Case Title: ABKA Limited Partnership v. Board of Review of the Village of Fontana-On-Geneva Lake

Citation: 

Docket Number: 1998AP000851

State: wisconsin

Court: Wisconsin Supreme Court

Date: 1999-12-23T00:00:00Z

Document:
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
98-0851 
 
 
Complete Title 
of Case: 
 
ABKA Limited Partnership,  
 
Plaintiff-Appellant-Petitioner, 
 
v. 
Board of Review of the Village of  
Fontana-On-Geneva-Lake,  
 
Defendant-Respondent.  
 
 
ON REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at: 
224 Wis. 2d 551, 591 N.W.2d 879 
 
 
 
(Ct. App. 1999, Published) 
 
 
Opinion Filed: 
December 23, 1999 
Submitted on Briefs: 
 
Oral Argument: 
September 8, 1999 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Walworth 
 
JUDGE: 
James L. Carlson 
 
 
JUSTICES: 
 
Concurred: 
 
 
Dissented: 
WILCOX, J., dissents (opinion filed). 
 
 
PROSSER, J., joins in dissent. 
 
Not Participating:  
 
 
ATTORNEYS: 
For the plaintiff-appellant-petitioner there were 
briefs by Alan Marcuvitz, Andrea Roschke and Weiss, Berzowski, 
Brady & Donahue, LLP, Milwaukee and oral argument by Alan 
Marcuvitz and Andrea H. Roschke. 
 
 
For the defendant-respondent there was a brief by 
Robert Horowitz and Stafford, Rosenbaum, Rieser & Hansen, Madison 
and oral argument by Robert Horowitz. 
 
No. 
98-0851 
 
1 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear in 
the bound volume of the official reports. 
 
 
No. 98-0851 
 
STATE OF WISCONSIN               :        
        
 
 
 
 
IN SUPREME COURT 
 
 
ABKA Limited Partnership,  
 
          Plaintiff-Appellant-Petitioner, 
 
     v. 
 
Board of Review of the Village of  
Fontana-On-Geneva-Lake,  
 
          Defendant-Respondent.  
FILED 
 
DEC 23, 1999 
 
Marilyn L. Graves 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed. 
¶1 
ANN 
WALSH 
BRADLEY, 
J.   Plaintiff 
ABKA 
Limited 
Partnership (ABKA) seeks review of a published decision of the 
court of appeals that affirmed a circuit court order to uphold 
the 1996 and 1997 property tax assessments of the Abbey on 
Geneva Lake Resort.1   ABKA contends that the assessments of the 
Board of Review of the Village of Fontana-on-Geneva-Lake (Board) 
improperly included income from the management of separately 
owned off-site condominiums and incorporated erroneous data and 
methodology.   We determine that the management income is  
“inextricably intertwined” with the resort property and that the 
                     
1 ABKA Ltd. Partnership v. Board of Review of the Village of 
Fontana-on-Geneva-Lake, 224 Wis. 2d 551, 591 N.W.2d 879 (Ct. 
App. 1999) (affirming in part and reversing in part the judgment 
of the Circuit Court for Walworth County, James L. Carlson, 
Judge).  
No. 
98-0851 
 
2 
assessor employed proper data and methodology.  Because we 
conclude that assessments of the Board were made according to 
law and were supported by a reasonable view of the evidence, we 
affirm the court of appeals.   
¶2 
ABKA owns and manages the Abbey on Geneva Lake Resort 
(Abbey).  In 1996, the Abbey was assessed at $8.5 million.2  In 
his valuation of the resort property, Assessor Fred Mathes 
included 
ABKA’s 
income 
from 
the 
management 
of 
rental 
condominiums located adjacent to the resort.  ABKA disputed 
neither the assessor’s use of the income method to calculate the 
property assessment nor the capitalization rate he applied.3  
                     
