Ronald L. Collison v. City of Milwaukee Board of Review

2021 WI 48, 960 N.W.2d 1, 397 Wis. 2d 246

• Court: Wisconsin Supreme Court
• Decided: June 2, 2021
• Docket: 2018AP000669
• Status: Published

Opinion

2021 WI 48

SUPREME COURT OF WISCONSIN CASE NO.: 2018AP669

COMPLETE TITLE: State of Wisconsin ex rel. Ronald L. Collison, Petitioner-Appellant-Petitioner, v. City of Milwaukee Board of Review, Respondent-Respondent.

REVIEW OF DECISION OF THE COURT OF APPEALS Reported at 388 Wis. 2d 621,935 N.W.2d 553 (2020 – unpublished)

OPINION FILED: June 2, 2021 SUBMITTED ON BRIEFS: ORAL ARGUMENT: January 11, 2021

SOURCE OF APPEAL: COURT: Circuit COUNTY: Milwaukee JUDGE: Glenn H. Yamahiro

JUSTICES: 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. NOT PARTICIPATING:

ATTORNEYS: 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.

2 2021 WI 48

NOTICE This opinion is subject to further editing and modification. The final version will appear in the bound volume of the official reports. No. 2018AP669 (L.C. No. 2017CV4572)

STATE OF WISCONSIN : IN SUPREME COURT

State of Wisconsin ex rel. Ronald L. Collison,

Petitioner-Appellant-Petitioner, FILED v. JUN 2, 2021 City of Milwaukee Board of Review, Sheila T. Reiff Respondent-Respondent. Clerk of Supreme Court

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.

REVIEW of a decision of the Court of Appeals. Affirmed.

¶1 ANN WALSH BRADLEY, J. 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Collison, seeks review of an unpublished per curiam decision of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 No. 2018AP669

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.

1State ex rel. Collison v. City of Milwaukee Bd. of Rev., No. 2018AP669, unpublished slip op. (Wis. Ct. App. Aug. 27, 2019) (per curiam) (affirming the order of the circuit court for Milwaukee County, Glenn H. Yamahiro, Judge). 2All subsequent references to the Wisconsin Statutes are to the 2017-18 version unless otherwise indicated.

2 No. 2018AP669

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. 3 No. 2018AP669

¶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

Collison represented himself through the petition for 3

review stage of this case, appearing pro se before the Board, the circuit court, and the court of appeals.

Wisconsin Stat. § 70.32(1m) provides: "In addition to the 4

factors set out in sub. (1), the assessor shall consider the impairment of the value of the property because of the presence of a solid or hazardous waste disposal facility or because of environmental pollution, as defined in s. 299.01(4)." 5 In relevant part, the CMECS set forth:

Burden of Proof on Taxpayer . . . Contamination must be substantiated through an independent environmental (continued) 4 No. 2018AP669

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.

expert. This step is no different from providing independent appraisals to defend values on appeal. The minimum level of acceptable substantiation will be a comprehensive Phase II Audit, setting forth (among other pertinent information) the type, level and source of contamination and the suggested method or methods for remediation. Without this information, property must be valued as if uncontaminated. All information we obtain from owners/agents regarding potential contamination will be considered open records to the public.

5 No. 2018AP669

¶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."

6 No. 2018AP669

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." 7 No. 2018AP669

¶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. (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 validity of a decision rendered by a municipality, an

administrative agency, or an inferior tribunal." Ottman v. Town

of Primrose, 2011 WI 18, ¶34, 332 Wis. 2d 3, 796 N.W.2d 411.

¶20 On certiorari review, we examine the decision of the

board of review, not the decision of the circuit court or court

of appeals. Sausen v. Town of Black Creek Bd. of Rev., 2014 WI

9, ¶5, 352 Wis. 2d 576, 843 N.W.2d 39; see Wis. Stat.

§ 70.47(13). Our review is limited to whether the board's actions were: (1) within its jurisdiction; (2) according to 8 No. 2018AP669

law; (3) arbitrary, oppressive, or unreasonable and represented

its will and not its judgment; and (4) supported by evidence

such that the board might reasonably make the order or

determination in question. Sausen, 352 Wis. 2d 576, ¶6.

¶21 In our review, we must engage in statutory

interpretation. The interpretation of a statute presents a

question of law this court reviews independently of the

determinations rendered by the circuit court and court of

appeals. Hinrichs v. DOW Chem. Co., 2020 WI 2, ¶26, 389

Wis. 2d 669, 937 N.W.2d 37.

III

¶22 We begin with a review of the statutory background

underlying this case, including general tax assessment

methodology pursuant to Wis. Stat. § 70.32 and this court's

precedent. Subsequently, we discuss the law related to

contaminated property and examine Collison's contention that the

assessment in this case contravened the statutory mandate that

contamination of property be considered in arriving at a valuation.

