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COURT OF
APPEALS DECISION DATED AND
RELEASED April
3, 1996 |
NOTICE |
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A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
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No. 95-1313
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT II
ROBERTA
YOUSO,
Petitioner-Appellant,
v.
CITY
OF NEENAH BOARD OF
REVIEW,
HERBERT KRUSE,
ANNE
PAULUS, DANIEL SCHMIDT,
LESTER
HERZFELDT, BILL
DE
GENEFFE and CLERK
JEAN
MOXON,
Respondents-Respondents.
APPEAL
from an order of the circuit court for Winnebago County: WILLIAM E. CRANE, Judge. Affirmed.
Before
Anderson, P.J., Nettesheim and Snyder, JJ.
SNYDER,
J. Roberta
Youso appeals from an order affirming the City of Neenah's tax assessment of
her real estate. On appeal, Youso
claims that the City of Neenah Board of Review (the Board) exceeded its
jurisdiction, failed to act according to law and acted arbitrarily in
confirming the assessment of her real estate.
She specifically complains that the previous affirmance of the
assessment did not adequately address the methodology used by the
assessor. We conclude that the
assessor's methodology addressed the statutory mandates and that the Board
acted properly in confirming the assessment.
Consequently, we affirm.
Youso
owns a home in the City of Neenah that was built in 1891.[1] In 1993, the City reassessed her property
for tax purposes and placed the value of the land and improvements at
$409,900. Youso objected to this
assessment and requested a hearing before the Board. At the hearing, she argued that the fair market value of her
property did not exceed $375,000 because many expensive repairs were
needed. She also claimed that the
assessment was not performed according to law.
The Board affirmed the assessment.
Youso
then commenced an action before the circuit court. Upon review, the court found that there was credible evidence to
support the assessment and affirmed it.
Youso now appeals that order.
The
scope of this court's review is identical to that of the circuit court; our
review is independent and does not rely on the circuit court's
conclusions. See Steenburg
v. Town of Oakfield, 167 Wis.2d 566, 571, 482 N.W.2d 326, 327
(1992). This court reviews the findings
of the board of review, and we must determine, inter alia, whether the evidence
was such that the board might reasonably make the determination in question. See Metropolitan Holding Co. v.
Board of Review, 173 Wis.2d 626, 630, 495 N.W.2d 314, 316 (1993).
In
determining whether a valuation has been made upon the statutory basis, a court
adheres to a number of principles. Steenburg, 167 Wis.2d at 571,
482 N.W.2d at 328. There is a
presumption that the assessor's valuation is correct. Id. at 571-72, 482 N.W.2d at 328. The burden of producing evidence to overcome
this presumption is on the person contesting the assessment. Id.
If
there is conflicting testimony concerning the value of the property, the court
will not substitute its opinion for that of the board. Id. at 572, 482 N.W.2d at
328. The court is not to make an
assessment of the property or order that an assessment be made at any fixed
amount. Rosen v. City of
Milwaukee, 72 Wis.2d 653, 661, 242 N.W.2d 681, 684 (1976). The valuation must be upheld if there is
credible evidence before the board which in any reasonable view supports the
assessor's valuation. Steenburg,
167 Wis.2d at 572, 482 N.W.2d at 328.
Wisconsin
has codified the procedure for determining the fair market value of real estate
for assessment purposes. Section
70.32(1), Stats., states in
relevant part:
Real estate, how valued. (1) Real property shall be valued by the assessor in the
manner specified in the Wisconsin property assessment manual ... from actual
view or from the best information that the assessor can practicably
obtain. ... [T]he assessor shall consider recent arm's-length sales of the property
to be assessed ...; recent arm's-length sales of reasonably comparable
property; and all factors that ... affect the value of the property to be
assessed.
The “best information” is considered to be a recent
arm's-length sale of the subject property.
See State ex rel. Markarian v. City of Cudahy, 45
Wis.2d 683, 686, 173 N.W.2d 627, 629 (1970).
If there has been no such sale, an assessor may use a recent sale of a
reasonably comparable property. Id. In the absence of these types of sales, the
assessor may consider all of the factors which collectively have a bearing on
the value of the property in arriving at a fair market value. Id.
Youso
contends that the assessor, John A. Ophoven, utilized an incorrect valuation
method to determine her assessment. She
argues that the cost approach method used by Ophoven was contrary to the
requirements of the Wisconsin Property Assessment Manual and contends that the
comparable sales method should have been used.
She maintains that since there had not been a recent sale of her
property, Ophoven was required to use the comparable sales
approach. She contends that there were
recent sales of comparable properties available to use and Ophoven chose not to
“because of his ... subjective belief that they were not ‘very good.’”
The
assessment manual describes reasonably comparable sales as “competitive
properties with characteristics similar to the subject which have sold recently
on the local market.” 1 Wisconsin Dep't of Revenue, Property
Assessment Manual for Wis. Assessors 7-3. At the hearing before the Board, Ophoven testified that he looked
for comparable properties that had been sold, but determined that recently sold
properties were not appropriate to use.
