Also in this issue: Updated DNR Rules Relax Attorney Letter Requirement for Safe Drinking Water and Clean Water Fund Loans | Lease, License, or Easement? | Energy Grant Awards: Congratulations to Kaukauna Utilities
Wisconsin Court Of Appeals Clarifies Appropriate Use of Vacancy Rate in Tax Assessment Matters
Storm B. Larson | 12.07.23
A recent decision from the Wisconsin Court of Appeals held that a projected vacancy rate was a better metric for an assessor to use in valuing a luxury apartment in downtown Madison. In Veritas Village, LLC v. City of Madison, the court of appeals affirmed a circuit court judgment which upheld the City of Madison’s (“City”) 2018 tax assessment of the property.
This case centered on the City’s 2018 assessment of Veritas Village. Construction on the apartment complex was completed in 2017. By January 1, 2018, it was 28% occupied, which meant there was an actual vacancy rate of 72%. There was, however, no dispute that Veritas Village was in the process of signing new leases to bring that figure closer to the market vacancy rate in the City. Thus, the projected vacancy rate was lower than the actual rate of 72%. As of January 1, 2018, the City assessed the property at $17,780,000 using a projected vacancy rate whereas Veritas Village assessed the property at $6,800,000.
The stark difference in the appraisal figures was due mainly to the differing vacancy rates that the respective appraisers used. On appeal, Veritas Village argued that the City’s 2018 assessment failed to comply with the Wisconsin Property Assessment Manual when it used the projected vacancy rate in assessing the property rather than the actual vacancy rate.
Ultimately, the court of appeals agreed with the City’s use of a projected vacancy rate concluding that the method was more consistent with the Wisconsin Property Assessment Manual that there was no support for Veritas Village’s assertion that the actual vacancy rate should have been used.
In sum, Veritas Village, LLC v. City of Madison serves as a good reminder to assessors and municipalities as to the proper data and methodologies to use in conducting proper property assessments.
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