2 Other assessments for the same year included: 
Personal Property (owned by ABKA) - $1,789,900     
Unsold dockominium units - $4,465,000                 
      Sold dockominium units - $6,917,000 
The unsold dockominium units are boat slips offered by ABKA for 
sale but which remain unsold. 
3 The income approach involves the conversion of anticipated 
       future benefits into an estimate of the present worth of 
the property.  Capitalization represents the conversion process. 
 1 Property Assessment Manual for Wisconsin Assessors, 9-7 (Rev. 
12/94).  This court has described the basics of the income 
method: 
No. 
98-0851 
 
3 
Instead, ABKA challenged the inclusion of the management fees in 
the assessment of the resort property.  
¶3 
ABKA does not own the condominiums located near the 
property.  They are separately owned and assessed.  Pursuant to 
annual rental agreements between ABKA and the condominium 
owners, however, ABKA receives 50% of the gross revenues from 
the rental of each unit.  The owners retain the remaining 50%.   
¶4 
In return for its percentage of rental revenues, ABKA 
provides a myriad of services for the renters.  Renters make 
reservations through the Abbey, where they also check-in and 
check-out.  Rental prices for the condominiums are advertised in 
the Abbey’s brochures and are listed along with the rates for 
rooms in the Abbey.  According to the terms of the rental 
agreements, ABKA retains sole discretion to set rental rates for 
the condominiums.  In addition, the condominium renters have 
access to the full amenities of the resort, subject to the same 
                                                                  
“An assessor first determines the net annual income of 
the property.  This figure is reached by deducting 
estimated operating expenses from the property’s gross 
income.  The assessor also selects a capitalization 
rate by considering the discount and recapture rates 
suitable for such an investment as well as the 
applicable effective tax rate.  Finally the assessor 
applies a capitalization rate to the net annual income 
to yield the present value of the expected income 
stream over the life of the property.” 
Waste Management of Wis., Inc. v. Kenosha County Bd. of Review, 
184 Wis. 2d 541, 561, 516 N.W.2d 695 (1994). 
No. 
98-0851 
 
4 
additional charges as resort guests.  The resort also provides 
advertising, individualized accounting, cleaning supplies and 
toiletries, and maid and switchboard services.   
¶5 
ABKA has managed the condominiums since 1978, and the 
management income from the rental of these condominiums accounts 
for over $300,000 of the resort’s yearly revenue.  Although not 
all of the condominium units participate in the rental pool, 
those units that do participate have provided a long-term, 
consistent pattern of rentals and a stabilized flow of income to 
the Abbey.  
¶6 
ABKA challenged the 1996 assessment before the Board 
on December 11, 1996.  While testifying before the Board, both 
Assessor Fred Mathes and Frank Karth, ABKA’s expert appraiser, 
addressed the propriety of including the management income in 
the assessment of the resort property.  Mathes testified in 
support of the inclusion, while Karth testified that the fees 
represented intangible personal property that Mathes erroneously 
used to assess the resort property.  ABKA also challenged the 
methodology that Mathes used in making the assessment, as well 
as his reliance on estimates rather than actual historical data. 
 Finally, ABKA challenged the assessor’s “rounding” of the 
assessed value from $8,328,025 to $8.5 million.  
¶7 
At the conclusion of the hearing, the Board decided to 
uphold the 1996 assessment.  ABKA subsequently filed for 
No. 
98-0851 
 
5 
certiorari review of the Board’s determination.  By that time, 
the 1997 assessment was also complete, and once again, the 
property was assessed at $8.5 million.  The parties stipulated 
that the Board may make a determination as to the 1997 
assessment 
based 
on 
the 
1996 
hearing 
record. 
 
Shortly 
thereafter, the Board upheld the 1997 assessment.    In 
addition, the parties agreed to consolidate the certiorari 
actions for the 1996 and 1997 assessments.   
¶8 
Upon certiorari review, the circuit court affirmed the 
Board’s decision finding both that the Board acted according to 
law and that its decision was based on a reasonable view of the 
evidence.  The court of appeals subsequently affirmed the 
circuit court decision in part and reversed in part.  The court 
held that the management income was “inextricably intertwined” 
with the resort property and thus was properly included in the 
assessment. 
 
