January/February 2021 Issue

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Divided Court Agrees With Kenosha: Property Not Actually Used for Ag Purposes May Be Assessed as Residential

02.10.21

A divided Court of Appeals ruled that Kenosha could assess undeveloped property as residential, when the owner was unable to show any actual agricultural use of the land. State ex rel Nudo Holdings LLC v. Board of Review for Kenosha, 2020 WI APP 78 (November 25, 2020), petition for review filed.

In Wisconsin, property is normally assessed at its fair market value, that is, what a willing buyer would pay for the property from a willing seller. However, the state has an exception for agricultural property. Ag property is assessed based on its value as used for agriculture, the so-called ​“use value.” Ag use value is advantageous to the owner, as it is usually much less than fair market value. The policy behind the ag use law is to help farmers afford to stay on their land.

This difference in assessment of property often leads to disputes, and Nudo Holdings LLC disputed the City of Kenosha assessor’s determination that its land should be assessed at fair market value as residential property. In upholding the Kenosha Assessor, and the affirmance of the Assessor by the Board of Review, the court noted (¶ 29):

…the agricultural classification does not attach merely because plants falling within the DOR definition of ​“agricultural use” happen to be growing on the property. See WIS. ADMIN. CODE § TAX 18.05(1). Agricultural activity is necessary. … Properties should not qualify for agricultural classification through happenstance.

In this case, the property was undeveloped, had no sewer or water, was zoned Agricultural, had walnut trees and fir trees on it, and the owner had a permit to raise chickens. But, in contrast to those facts, the land was in a zone slated for future residential development in Kenosha’s Comprehensive Plan, the owner admitted he intended to develop it into residential lots, there was no sign that any harvesting of walnuts or fir trees ever occurred, and the owner did not actually raise chickens or any other livestock on the land.

Relying upon various directives in the Administrative Code and the Wisconsin Property Assessment Manual, the Court of Appeals essentially agreed with this succinct description of the Kenosha Assessor: ​“I don’t see any effort, any action, any plan in terms of agricultural. This is a piece of land that has some things growing on it.” (Emphasis added.)

The dissent argued that the majority put too much emphasis on the potential future use of the land and that ag zoning is retrospective. The dissent would have zoned the property as agricultural. 

A petition for review has been filed with the Wisconsin Supreme Court.