Nov. 21, 2023 – De novo review, rather than certiorari review, is the proper form of review for a circuit court hearing a challenge to a municipality’s disallowance of a property tax exemption, the Wisconsin Court of Appeals has ruled.

In North Central Conservancy Trust, Inc., v. Town of Harrison, 2022AP185 (Nov. 7, 2023), the Court of Appeals District III held that because de novo review was proper, the circuit court did not err by considering evidence not previously provided to the municipality or its assessor.

Claim for Exemption Disallowed

The North Central Conservancy Trust, Inc. (Trust) owns 160 acres in the Town of Harrison (Town).

In February 2019, the Trust made a formal request to the Town’s assessor that the property be exempt from taxation because it was held in the public interest under Wis. Stat. section 70.11(20).

The assessor denied the Trust’s request. In 2019 and 2020, the Trust paid taxes on the 160 acres, under protest.

In January 2020, the Trust filed a claim against the Town under section 74.35(2)(a).

Ninety days passed with the Town taking no action on the claim, which under section 74.35(3)(a) meant the Town had disallowed the claim.

Lawsuit Follows

The Trust then filed an action in Marathon County Circuit Court under section 74.35(3)(d).

When both parties filed for summary judgment, the Trust included affidavits that contained information that it had not previously disclosed to the assessor or the Town.

The Town argued that the circuit court shouldn’t consider the new information submitted by the Town, because the circuit court should apply certiorari review.

But the circuit court decided to apply de novo review instead and considered the new information.

The circuit court concluded that the Trust had met its burden and demonstrated that the property was exempt under section 70.11(20) and denied the Town’s motion for summary judgment.

The Town appealed.

Two Types of Review

Judge Gregory Gill began his opinion for a three-judge panel by explaining that of the two methods for seeking judicial review of a municipality’s decision, certiorari review is limited to considering the record made by the municipality, while de novo review is not so limited.

Gill pointed out that with two exceptions not at issue, section 74.35 provides the sole means for a property owner to challenge a municipality’s decision to disallow a claim of tax exemption.

However, Judge Gill reasoned that it was important to look at section 74.37, which provides a way for property owners to challenge an allegedly excessive tax assessment, for context.

Gill noted that section 74.37 specifies three different procedures for challenging an allegedly excessive assessment:

• file an action for certiorari to circuit court under section 70.47(13);

• file a written complaint with the state Department of Revenue under section 70.85; or

• file a claim in circuit court under section 74.37(3)(d).

Judge Gill pointed out that the Wisconsin Supreme Court has characterized the first two forms of review as certiorari reviews, while it’s held that the third form of review, under section 74.37(3)(d), is de novo.

Gill concluded that reasoning was persuasive as applied to the Trust’s action filed under section 74.35(3)(d), because the wording of that section and section 74.37(3)(d) were identical.

Judge Gill pointed out that the legislature in 1987 split section 74.73 into sections 74.35 (unlawful taxes) and 74.37 (excessive assessments) while keeping the wording of the relevant subsections identical.

“The fact that Wis. Stat. sections 74.35(3)(d) and 74.37(3)(d) were once part of the same statute and that both now use the same language regarding initiating an action in the circuit court demonstrates the legislature’s intention that both statutes be interpreted to provide for the same standard of review,” Judge Gill wrote.

Scope of Initial Review

Judge Gill also pointed out that a challenge to an unlawfully imposed tax differs from a challenge to an excessive tax because the latter involves substantive initial review.

“Therefore, a circuit court reviewing a challenge to an unlawful tax under section 74.35(3)(d) may have a limited record before it, resulting in the need for additional evidence to be presented at the circuit court,” Gill wrote.

Liquor Licensing vs. Property Tax

The Town argued that under Nowell v. City of Wausau, 2013 WI 88, 351 Wis.2d 1, 838 N.W. 2d 852, a holding that an action under section 74.35(3)(d) is subject to de novo review would in effect transfer the legislative function from the municipality to a court.

In Nowell, the supreme court held that certiorari review was the proper method for reviewing a municipality’s decision to grant or deny a liquor license where the relevant statute was silent as to the form of review, because a court performing a de novo review would be exercising a legislative function.

But Judge Gill distinguished Nowell, reasoning that whether to grant a liquor license is a discretionary local issue while property taxation is a state issue.

“In contrast, municipalities have a much more limited control of property taxes, despite a ‘tax levy’ being listed as a police power,” Gill wrote.