Furthermore, 
the 
court 
determined 
that 
the 
assessor’s methodology was proper, as was his reliance on 
estimates rather than actual historical data.  However, the 
court disapproved of the assessor’s decision to “round up” the 
final 
assessment 
and 
thus 
reversed 
and 
remanded 
with 
instructions to reduce the actual assessed value.4     
I. 
                     
4 The issue of “rounding up” the value of the Abbey 
assessment was not raised before this court on appeal.  
No. 
98-0851 
 
6 
¶9 
ABKA asks this court to review the Board’s decision to 
uphold the assessment of its resort property.  In a certiorari 
action under Wis. Stat. § 70.47(13) (1995-96),5 our review of the 
Board’s decision is “strictly limited.”  State ex rel. Geipel v. 
City of Milwaukee, 68 Wis. 2d 726, 731, 229 N.W.2d 585 (1975).  
This court considers the following factors: (1) whether the 
Board acted within its jurisdiction; (2) whether the Board acted 
according to law; (3) whether the Board’s action was arbitrary, 
oppressive, or unreasonable, representing its will rather than 
its judgment; and (4) whether the evidence was such that the 
Board might reasonably make the order of determination in 
question.  Darcel, Inc. v. Manitowoc Bd. of Review, 137 Wis. 2d 
623, 626, 405 N.W.2d 344 (1987).  In this case, the parties 
dispute whether the Board acted according to law and whether its 
determination was supported by a reasonable view of the 
evidence. 
¶10 This 
court 
reviews 
the 
record 
of 
the 
Board 
independently of the determinations rendered by the circuit 
court and court of appeals, while benefiting from their 
analyses. Steenberg v. Town of Oakfield, 167 Wis. 2d 566, 571, 
482 N.W.2d 326 (1992). If the assessment is made in accordance 
with the statutory mandate, it must be upheld if it can be 
                     
5 All future references to the Wisconsin Statutes will be to 
the 1995-96 volumes. 
No. 
98-0851 
 
7 
supported by any reasonable view of the evidence.  Waste 
Management of Wis., Inc. v. Kenosha County Bd. of Review, 184 
Wis. 2d 541, 555, 516 N.W.2d 695 (1994).  In determining whether 
there is enough evidence to sustain the assessment, “[t]he 
presumptions are all in favor of the rightful action of the 
Board.”  Darcel, 137 Wis. 2d at 626 (quoting State ex rel. 
Boostrom v. Board of Review of the Town of Linn, 42 Wis. 2d 149, 
155, 166 N.W.2d 184 (1969)).   
II. 
¶11 We begin our analysis by examining the statutory basis 
for the assessment.  Wisconsin Stat. § 70.03 defines “real 
property,” “real estate,” and “land” for the purposes of tax 
assessment as “not only the land itself but all buildings and 
improvements thereon, and all fixtures and rights and privileges 
appertaining   thereto . . . .”  Whether an income interest may 
be captured in a property assessment hinges on whether the value 
appertains to the property.  A value that appertains to  
property is one that is transferable with the property.  State 
ex rel. N/S Assocs. v. Board of Review of the Village of 
Greendale, 164 Wis. 2d 31, 54, 473 N.W.2d 554 (Ct. App.  1991).  
¶12 At the heart of ABKA’s argument lies its claim that, 
as business value, the management income from the rental of off-
site condominiums was improperly assessed under the laws of this 
state.  However, Wisconsin law recognizes that certain business 
No. 
98-0851 
 