A

¶23 Valuation of real estate for tax assessment purposes

is governed by Wis. Stat. § 70.32. Subsection (1) of this

statute dictates that property shall be valued "in the manner

specified in the Wisconsin property assessment manual" and

additionally sets forth a hierarchical valuation methodology.

Metro. Assocs. v. City of Milwaukee, 2018 WI 4, ¶31, 379 Wis. 2d 141, 905 N.W.2d 784. 9 No. 2018AP669

¶24 As clarified in State ex rel. Markarian v. City of

Cudahy, 45 Wis. 2d 683, 686, 173 N.W.2d 627 (1970), the text of

Wis. Stat. § 70.32(1) lists three sources of information in a

specific order, with this order being indicative of the quality

of information each source provides. Metro. Assocs., 379

Wis. 2d 141, ¶31. This methodology has been described by courts

as providing three "tiers" of analysis. Id. (citation omitted).

¶25 The best information of a property's fair market value

is an arm's-length sale of the subject property. Id., ¶32.

Examination of a recent arm's length sale is known as a "tier 1"

analysis. Id. This is the first source of information an

assessor should look to in conducting an assessment. If there

is no recent sale of the subject property, the appraiser then

moves to tier 2, examining recent, arm's-length sales of

reasonably comparable properties (the "sales comparison

approach"). Id., ¶33.

¶26 When both tier 1 and tier 2 are unavailable, an

assessor then moves to tier 3. Id., ¶34. Under tier 3, an assessor may consider all the factors collectively which have a

bearing on value of the property in order to determine its fair

market value. Id. These factors include cost, depreciation,

replacement value, income, industrial conditions, location and

occupancy, sales of like property, book value, amount of

insurance carried, value asserted in a prospectus and appraisals

produced by the owner. Id. (citing State ex rel. Mitchell Aero,

Inc. v. Bd. of Rev. of City of Milwaukee, 74 Wis. 2d 268, 278, 246 N.W.2d 521 (1976)). As relevant here, the income approach, 10 No. 2018AP669

"which seeks to capture the amount of income the property will

generate over its useful life," fits under the umbrella of tier

3 analysis. Metro. Assocs., 379 Wis. 2d 141, ¶34.

B

¶27 With this necessary general background on assessment

methodology in hand, we address next the law related to

contaminated property and examine Collison's argument that the

assessor did not properly consider the contaminated nature of

the property in arriving at a valuation. Viewed within the

certiorari review framework, Collison's argument is one that the

Board did not act according to law when it upheld the

assessment.

¶28 The requirement that an assessor consider a property's

contamination arises from Wis. Stat. § 70.32, which contains a

provision directed at contaminated properties. Specifically,

§ 70.32(1m) sets forth: "In addition to the factors set out in

sub. (1), the assessor shall consider the impairment of the

value of the property because of the presence of a solid or hazardous waste disposal facility or because of environmental

pollution, as defined in s. 299.01(4)."6

6 Pursuant to Wis. Stat. § 299.01(4), "environmental pollution" is defined as "the contaminating or rendering unclean or impure the air, land or waters of the state, or making the same injurious to public health, harmful for commercial or recreational use, or deleterious to fish, bird, animal or plant life."

11 No. 2018AP669

¶29 Guidance on valuing contaminated property is provided

by the WPAM. See Wis. Stat. § 70.32(1) (explaining that

property "shall be valued by the assessor in the manner

specified in the Wisconsin property assessment manual"). It

acknowledges the "unique valuation problem" posed by

contaminated property due to the difficulty in identifying

contamination. 1 Wisconsin Property Assessment Manual 8-42

(2016).7 Despite the identified difficulty, the WPAM reinforces

that "[b]oth Wisconsin Statutes and appraisal principles require

the assessor to consider the effect of contamination on the

value of real estate." Id. at 8-43 (citing § 70.32(1m)).

¶30 Largely, the WPAM addresses "more common situations

where the extent of contamination and its effect on value are

readily identified and measured." Id. at 8-46. However, it

also recognizes that "there may be some situations where the

extent of contamination is unknown and thus the effect on value

is difficult to measure." Id. In such a situation, "it is not

possible to develop specific procedures for dealing with this uncertainty," but the WPAM provides assessors with a framework

for gathering information "to help estimate the effect of

contamination on value." Id.

¶31 By way of example, the WPAM provides:

[A]lthough there may not be sales of truly comparable contaminated property, there may be sales of other contaminated property indicating a range of values or,

All references to the Wisconsin Property Assessment Manual 7

are to the 2016 version unless otherwise indicated.

