed.
Not recommended for publication in the official reports.
[1] Although
it need not have done so to make the argument,
[2] According to statements in the City’s 2008 reassessment report, billboard permits are limited in the City “due to a past ordinance change and lawsuit settlement,” and all remaining permits had been issued as of the report date. The report also notes that “if a sign is removed or destroyed, the sign cannot be replaced and the permit is lost forever.”
[3] All references to the Wisconsin Statutes are to the 2007-08 version unless otherwise noted.
[4] We
note that