8 
value may be captured in a property assessment.  Waste 
Management, 184 Wis. 2d at 564-65. 
¶13 A 
determination 
of 
whether 
business 
value 
is 
assessable 
involves 
an 
inquiry 
into 
the 
income-producing 
capacity of the land.  Income that is attributable to the land, 
rather than personal to the owner, is inextricably intertwined 
with the land and is thus transferable to future purchasers of 
the land.  N/S Assocs., 164 Wis. 2d at 54.  This income may then 
be included in the land’s assessment under Wis. Stat. § 70.03 
because it appertains to the land. 
¶14 In N/S Associates, the owner of a shopping mall 
challenged the assessment of the property, arguing that the 
assessor had improperly included business value in the fair 
market value of the mall.  164 Wis. 2d at 52.  In addressing the 
mall owner’s argument, the court of appeals formulated a test 
for determining whether business value is to be included in a 
property assessment, and we adhere to that test today.   
¶15 The N/S Associates court stated that the “key to the 
analysis” of whether business value is assessable “is whether 
the value is appended to the property, and is thus transferrable 
with the property, or whether it is, in effect, independent of 
the property so that the value either stays with the seller or 
dissipates upon sale.”  Id. at 54.  Applying the test, the court 
found that the mall’s sole reason for existence, the leasing of 
No. 
98-0851 
 
9 
space to tenants, represented value that was “inextricably 
intertwined” with the mall and would survive its sale to a 
subsequent owner.  Id. at 55.  As part of its “transferrable 
income-producing capacity,” 
the mall’s 
business 
value was 
properly included in the mall’s assessment.  Id. 
¶16 In Waste Management, the owner-operator of a sanitary 
landfill challenged a tax assessment that included the income 
generated by the landfill.  184 Wis. 2d at 545.  The owner-
operator claimed that the landfill income was business value 
that should not have been included in a property assessment. Id. 
 In discussing N/S Associates, the court noted that the case:  
appears to recognize that certain business value may 
in fact be ‘appended’ to the real estate rather than 
personal to the owner.  According to the reasoning of 
the 
court, such appended 
value 
is ‘inextricably 
intertwined’ with the land and is transferred to the 
new owner upon a sale of the land. 
 
Id. at 564. 
 
¶17 The Waste Management court found that the income 
generated by the landfill could be attributed to the underlying 
parcel of land, which had “an inherent capacity to accept 
waste.” Id. at 568.  The court also found that the inherent 
capacity would pass to a new owner upon sale.  Id.  As a result, 
it concluded that the board of review could have reasonably 
determined that the income generated by the landfill was 
“attributable to the transferable income-producing capacity of 
No. 
98-0851 
 
10
the underlying land itself,” thus properly including the income 
in the assessment.  Id. at 569. 
¶18 While it is true that neither N/S Associates nor Waste 
Management is factually congruous to the situation presently 
before this court, both cases demonstrate the propriety of 
capturing business value in a property assessment when that 
value is inextricably intertwined with the underlying land.  We 
must then determine whether the Board properly concluded that 
the 
management 
income 
at 
issue 
here 
is 
so 
inextricably 
intertwined with the land on which the Abbey is situated that it 
is transferable to future purchasers of the land.   
¶19 Recognizing that the law provides for the inclusion of 
business value in a property assessment only if the value is 
inextricably intertwined with the property, the assessor in this 
case 
found 
ABKA’s 
management 
income 
to 
be 
inextricably 
intertwined with the Abbey.  The assessor testified that the 
condominiums, which are located next to the resort property, 
were developed by ABKA with the intention of providing a steady 
and available source of customers for the Abbey.  This regular 
stream of customers provides a stabilized flow of income for the 
resort. 
¶20 According to the assessor, the management income is 
attributable primarily to the nature of the resort property, 
including the access to the Abbey’s amenities and the advantage 
No. 
98-0851 
 
