In Hanning Regency LLC v. Town of Brookfield Board of Review (2018AP1584), the Court of Appeals District II held that the Town of Brookfield proceeded on an incorrect theory of law when assessing a commercial property.

The year after Hanning Regency bought commercial properties in Brookfield, the town reassessed the properties for tax purposes at nearly double Hanning’s purchase price. Hanning appealed the assessment to the town board, then circuit court, both of which ruled in favor of the town. The court of appeals reversed, holding that the assessor and the town both failed to apply the proper statutory methodology for property assessment evaluations.

Wis. Stat. § 70.32(1) requires assessors to value property by considering 1) recent arm’s length sales, 2) recent comparable sales, and 3) other factors, including how much income the property is likely to generate. Case law has established that assessors should consider these factors in order and stop their analysis when enough information is available. In this case, the court of appeals determined that the assessor and the town board did not follow this hierarchy of tiers. Instead, the assessor and town used an income approach (tier three) when information on recent arm’s length sales (tier one) was available. Therefore, the town proceeded on an incorrect theory of law in assessing Hanning’s property, so the court of appeals ruled in favor of Hanning.