12 No. 2018AP669

possibly, a percentage adjustment the assessor can use to reflect the contamination. Similarly, although an environmental engineer may not be able to estimate a specific cost to cure the contamination, the engineer may be able to estimate a range of costs and what are the probabilities that the cost to cure lies on the high or low end of the range. Properties with a great deal of uncertainty should be closely monitored and reviewed each year as more information becomes available to reduce the degree of uncertainty. Id.

¶32 In this case, the parties agree that the subject

property is contaminated, but the extent of that contamination

is unknown. As to the method of valuation, the assessor here

utilized the income approach to value Collison's property.

There had been no arm's length sale of the property, and the

assessor testified that "[t]he cost approach and the sales

comparison approach were not applicable."

¶33 Collison argues that the assessor did not properly

consider the property's contaminated nature in arriving at the

valuation of $31,800. In Collison's view, considering the

contamination cannot equate with merely using the income

approach instead of the sales approach, and it cannot equate

with merely assigning no value to the building. He argues,

contrary to the assessor's determination, that the property

actually has no value whatsoever because it cannot be sold.

¶34 We are unpersuaded by Collison's argument. Contrary

to Collison's contention, the fact that the property is

contaminated drove the entire assessment in this case, as will

be further explained below.

13 No. 2018AP669

¶35 As we must, we begin with the language of Wis. Stat.

§ 70.32(1m) and its requirement that the assessor "consider the

impairment of the value of the property" due to contamination.

See State ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI

58, ¶45, 271 Wis. 2d 633, 681 N.W.2d 110. "Statutory language

is given its common, ordinary, and accepted meaning, except that

technical or specially-defined words or phrases are given their

technical or special definitional meaning." Id. We also

interpret statutory language "in the context in which it is

used; not in isolation but as part of a whole; in relation to

the language of surrounding or closely-related statutes; and

reasonably, to avoid absurd or unreasonable results." Id., ¶46.

¶36 In the context of this case, we must determine what it

means for the assessor to "consider" the impairment of the value

of the property caused by the contamination. Looking to an

established dictionary for assistance, we observe that

"consider" is defined as "to take into account."8 Thus, we must

determine whether the assessor here took into account the impairment of the value of the property caused by the

contamination in arriving at the valuation of $31,800.

8Consider, Merriam-Webster Online Dictionary, https://www.merriam-webster.com/dictionary/consider (last visited May 27, 2021); see also State v. Sample, 215 Wis. 2d 487, 499, 573 N.W.2d 187 (1998) ("For purposes of statutory interpretation or construction, the common and approved usage of words may be established by consulting dictionary definitions.").

14 No. 2018AP669

¶37 In this task, we begin with the proposition that "real

estate must be valued at its highest and best use." Allright

Props., Inc. v. City of Milwaukee, 2009 WI App 46, ¶18, 317

Wis. 2d 228, 767 N.W.2d 567. Applied here, the assessor

determined that, given the property's location and taking into

account the presence of contamination, the highest and best use

in its current state is a parking lot.

¶38 Indeed, the assessor testified about the potential for

income:

[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. Thus, as this testimony demonstrates, it was the contamination

that drove the assessor's decision to use the income approach to

value the property, and to value the property according to its

highest and best use as a parking lot.

¶39 The record reflects a recognition that the property

could have been valued much higher but for the contamination.

The property is in a prime location near the new Milwaukee Bucks

stadium. One of the Board members stated at the hearing that

"with all the development that's happening in that

area, . . . this property could be worth a lot of money once the

groundwater and the soil has been remediated."

¶40 It follows from this that if the property were not

contaminated, a parking lot would no longer be the highest and best use of the property. By valuing the property as a parking

15 No. 2018AP669

lot using the income approach, the assessor took into account,

or "considered," the impairment of the value of the property due

to contamination in accordance with Wis. Stat. § 70.32(1m).9

¶41 Although the WPAM itself provides no specific

procedure for dealing with uncertainty like that presented here,

see 1 Wisconsin Property Assessment Manual 8-46, the assessor's

consideration of the impairment of the value of the property due

to contamination by valuing the property as a parking lot using

the income approach was consistent with the International

Association of Assessing Officers (IAAO) standards, which are

incorporated by the WPAM.10 Specifically, IAAO Standard on the

Valuation of Properties Affected by Environmental Contamination

§ 4.1 discusses the value in use of a contaminated property and

provides in relevant part that "[v]alue in use suggests that a

property which is still in use, or which can be used in the near

future, has a value to the owner." It further specifies that

"[t]his would be true even if costs to cure environmental

9The dissent contends that in order to "consider" the impairment of the value due to contamination, the assessor's report must demonstrate a reduction in value by a specific number. See dissent, ¶¶68, 74. Such a requirement finds no support in the text of Wis. Stat. § 70.32(1m). The statute requires only that the assessor "consider" the impairment of value due to contamination, not that he "reduce the value by a certain number from the value of the property if it were not contaminated." See Wis. Stat. § 70.32(1m).