11
of the Abbey’s location.  The assessor explained that the 
Abbey’s location serves as its main advantage.  See N/S Assocs., 
164 Wis. 2d at 53 (property’s value, for taxation purposes, 
affected by advantage or disadvantage of location). He indicated 
that the condominium renters are attracted both by the ability 
to make use of all of the resort’s amenities and by the resort’s 
lake setting.  Moreover, these attractions are unlikely to 
dissipate upon sale to a different owner.  
¶21 The assessor concluded, and the Board upheld, that 
ABKA’s management income is a transferable value that will 
survive a sale of the Abbey.  Wisconsin Stat. § 70.32 governs 
the valuation of property for tax assessment and requires that 
property be valued at its “full value.”6  “Full value” under     
§ 70.32 is synonymous with “fair market value,” which is the 
value reflected by an arms-length sale on the open market 
between “an owner willing but not obliged to sell and a buyer 
willing but not obliged to buy.”  State ex rel. Mitchell Aero, 
Inc. v. Board of Review of City of Milwaukee, 74 Wis. 2d 268, 
277, 246 N.W.2d 521 (1976); 1 Property Assessment Manual for 
                     
6 Wisconsin Stat. § 70.32 states in relevant part: 
“Real property shall be valued by the assessor in the 
manner specified in the Wisconsin property assessment 
manual provided under s. 73.03(2a) from actual view or 
from the best information that the assessor can 
practicably obtain, at the full value which could 
ordinarily be obtained therefor at private sale.”    
No. 
98-0851 
 
12
Wisconsin Assessors, 7-3 (Rev. 12/94).  Since value is best 
fixed at what it would bring in an arms-length sale, the 
assessor was required to examine whether the contractual 
interest to garner management fees from the rental of the 
condominiums represented an element that a prospective buyer of 
the Abbey would be willing, and indeed expecting, to purchase.  
N/S Assocs., 164 Wis. 2d at 53.   
¶22 In a memorandum submitted as an exhibit before the 
Board, the assessor noted that the management income was 
included in an appraisal report prepared by ABKA for financing 
purposes, and it was also listed in ABKA’s income statements. In 
his opinion, the listing of the management income was relevant 
because it indicated that the value of the Abbey included the 
management income and suggested that potential purchasers would 
be purchasing the ability to earn the income as well. 
¶23 Furthermore, 
ABKA’s 
own 
appraiser, 
Frank 
Karth, 
testified that most future purchasers of the Abbey would expect 
to acquire the management interest along with the Abbey property 
and would pay a greater sum accordingly. Thus, potential 
purchasers would recognize the value of the expectation of 
income from the management of the condominiums.  It is the 
future or anticipated benefits that give value to the property. 
 1 Property Assessment Manual for Wisconsin Assessors, 7-3 (Rev. 
12/94).   
No. 
98-0851 
 
13
¶24 In 
addition, 
the 
rental 
agreements 
provide 
for 
assignment to third parties and successors, who become subject 
to the same terms and limitations contained in the agreement. 
Although the agreements are contractual in nature and expire 
yearly, they provide for automatic renewal at the end of the 
contractual period and have been renewed consistently for the 
past eighteen years.  This history of renewal demonstrates the 
predictability of income from the rental of the condominiums and 
supports an expectation that this pattern is likely to continue. 
¶25 ABKA maintains, however, that the income is not 
inextricably intertwined with the resort property because ABKA’s 
unique skill and expertise in management, rather than the nature 
of the resort property, allow it to earn the substantial income 
from the condominiums.  While certain business value may be 
attributed to the transferable income-producing capacity of the 
underlying land, other business value that is attributable to 
the enterprise, skill, and acumen of the owner cannot be 
considered part of this transferable, income-producing capacity. 
 Waste Management, 184 Wis. 2d at 565.  A non-transferable use 
of property may not be considered an element of value for 
assessment purposes.  State ex rel. Oshkosh Country Club v. 
Petrick, 172 Wis. 82, 84, 178 N.W. 251 (1920). 
¶26 ABKA 
claims 
that 
another 
company 
or 
subsequent 
purchaser would not be able to emulate its success, for it is 
No. 
98-0851 
 
