May/June 2022 Issue

Also in this issue: Supreme Court Upholds Municipal Sign Ordinance     |     Court of Appeals Examines Limits on Municipal Exactions     |     Determining WRS Reportable Earnings with Employee Separations and Settlements

Wisconsin Supreme Court: Board of Review Properly Classified Nudo Holdings, LLC Property

Storm B. Larson | 05.24.22

In a newsletter we issued early last year, we discussed State ex rel. Nudo Holdings, LLC v. Board of Review for Kenosha, 2020 WI App 78. In that case, a divided Wisconsin Court of Appeals panel held that the City of Kenosha’s Board of Review properly classified a parcel of property as ​“residential” rather than ​“agricultural” over the landowner’s objection. Since this decision was announced, we have been monitoring the landowner’s appeal to the Wisconsin Supreme Court, which has just weighed in. 

In a 4 – 3 decision, the supreme court affirmed the decision of the Board of Review and rejected all arguments the landowner raised in his appeal. For procedural reasons, the supreme court reviews the decision of the Board and not the decisions of the court of appeals or circuit court Thus, the Board’s decision will remain in effect.

You may recall that this dispute arose because the City of Kenosha assessed the landowner’s property as residential. However, the landowner contended that it should have been classified as ​“agricultural.” Agricultural property is generally assessed at a lower rate than residential property as a benefit to farmers. 

After losing before the Board of Review, the circuit court, and the court of appeals, the landowner appealed to the Wisconsin Supreme Court. He raised three arguments as to why the Board’s ruling was unlawful: (1) the Board improperly ignored the agricultural uses of the land; (2) the Board improperly considered prospective residential uses of the property; and (3) insufficient evidence existed to support the Board’s ​“residential” classification. The supreme court rejected all three arguments in a 4 – 3 decision authored by Justice Brian Hagedorn.

The landowner first argued that the land met the definition of ​“agricultural land” because he was only using it for some agricultural purposes, and so it should have been classified as ​“agricultural.” The supreme court rejected this argument because there was insufficient evidence in the record that enough agricultural activity was occurring to justify that classification. The record showed that the only significant agricultural activity taking place was ​“a bit of tilling” and casual harvesting of walnuts. There was no livestock on the property nor was there any timber harvesting. Accordingly, the land was not ​“chiefly given over to agricultural use,” and Board’s determination was therefore justified. 

The landowner’s second argument was that the Board improperly considered the prospective residential use of the property in classifying it as residential. The landowner argued that because the statute required the Board to classify the property ​“on the basis of use,” it could not be classified as residential due to the lack of a dwelling or human abode on the property. The supreme court rejected this argument and held that the statutory definition of residential property included but was not limited to land which currently had a dwelling or human abode on it. Guidance from the WPAM also supported this reading, according to the court. Therefore, it was proper for the Board to have considered whether it was reasonably likely or planned for the property to be used for residential purposes in the future. 

Finally, the supreme court quickly rejected the landowner’s third and final argument that insufficient evidence supported the Board’s classification. The supreme court reiterated that the Board only needed ​“substantial evidence” to justify its determination, which ​“is not a high bar.” The supreme court was satisfied that factors such as the lack of organized agricultural activity and undeveloped nature of the land were enough to support the Board’s residential classification. Thus, the decision of the Board was left to stand.

The supreme court’s ruling in this matter clarifies the scope of municipalities’ exercise of discretion in assessing properties. The Board of Review won, in part, due to its reasoned legal conclusion and proper analysis of the facts. We encourage municipalities to reach out to a member of the Boardman Clark Municipal Law Practice Group with questions regarding the implications of this decision moving forward.