"Whether or not the IAAO Standards appear in the WPAM, 10

the most current version in effect on January 1 of a given assessment year is incorporated by reference in the manual." 1 Wisconsin Property Assessment Manual 1-3.

16 No. 2018AP669

problems exceed the nominal, unencumbered value. The value in

use will most nearly reflect the market value of the

property . . . ." Int'l Ass'n of Assessing Officers, Standard

on the Valuation of Properties Affected by Environmental

Contamination § 4.1 (2016).11

¶42 The assessment here is consistent with this principle.

It recognizes that the highest and best use of the property as a

parking lot has value to the owner even if the cost to cure

environmental problems exceeds the value of the property.

¶43 Additionally, Collison's argument that the property

has no value whatsoever is unpersuasive for two reasons.12

First, it ignores the established three-tiered valuation

methodology. By arguing that the value is zero because it

cannot be sold, Collison urges the court to require the assessor

to use either an arms-length sale or sales comparison approach

and go no further. Collison's proposed approach ignores the

tier 3 approaches that the law dictates the assessor must use in

the absence of information on tiers 1 and 2.

All references to the IAAO Standard on the Valuation of 11

Properties Affected by Environmental Contamination refer to the 2016 version unless otherwise indicated.

See also Bonnie H. Keen, Tax Assessment of Contaminated 12

Property: Tax Breaks for Polluters?, 19 B.C. Env't Aff. L. Rev. 885, 906-08 (1992) (explaining that "the majority of cases have rejected taxpayers' assertions of zero or nominal value" and collecting cases); Peter J. Patchin, Valuation of Contaminated Properties, 56 Appraisal J. 7, 13 (1988) (stating that a conclusion that contaminated property is "worthless" is "unreasonable when the property is still being utilized by its present owner for some useful purpose").

17 No. 2018AP669

¶44 Second, Collison's argument ignores that it is

Collison's burden to present evidence before the Board to

support his proposed valuation of zero, which he did not do.

See Sausen, 352 Wis. 2d 576, ¶10. Like our case law, the IAAO

standards make clear that in a case of contamination, the burden

is on the taxpayer to demonstrate the extent of the damage.

Int'l Ass'n of Assessing Officers, Standard on the Valuation of

Properties Affected by Environmental Contamination § 5.1 ("The

property owner must provide clear documentation of the nature

and extent of environmental contamination. Accurate and

detailed maps must be included as part of this documentation.")

By imploring the court to adopt a value of zero for his property

despite not presenting evidence to support such a theory,

Collison is asking the court to allow him to sidestep his

burden, which we will not do.

¶45 As a final matter, we decline to address the

additional issue presented in Collison's petition for review and

briefing, i.e., whether the CMECS conflict with Wis. Stat. § 70.32(1m).13 Although Collison asserts that the CMECS

unlawfully require a phase II assessment, the assessor testified

that he would have accepted "any written, verifiable evidence

The dissent states that "[w]e asked the parties to 13

address whether MECS were consistent with the statutes." Dissent, ¶77. Such a statement could be read to indicate that the court sua sponte asked the parties to brief the question. That is not correct——the issue was raised in Collison's petition for review.

18 No. 2018AP669

done by an expert[,]" and not only a phase II assessment of the

property as evidence of contamination.

¶46 As both the circuit court and court of appeals

determined, the Board did not reject Collison's challenge on the

basis that he lacked a phase II assessment. The legal question

Collison presents, while interesting, is not reachable on the

facts of this case. We will therefore not depart from our

general practice that this court will not offer an advisory

opinion or make a pronouncement based on hypothetical facts.

State v. Grandberry, 2018 WI 29, ¶31 n.20, 380 Wis. 2d 541, 910

N.W.2d 214.

¶47 In sum, 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.

¶48 Accordingly, we affirm the decision of the court of

appeals.

By the Court.—The decision of the court of appeals is

affirmed.

19 No. 2018AP669.pdr

¶49 PATIENCE DRAKE ROGGENSACK, J. (dissenting). As the

City of Milwaukee's appraiser, Jim Wiegand, said, "we recognize

the site is contaminated." Once the presence of contamination

is found on a property, Wis. Stat. § 70.32(1m) requires the

taxation assessor1 to consider the "impairment of the value of

the property" that is due to contamination. However, Wiegand's

appraisal, upon which the assessor relied, did not follow

§ 70.32(1m). Instead, it appears that Wiegand applied the

Milwaukee Environmental Contamination Standards (MECS), which

directed the appraiser to value the property "as if

uncontaminated" unless the taxpayer meets MECS's burden of

proving the costs of clean-up.