14
ABKA’s superior business acumen that produces the revenues from 
the condominiums.  ABKA errs in its reading of precedent.  
Whether business value may be included in a property assessment 
hinges on the property’s inherent “income-producing capacity,” a 
capacity that survives the sale of the underlying land, rather 
than on whether a subsequent owner succeeds in fully exploiting 
that capacity.   N/S Assocs., 164 Wis. 2d at 55 (emphasis 
added).    
¶27 As long as the potential to produce income exists with 
the land and transfers to a subsequent owner, whether a 
subsequent owner of the Abbey is able to maintain the same level 
of management income as ABKA has historically maintained is not 
central to our concern.  The relevance of a subsequent owner’s 
success in maintaining the same level of income would be 
strictly limited to the specific amount included in the 
assessment.  This amount may vary depending on the ability to 
exploit the income-producing capacity that inherently exists 
with the Abbey property. 
¶28 A competent level of management can be expected to 
reproduce the predicted income stream from the condominiums.  
Most entrepreneurs willing to participate in the competitive 
resort market are likely to possess the requisite business savvy 
     and skills to provide clean linens, switchboard services, 
and help with reservations and check-in and check-out.  The 
No. 
98-0851 
 
15
services offered by ABKA do not suggest any unique skill on the 
part of ABKA, but rather militate in favor of finding a unique 
quality of the land itself that attracts prospective condominium 
renters.  
¶29 Moreover, there is evidence that the assessor did 
indeed factor out the amount he believed to be attributable to 
ABKA’s own labor and skill in management.  He did this by 
including appropriate management fees as an expense of the 
resort in the stabilized operating statement.  The remainder was 
properly included in the assessment as income attributable to 
the Abbey property and not to any unique skill on ABKA’s part.   
¶30 ABKA further argues that because its management income 
is easily separated from income generated by the Abbey, unlike 
the business value of the mall in N/S Associates, it is not 
inextricably intertwined with the Abbey.  Once again, ABKA 
misapprehends the test for determining whether a non-real estate 
interest may be captured under Wis. Stat. § 70.03.  While the 
difficulty 
of 
separating 
the 
mall’s 
business 
value 
was 
considered in N/S Associates, the issue of severability did not 
represent the dispositive factor.  Rather, the fact that the 
income was non-severable helped buttress the court’s conclusion 
that the income was inextricably intertwined with the mall 
property.  Here, the Board determined that the management income 
is inextricably intertwined with the resort property.  The fact 
No. 
98-0851 
 
16
that it can be easily distinguished does not alter the outcome 
of our analysis.  
¶31 ABKA also contends that assessable business value must 
be generated on the land, and that because its management income 
was generated from the off-site condominiums, it is not 
inextricably intertwined with the resort property.  The court of 
appeals found ABKA’s distinction to be an overly constrained 
reading of precedent, and we agree with this characterization.  
Wisconsin law does not create such an artificial distinction 
between on-site and off-site income.  However, even assuming 
that the distinction carries a degree of significance, we are 
able to dismiss ABKA’s contention by concluding that the 
management fees are generated primarily on the resort property 
itself. 
¶32 We reiterate here that not only does the Abbey possess 
an inherent capacity to generate income due to its location and 
access to amenities, but that the Abbey also represents the 
actual site of income generation.  The condominium rental fees 
are generated by the range of services and amenities provided on 
the resort grounds.   
¶33 Furthermore, 
the 
assessor 
testified 
that 
the 
condominiums serve as extensions of the Abbey and, for all 
practical purposes, can be considered to be located on-site.  
The assessor found that the condominiums represent “an auxiliary 
No. 
98-0851 
 
