January/February 2024 Issue

Also in this issue: On Tap – Changes to Wis. Stat. Ch. 125 (Alcohol Beverage) Under 2023 Wisconsin Act 73     |     EV Charging Bill Would Restrict Local Governments From Owning and Operating Charging Stations     |     Julia K. Potter Named Partner

Municipal Airports Must Comply With New Law Requiring Improvements Owned by Private Citizens on Tax Exempt Land

Maximilian J. Buckner | 02.09.24

Many municipalities across the State of Wisconsin own municipal airports. Municipal airports can provide many benefits to a municipality and its residents, including creating jobs, providing recreation, and making the municipality an accessible and attractive place for economic development. 

As a part of these benefits, municipalities often permit private individuals and businesses to own aircraft hangers at the airport for convenience. It is common practice that the municipality rents land to the private individual or business, who will then build a hanger. The building/​improvements are then owned by the private individual or business, while the underlying land is owned by the municipality. 

Up until this year, in the above situation, municipalities could tax the owners of the improvements as personal property. 

In June of 2023, Wisconsin passed Wis. Stat. § 70.17(3), which requires manufactured and mobile homes, buildings, improvements, and fixtures on leased land, exempt land, or managed forest land to be assessed as real property. The new law applies to aircraft hangers owned by private individuals or businesses located in a municipal airport. Starting in 2024, the improvements (aircraft hangers) will be taxed as real property.

As a part of the new law, assessors must create separate tax parcels for the buildings, improvements, and fixtures and assess them as real property. The owner of the aircraft hanger will then receive a tax bill for the real property. 

Many municipalities around the State have already or will have to go through this process, which is new to everyone. There has been some debate on what type of document is required to be executed and recorded to create these new tax parcels. 

The Wisconsin Real Property Listers Association has come out with a proposed form titled ​“Building(s), Fixture(s), and/​or Improvement(s) Document.” Their document is drafted as a conveyance, where the municipality conveys the building, fixture, or improvement to the private individual or business. Because it is drafted as a conveyance, the document must be filed with a real estate transfer return, although will likely be exempt from a transfer fee. Depending on the number of privately owned hangers at an airport, the requirement to complete transfer returns for each hanger could be time-consuming.

Some municipalities have been successful in filing and recording a declaration or notice of ownership and being able to avoid the requirement to file a transfer return. The declaration or notice may be appropriate when the improvements are already owned by the private individual or business. However, this approach will be subject to the approval of the register of deeds in your county.

Any municipality that owns an airport must be proactive in creating these new tax parcels. Below is the text of the new law, Wis. Stat. § 70.17(3), for reference:

Beginning with the property tax assessments as of January 1, 2024, manufactured and mobile homes, not otherwise exempt from taxation under s. 66.0435 (3), buildings, improvements, and fixtures on leased lands, buildings, improvements, and fixtures on exempt lands, buildings, improvements, and fixtures on forest croplands, and buildings, improvements, and fixtures on managed forest lands shall be assessed as real property. If buildings, improvements, and fixtures, but not the underlying land, are leased to a person other than the landowner or if the buildings, improvements, and fixtures are owned by a person other than the landowner, the assessor may create a separate tax parcel for the buildings, improvements, and fixtures and assess the buildings, improvements, and fixtures as real property to the owner of the buildings, improvements, and fixtures. The assessor may also create a tax parcel, as provided under s. 70.27, for buildings, improvements, and fixtures on exempt lands, buildings, improvements, and fixtures on forest croplands, and buildings, improvements, and fixtures on managed forest lands and assess the buildings, improvements, and fixtures as real property to the owner of the buildings, improvements, and fixtures. For purposes of this subsection, ​“buildings, improvements, and fixtures” does not include any property defined in s. 70.04.