¶50 I respectfully dissent because the majority opinion

affirms the Board of Review's decision sustaining Wiegand's

appraisal, which appraisal did not follow the law.2 I also write

because I conclude that MECS do not comply with Wis. Stat.

§ 70.32(1m) and therefore, it is unlawful to apply MECS in

taxation appraisals of contaminated properties.

I. BACKGROUND

¶51 The City agrees that Ronald Collison's property is

environmentally contaminated. The contamination was caused by

leaking from underground storage tanks that once contained

1 The City of Milwaukee is the assessor of taxes due on real estate within its boundaries. Wiegand is the appraiser for the City who determined the market value of the property. 2 Majority op., ¶3.

1 No. 2018AP669.pdr

petroleum products and perchloroethylene, solvents used in a dry

cleaning business that operated on the property in 1979 when

Collison purchased it. As Board member, Volkman, pointed out,

the City has long been aware of the contamination because the

City built an alley on the edge of Collison's property and found

evidence of these pollutants leaching into city property. He

was surprised that the City did not do anything about cleaning

up the contamination.

¶52 Wiegand's appraisal recognized the contamination and

related that "owner has provided a copy of a Tank System Site

Assessment Report (TSSA) dated July 19, 2012 from Endpoint

Solutions. This report details the removal of four underground

storage tanks (UST's) and a comprehensive analytical soil sample

report."3 The appraisal continues to relate that the "Report [of

Endpoint Solutions] did not make any recommendations regarding

cost or remediation. . . . The owner has not provided any

report detailing clean-up costs. Lacking detailed, a Phase II

environmental study, it remains unclear as to the extent of

contamination that exists on the site or any associated clean-up

costs."4

3 Appraisal, Non-Electronic Record Item, p. 4. 4 Id.

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II. DISCUSSION

A. Standard of Review

¶53 We review the decision of the Board of Review, not the

decision of the circuit court or the court of appeals.

Steenberg v. Town of Oakfield, 167 Wis. 2d 566, 571, 482 N.W.2d

326 (1992). Our review is under certiorari standards where we

determine whether the Board's actions were: (1) within its

jurisdiction; (2) according to law; (3) arbitrary, oppressive,

or unreasonable and represented its will and not its judgment;

and (4) supported by evidence such that the Board might

reasonably make the decision now under review. Sausen v. Town

of Black Creek Bd. of Rev., 2014 WI 9, ¶¶5, 6, 352 Wis. 2d 576,

843 N.W.2d 39.

¶54 Our review falls under the second certiorari standard

because Collison claims that the Board of Review did not act

according to the requirements of Wis. Stat. § 70.32(1m), i.e.,

that it did not act according to law. Although the Board

presumes that the valuation is correct pursuant to Wis. Stat.

§ 70.47(8)(i), there is no presumption that the Board acted

according to law when it adopted Wiegand's valuation. Rather,

"[w]hether the Board acted according to law is a question of law

that we decide independently." State ex rel. Peter Ogden Fam.

Tr. of 2008 v. Bd. of Rev., 2019 WI 23, ¶24, 385 Wis. 2d 676,

923 N.W.2d 837. In order to resolve whether the Board acted

according to law, we interpret and apply § 70.32(1m). Again,

these tasks present questions of law that we decide

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independently of the decisions of the Board, the circuit court

and the court of appeals. Id.

B. Relevant Statutes

¶55 Real estate is valued for taxation purposes by the

criteria set out in Wis. Stat. § 70.32. Provisions relevant to

Wiegand's appraisal of Collison's property provide:

(1) Real property shall be valued by the assessor in the manner specified in the Wisconsin property assessment manual provided under s. 73.03(2a) . . . at the full value which could ordinarily be obtained therefor at private sale. In determining the value, the 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, according to professionally acceptable appraisal practices, affect the value of the property to be assessed. . . . .

(1m) In addition to the factors set out in sub. (1), the assessor shall consider the impairment of the value of the property because of the presence of . . . environmental pollution, as defined in s. 299.01(4). § 70.32.

¶56 Collison claims that the City did not act in accord with Wis. Stat. § 70.32(1m) because he provided proof that his

property was contaminated, but the City did not consider the

impairment of the value of the property because of contamination

as § 70.32(1m) requires. Rather, the City contended that

Collison was required to provide "verifiable written evidence

pertaining to the extent or cleanup costs" for the contamination

in order to have his property value reduced. Accordingly, the

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interpretation and application of § 70.32(1)(m) are central to

the case before us.

C. Wiegand's Appraisal

¶57 Wiegand used the income approach to value Collison's

property. He did so by following the 2016 Wisconsin Property

Assessment Manual (WPAM),5 as Wis. Stat. § 70.32(1) directs, and

by employing MECS to the acknowledged contamination. In order

to place issues in the context this case presents, a brief

review of principles that underlie taxation appraisals will be

helpful.