17
set of overflow hotel rooms,” an extension of the resort 
property with minimal expenses.  While ABKA retains its half of 
the rental revenues, most of the costs are borne by the 
condominium owners, who pay taxes, maintenance, and insurance.  
The condominiums were developed by ABKA and, pursuant to the 
rental agreements, ABKA retains sole discretion to set rental 
rates.  Renters enjoy the same privileges and opportunities as 
resort guests and are not separately identified for revenue or 
expense purposes. 
¶34 In summary, upon applying the test to determine 
whether business value may be included in a property tax 
assessment, we conclude today that ABKA’s management income is 
inextricably intertwined with the Abbey.  The management fees 
are generated both by and on the land on which the Abbey is 
located, and the ability to earn the fees is transferable to 
future purchasers of the Abbey.  As value that is inextricably 
intertwined with the Abbey, the management income appertains to 
the Abbey under Wis. Stat. § 70.03 and was properly included in 
the Abbey assessment.   We further conclude that the Board, in 
upholding the assessment, acted according to law and that its 
determination was supported by a reasonable view of the 
evidence. 
¶35 Before proceeding further, we would like to sound a 
note of caution.  Our determination today is not to be construed 
No. 
98-0851 
 
18
as a broad license to ignore the site of income and thus assess 
income derived from any off-site property that may have tenuous 
relationship to the main property being assessed.  It is true 
that the off-site location of income lends itself to the initial 
conclusion that the income should not be encompassed in the 
assessment.  However, where a factual exploration reveals a 
situation in which income is attributed primarily to the nature 
of the land being assessed, the significance of its off-site 
nature may lose potency. 
III. 
¶36 We turn next to ABKA’s claim that the assessor used 
incorrect data and methodology in making his valuation of the 
Abbey.  First, ABKA submits that the assessor’s data was  
erroneous because he relied on estimated figures, while ignoring 
the existence of actual figures.  We reject ABKA’s contention 
and find that the assessor’s valuation was supported by a 
reasonable view of the evidence. 
¶37 While 
testifying 
before the 
Board, 
the assessor 
explained that in making his assessment he first reviewed actual 
revenues and expenses.  He then constructed a “stabilized 
operating statement.”  A stabilized operating statement examines 
operating history, eliminates anomalies in the flow of income, 
and projects stabilized income and expense levels for the 
future.  
No. 
98-0851 
 
19
¶38 In 
explaining 
why 
he 
did 
not 
use 
the 
actual 
administrative and general expenses for 1994 and 1995 in making 
the assessment, the assessor testified that the actual expenses 
were largely in excess of those expenses for similar properties. 
 The same was true of repair expenses, which he reasoned was a 
result of remodeling projects that would be “capitalized out” 
over a period of years. 
¶39 The assessor also explained why he attributed more 
income to the property for marina fuel sales, when the sales had 
dropped the previous year.  He noted that the previous year was 
the year that dockominiums were beginning to be sold, and as a 
result, the marina income was lower than normal.  He did not 
believe the previous year’s figure accurately reflected the 
income, and thus he used the income from the last year the 
marina was fully occupied.   
¶40 In calculating an assessment, an assessor is required 
to make a determination “from actual view or from the best 
information that the assessor may practicably obtain.”  Wis. 
Stat. § 70.32.  While the statute specifically mandates the use 
of recent sales as the “best information,” there is nothing that 
suggests that an assessor must always use actual figures in the 
absence of a sale.  Although an assessor should consider actual 
figures, we find no blanket rule mandating the use of actual 
No. 
98-0851 
 
20
figures as the data for an assessment when actual figures do not 
accurately reflect regular expenses.  
¶41 In Rosen v. City of Milwaukee, 72 Wis. 2d 653, 242 
N.W.2d 681 (1976), this court disapproved the assessor’s use of 
estimated figures because it found the actual figures to be more 
reliable.  This court examined actual construction costs and 
costs of land, instead of relying on estimated replacement 
costs, and noted that recent and undisputed market cost figures 
were preferable to any other “factor, theory, or rule of thumb.” 
 Id. at 669 (quoting State ex rel. Garton Toy Co. v. Mosel, 32 
Wis. 2d 253, 261, 145 N.W.2d 129 (1966)).  Notwithstanding its 
stated preference for actual figures, the court stopped short of 
declaring a mandate for the use of actual figures as data for a 
property assessment.  The court instead disapproved of the 
board’s failure even to consider actual figures.  Id.  See also 
Marina Fontana v. Village of Fontana-on-Geneva Lake, 107 Wis. 2d 
226, 231, 319 N.W.2d 900 (Ct. App. 1982) (failure to consider 
actual costs grounds for invalidating assessment based on 
estimated costs). 
¶42 In contrast, the assessor here did consider actual 
figures before he arrived at the figures in his stabilized 
operating statement.  He did not wholly ignore the actual 
figures, but rather thought that they did not represent the 
“best information” available.  His explanation for using 
No. 
98-0851 
 