Ophoven then turned to the remaining method of property valuation
outlined in the manual—the comprehensive factor approach.[2]
Youso
argues that there are at least three homes which could be considered comparable
and should have been utilized by Ophoven in arriving at the valuation of her
home. The one Youso contends is the
most comparable contains 4976 square feet, which is less than half the square
footage of the Youso property.[3]
Youso's
property had been assessed by a bank appraiser several years earlier. That appraiser had considered two other
homes as comparables. They were: (1) a home measuring 4807 square feet and
valued at $426,000, and (2) a home measuring 8689 square feet and valued at
$373,000. The bank appraiser had said
the cost approach was given only supportive consideration because of the home's
massive size, age and the difficulty in measuring depreciation.[4]
Based
on the significant differences in size and assessed valuation among the homes
Youso contends are “comparables,” we conclude that there was credible evidence
to support Ophoven's determination that none of the offered properties were
comparable for assessment purposes. The
Youso home is a unique property; the fact that there are other equally unique
properties in the area does not mean that they are necessarily comparable. The Board acted within its jurisdiction when
it found that there was credible evidence to support Ophoven's determination
that the other properties were not comparable and should not be used as the
sole means of determining the value of Youso's property.
After
discounting the use of the comparable sales approach to valuation, Ophoven
applied the comprehensive factor analysis.
This approach utilizes all of the information available, including “like
sales, a sale of the subject [property] which may not be recent, the cost and
income approaches to value ... outside appraisals of the subject [property],
and the assessments of other comparable properties.” Id. In
addition to those factors outlined above, this approach requires the assessor
to consider depreciation, replacement value and any appraisals procured by the
owner. See Rosen,
72 Wis.2d at 663, 242 N.W.2d at 685.
In
applying the comprehensive factor analysis, Ophoven first determined the value
of Youso's land. He testified that
because there were no vacant land sales in the neighborhood, the abstraction
method was the only method available to do this. This method arrives at an estimation of the value of vacant land
through the use of sales of improved property.[5] Using this method, Ophoven arrived at a land
value of $126,100.
Youso
contends that the abstraction method contains too many limitations to be used
as the sole means of deriving the land's value. See 1 Wis. Dep't of
Revenue, supra, at 8-4 to 8‑5. The manual states that “this method is best utilized on newer
properties with little or no depreciation.”
Id. at 7‑12.
Youso argues that because of the shortcomings of this method of
valuation and because of Ophoven's refusal to acknowledge them, the resulting
assessment of her property was invalid.
Ophoven
agreed that there were limitations to the use of the abstraction method, but
stated that in this case, “That's the only method we have. There are no vacant [land] sales of property
so you have to use the best method available, which is the abstraction
method.” Our review of the record leads
us to conclude that the Board was presented with credible evidence to sustain
Ophoven's decision to employ the abstraction method to determine the value of
Youso's land.
In
a similar argument, Youso contends that the cost approach was erroneously
utilized in valuing the improvements to her property. She cites the difficulty of estimating new replacement costs and
the accrued depreciation of older improvements as among the limitations of this
method, pointing out that most of the improvements on her land are over 100
years old.
In
applying the cost approach, Ophoven determined the reproduction cost of Youso's
home, less depreciation. This method is
approved by the manual and Ophoven submits that it was appropriate. Using this method, the value of the
improvements was placed at $286,800.
Although
the assessment manual confirms that the cost approach is best utilized on newer
properties because of its limitations, it does not prohibit the method from
ever being used as a means of deriving value.
The manual merely states, “Depreciation is a critical factor .... Examples where the cost approach may not be
entirely reliable are properties with very old or poorly maintained
improvements ....” Id. at
8‑14. In this case, given the lack of comparable home sales, Ophoven
utilized the cost approach in order to determine an initial starting point to
value the improvements to the property.
Factors such as depreciation were then included and resulted in a
downward assessment.[6] This figure was then further adjusted based
on an open-book meeting with Gary Youso, Roberta's husband.
We
conclude that Ophoven's methods demonstrate sufficient compliance with the
manual. He considered the preferred
methods of property valuation before concluding that the abstraction and cost
approaches were the only appropriate options.
As a result, his decision to use this methodology was supported by
credible evidence that it was applicable and not inherently unreliable.
Finally,
Youso argues that Ophoven incorrectly assessed her home by not adjusting the
valuation to account for numerous adverse factors and conditions that she
contends affect the value of the real estate.[7] However, the record shows that an open-book
meeting was held after Ophoven made his initial valuation. While at the meeting, Gary had the
opportunity to point out any adverse factors that were overlooked. Ophoven testified before the Board, “After
Mr. Youso and I talked at open book, I made some adjustments to our cost
approach ....”
We
conclude that the valuation of the property was made on the statutory bases and
the Board correctly exercised its jurisdiction in confirming the assessment.
By
the Court.—Order affirmed.
Not
recommended for publication in the official reports.
[1] The assessor
described the home as a “mansion built in 1891 with full basement, nine
bedrooms, 27 rooms in the home, six full bathrooms, and three ... half baths
.... That's six stacks with 9 openings
for fireplaces. I show ... 12,200
square feet in the home.”
[2] Although Youso
argues that the “cost approach” should not have been utilized, and the City
argues that utilization of this approach was within the statutory mandates, our
review of the record leads us to conclude that what was actually used was the
“comprehensive factor analysis” or the “all factor analysis,” which is mandated
by 1 Wisconsin Dep't of Revenue,
Property Assessment Manual for Wis. Assessors 7-3. The assessor used the three terms
interchangeably in testimony before the Board.
[3] There is some
disagreement over the actual square footage of the Youso home. Youso maintains that her measurements place
the size at 9720 square feet. An
earlier appraisal of the home listed it at 10,100 square feet, and the assessor
recorded the number at 13,310 square feet.
[4] The bank
appraiser arrived at a market value of $453,800 using the cost approach. It is unclear whether any other factors were
taken into consideration in arriving at that figure.
[5] From the sale
price of the improved parcel, the assessor subtracts the estimated market value
of the improvements to arrive at a market value for the land. See 1
Wis. Dep't of Revenue, supra note 2, at 7‑12.