¶58 Assessments for taxation purposes are valid for the

current year, with Wis. Stat. § 70.10 establishing the

assessment date as January first. "The assessment is based on

the status of the property as of the close of that day."6

¶59 As WPAM explains, "There are three traditional

approaches to developing the opinion of value: the sales

comparison approach, the cost approach, and the income

approach."7 For taxation valuations, the "Markarian hierarchy"

is used.8 State ex rel. Kesselman v. Bd. of Rev. for Vill. of

Sturtevant, 133 Wis. 2d 122, 128-34, 394 N.W.2d 745 (1986). The

Markarian hierarchy requires:

5All references to the Wisconsin Property Assessment Manual are to the 2016 version. 6 Wisconsin Property Assessment Manual (WPAM) at 7-21. 7 Id. at 7-22. 8 Id. at 7-23.

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[A]ssessors to first use a recent arm's length sale of the subject property. If there is no such sale, the next step is to use recent comparable sales of other properties. Only if there are no recent comparable sales of other properties should the assessor proceed to other indicators of value that include the income and cost approaches to value.[9] ¶60 Valuation by the income approach employs

capitalization of income, as explained in WPAM. "This method

assumes the gross rental under a ground lease is at current

market levels. Net rental after deduction of the owner's

expenses (insurance, management) is capitalized at an

appropriate rate into an estimate of land value."10 Direct

capitalization, as described in WPAM, was used by Wiegand to

determine the value of Collison's property.11

¶61 WPAM also addresses contaminated properties "where the

extent of contamination is unknown and thus the effect on value

is difficult to measure."12 In those circumstances, the

guidelines in ch. 8 of WPAM "provide a framework the assessor

can use to gather information to help estimate the effect of

contamination on value."13 Contamination attaches a stigma to

property "that makes it less desirable than comparable

properties."14

9 Id. (citing State ex rel. Markarian v. City of Cudahy, 45 Wis. 2d 683, 686, 173 N.W.2d 627 (1970)). 10 Id. at 9-11. 11 Id. at 9-15; Appraisal, Non-Electronic Record Item, p. 4. 12 WPAM at 8-46. 13 Id. 14 Id.

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¶62 There is nothing in Wiegand's income-based valuation

that refers to impairment of value, even though Wiegand's

appraisal confirmed both his knowledge of contamination and his

receipt of a detailed contamination report from Endpoint

Solutions. Rather, Wiegand supported using his $31,800

valuation as the appraisal for taxation with the following

statement: "As of January 1st 2016, The City of Milwaukee

Assessor Office did not have any verifiable written information

pertaining to the extent or clean-up costs associated with any

perceived contamination at the subject property."15

D. Wisconsin Stat. § 70.32(1m)

¶63 The purposes of statutory interpretation and

application are to apply the meaning of the words the

legislature chose to undisputed facts presented. Jefferson v.

Dane Cnty., 2020 WI 90, ¶21, 394 Wis. 2d 602, 951 N.W.2d 556.

Wisconsin Stat. § 70.32(1m) provides:

In addition to the factors set out in sub (1), the assessor shall consider the impairment of the value of the property because of the presence of . . . environmental pollution, as defined in s. 299.01(4)."[16] ¶64 I begin by interpreting the plain meaning of the words

that the legislature chose. State v. Mercado, 2021 WI 2, ¶43,

15 Appraisal, Non-Electronic Record Item, p. 7.

Wisconsin Stat. § 299.01(4) provides that "'Environmental 16

pollution' means the contaminating or rendering unclean or impure the air, land or waters of the state, or making the same injurious to public health, harmful for commercial or recreational use, or deleterious to fish, bird, animal or plant life."

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395 Wis. 2d 296, 953 N.W.2d 337. "'Statutory language is given

its common, ordinary, and accepted meaning, except that

technical or specially-defined words or phrases are given their

technical or special definitional meaning.'" Id. (quoting State

ex rel. Kalal v. Circuit Court for Dane Cnty., 2004 WI 58, ¶45,

271 Wis. 2d 633, 681 N.W.2d 110).

¶65 The plain meaning of the words the legislature chose

for Wis. Stat. § 70.32(1m) places two duties on the assessor

when property is contaminated. First, the assessor is to apply

the assessment factors in subsection (1), which require the use

of WPAM and the Markarian hierarchy that I explained above.

Second, "the assessor shall consider the impairment of the value

of the property" due to contamination. Stated otherwise,

subsection (1m) places an affirmative obligation on the assessor

to act. It requires that the effect of contamination on the

value of the property be addressed by the assessor.

¶66 Focusing on the term, "impairment," I note that common

synonyms for impairment are: damage, injury, and loss.

Thesaurus, Microsoft January 27, 2021. A common dictionary

definition for impairment is that which is "diminished in some

material respect." Webster's New Collegiate Dictionary, 574

(1974).

¶67 The assessor is to "consider" the impairment.

Deliberate, ponder and think-through are all synonyms for

consider. Thesaurus, Microsoft January 27, 2021. All synonyms

require the assessor to take some action because of the

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impairment caused by contamination of the property. He is not

free to ignore the impairment.

¶68 However, Wiegand's appraisal never mentions

"impairment" or any other synonym to show that he considered the

effect of contamination on the value of the property. By

ignoring impairment, he failed to provide an appraisal in

compliance with the legislature's directive in Wis. Stat.

§ 70.32(1m). Stated otherwise, the value he found by the income

approach was not diminished in any respect because of the

presence of contamination.17

¶69 Instead of following the statutory directive,

Wiegand's appraisal placed additional requirements on Collison.

For example, Wiegand says that the owner should have provided

"verifiable written information pertaining to the extent or

cleanup costs associated with any perceived contamination on the

subject property." However, there is nothing in Wis. Stat.

§ 70.32(1m) that requires, or even suggests, that the owner do

so. The legislature placed all the duties found in § 70.32(1m)

on the assessor, not on the property owner.

¶70 Because the Board of Review sustained Wiegand's

appraisal, which was not prepared consistent with Wis. Stat.

§ 70.32(1m), the Board's decision was not made according to law.

I do not contest that the property owner must show that 17

the property is contaminated before the burden of Wis. Stat. § 70.32(1m) applies to the assessor. However, here, Collison provided an environmental report from Endpoint Solutions showing contamination, and all parties agreed that the property was contaminated.

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Therefore, I would reverse its decision and remand to the Board

so that it can request an appraiser to consider the impairment

of value caused by contamination as § 70.32(1m) requires.18

E. Majority Opinion

¶71 The majority opinion asserts that the assessor did

consider the impairment due to contamination because the

appraiser valued the property based on the income approach.19 To

support this assertion, the majority quotes the appraiser's

statement that there is a "need for parking in this area and

contaminated sites can be encapsulated and used as parking

lots."20 The majority then concludes that "it was the

contamination that drove the assessor's decision to use the

income approach to value the property."21 This conclusion

ignores Exhibit 3, prepared by Wiegand, as his written valuation

report, and it also ignores the Markarian hierarchy that must be

used for taxation appraisals according to WPAM and Wis. Stat.

§ 70.32(1).

¶72 I begin with the appraiser's report. Prior to

calculating the market value under the income approach that is

before us in this review, Wiegand noted that he could not use

other valuation methods for this property. He explained that

18I take no position on the dollar valuation of the impairment due to contamination. That is a matter left to the professional expertise of an appraiser. 19 Majority op., ¶3. 20 Majority op., ¶38. 21 Id.

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"the Direct Sales Comparison Approach was considered but not

applied due to difficulty finding sales of similar properties."22

He also considered the cost approach to value, but concluded it

was not "the most reliable indication of value for the subject

property given the age of the structure and difficulties in

estimating depreciation."23 It was only after determining that

other valuation approaches were not available that Wiegand moved

to the income approach where he applied direct capitalization of

income to determine value.

¶73 The appraiser's report contained a step-by-step

calculation from which he derived the market value of $31,800.

It shows in clear terms that he did not employ an income-based

valuation due to his consideration of contamination. Rather, he

employed direct capitalization of income because he was

following the Markarian hierarchy required by WPAM, and it was

the one valuation method available for this property. First, he

determined projected annual revenue based on what Collison had

been paid in the past. Next, he deducted an amount equivalent

to a 30 percent vacancy rate as an expense. Then, he

capitalized the resulting number, $4,082, by 12.841 percent,

which was "a market derived capitalization rate of 10.00% plus

an effective tax rate of 2.841%."24 Under the Markarian approach

22 Appraisal, Non-Electronic Record Item, p. 5. 23 Id. 24Report of Jim Wiegand, Senior Property Appraiser, Exhibit 3, p. 6.

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to taxation valuation, the income method is appropriate when

recent sales or comparable sales are not available.25 State ex

rel. Markarian v. City of Cudahy, 45 Wis. 2d 683, 686-87, 173

N.W.2d 627 (1970). That is what happened here.

¶74 I have no problem with the value the appraiser

calculated through direct capitalization of income. His

calculations were properly done. My objection is that he did

not reduce the $31,800 value by any amount based on "impairment

of the value of the property because of the presence of []

environmental pollution" as Wis. Stat. § 70.32(1m) requires.

¶75 There simply are no facts from which to conclude that

Wiegand used the capitalization of income approach to consider

the effect of environmental contamination on the value of

Collison's property as the majority opinion has done. In order

to come to its conclusion, the majority opinion ignored

Wiegand's step-by-step valuation that is set out in Exhibit 3.

His testimony and the exhibit he prepared belie the majority

opinion's conclusion.

¶76 Furthermore, the majority's conclusion that Wiegand

used the income approach to consider impairment of the

property's value due to contamination is new law, without

citation to authority or reasoning to support it. The majority

opinion will create unending confusion in what has been a

consistent approach to taxation valuations where capitalization

of income has been well accepted as part of the Markarian

25 WPAM at 7-23 (citing Markarian, 45 Wis. 2d at 685-86).

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hierarchy when comparable sales are not available,26 but never

before used to "consider the impairment of the value of the

property because of . . . environmental pollution." Wis. Stat.

§ 70.32(1m).

F. MECS Validity

¶77 We asked the parties to address whether MECS were

consistent with the statutes. Because they give burdens to

property owners that are inconsistent with the plain meaning of

Wis. Stat. § 70.32(1) and (1m), I conclude that they are

unlawful and their use should be discontinued in regard to

valuations of contaminated property.

¶78 As foundation for the following discussion, I review

what MECS require of the taxpayer and the appraiser in regard to

valuing contaminated property. First, MECS place a "BURDEN OF

PROOF ON TAXPAYER."27 MECS require the taxpayer to prove that

contamination exists: "The appraiser should not assume that a

specific property type has contamination without appropriate

substantiating evidence."28 Second, "[c]ontamination must be

substantiated through an independent environmental

expert. . . . The minimum level of acceptable substantiation

will be a comprehensive Phase II Audit, setting forth (among

other pertinent information) the type, level and source of

26 WPAM at 7-23.

Milwaukee Environmental Contamination Standards (MECS) at 27

A-App. 057. 28 Id.

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contamination and the suggested method or methods for

remediation."29 Third, "[w]ithout this information, property

must be valued as if uncontaminated."30 Fourth, reductions in

valuations are tied to clean up costs: "Adjustments to the

assessments will be based on clean up costs with consideration

of discounting these costs for time."31 Fifth, "[p]roperty

assessments which have been adjusted for contamination shall be

designated as unfinished ("U" symbol) assessment."32

¶79 Here, Collison provided a contamination report from

Endpoint Solutions. It detailed the removal of four underground

storage tanks and provided "a comprehensive analytical soil

sample report"33 of environmental contamination. In addition,

all parties agreed that Collison's property was contaminated.

Therefore, despite MECS's Phase II requirement, the assessor's

duties under Wis. Stat. § 70.32(1m) were clearly triggered in

this case.

¶80 In his Appraisal Report, Wiegand explained that one of

the purposes of his appraisal was that it be in accord with

"procedures of the City of Milwaukee Assessor's Office," i.e.,

MECS.34 He also said that the City Assessor's Office did not

29 Id. 30 Id. 31 Id. at A-App. 058. 32 Id. 33 Appraisal, Non-Electronic Record Item, p. 4. 34 Id., p. 2.

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have any verifiable written information pertaining to the clean-

up costs associated with contamination of Collison's property.

From this statement and his failure to address impairment of

value due to contamination, it appeared that he applied MECS's

requirement that without a Phase II report showing the costs of

clean-up the property is to be assessed as if uncontaminated.

¶81 Wiegand's appraisal ignored all impairment of the

value of Collison's property due to contamination, as his

written report, Exhibit 3, explained in step-by-step detail.

This is confirmed by the MECS directive set forth in the

following footnote.35 And finally, under MECS, if Wiegand had

considered an impairment due to contamination, he would have

specially marked his assessment because MECS provides that

property assessments "adjusted for contamination shall be

designated as unfinished ("U" symbol) assessment." The

assessment for Collison's property did not have a "U" symbol

showing that it had been adjusted for contamination.

III. CONCLUSION

¶82 In conclusion, I respectfully dissent because the

majority opinion affirms the Board of Review's decision

sustaining Wiegand's appraisal, which appraisal did not follow

the law.36 I also write because I conclude that MECS do not

As MECS provides, "The starting point for determining 35

market value for properties affected by contamination is the unencumbered, or unimpaired value. This is the value that a property would have if no adjustment were made for any environmental problems. Unencumbered value is obtained using standard appraisal methods." MECS at A-App. 064. 36 Majority op., ¶3.

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comply with Wis. Stat. § 70.32(1m) and therefore, it is unlawful

to apply MECS in taxation appraisals of contaminated properties.

¶83 I am authorized to state that Chief Justice ANNETTE

KINGSLAND ZIEGLER and Justice REBECCA GRASSL BRADLEY join this

dissent.

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