21
estimates as data for the assessment was reasonable in light of 
his knowledge and familiarity with comparable properties.7 
¶43 Next, ABKA challenges the assessor’s methodology.  His 
methodology included first valuing the resort property as a 
whole based on ABKA’s total gross revenues.  The assessor then 
subtracted component parts from the whole, including personal 
property and dockominium values, to arrive at the final 
assessable value of the Abbey.  ABKA offers only State ex rel. 
Gisholt Mach. Co. v. Norsman, 168 Wis. 442, 448-49, 169 N.W. 429 
(1919), and argues that this court disapproved of the same 
“inverse” method of assessment used by the assessor in this 
case. ABKA’s reliance on Gisholt is misplaced because it did not 
involve the income method of valuation.   
¶44 Furthermore, 
we 
find 
nothing 
in 
the 
Property 
Assessment Manual that suggests that the assessor’s method was 
                     
7 ABKA cites several cases that fail to support its argument 
that an assessor must always rely on actual figures in the 
valuation of property.  In State ex rel. Park Plaza Shopping 
Ctr., Inc. v. Board of Review of City of Madison, 61 Wis. 2d 
469, 476, 213 N.W. 2d 27 (1973), this court did not require the 
use of actual figures over estimates, but simply noted that it 
was not erroneous for an assessor to use actual figures.  
Darcel, Inc. v. City of Manitowoc Bd. of Review, 137 Wis. 2d 
623, 640, 405 N.W.2d 344 (1987), involved a recent arms-length 
sale of property, which under the statute represents the “best 
information” for tax assessment purposes. 
In 
Metropolitan 
Holding Co. v. Board of Review of City of Milwaukee, 173 Wis. 2d 
626, 631, 495 N.W.2d 314 (1993), the use of estimated rents was 
not allowed in an assessment of property encumbered by HUD 
restrictions.  No such encumbrances affect the Abbey. 
No. 
98-0851 
 
22
improper.  The party challenging a property assessment must show 
why its method of valuation is more reliable or accurate than 
the assessor’s chosen method.  State ex rel. Park Plaza Shopping 
Ctr., Inc. v. Board of Review for the City of Madison, 61 Wis. 
2d 469, 476-77, 213 N.W.2d 27 (1973).  ABKA has failed to 
convince us that the assessor’s methodology was erroneous and 
has failed to offer a more reliable method of valuation.   
¶45 ABKA also claims that by including the management 
income in the Abbey’s assessment, the assessor violated this 
state’s unitary tax rule, which requires that all property be 
assessed to its owner.  Aberg v. Moe, 198 Wis. 349, 359, 224 
N.W. 132 (1929).  ABKA argues that the assessor took some of the 
income of the condominiums and improperly transferred it to the 
resort.  ABKA’s argument misses a critical point. 
¶46 The assessor testified that in the Abbey assessment, 
he included only the 50% of the income that duly belonged to 
ABKA as management income under the terms of the agreements.  
The remaining 50% was attributed to the condominium owners.  
Thus, there was no transfer of condominium income to the Abbey.  
¶47 Moreover, the management income is not an interest in 
the real property of the condominiums.  Rather, it represents a 
contractual obligation of the condominium owners.  We have 
already determined that the management income is generated by 
the resort property and is properly assessed as interest 
No. 
98-0851 
 
23
transferable with the property.8 
 Accordingly, 
we 
reject 
ABKA’s argument that the inclusion of the management income in 
the Abbey’s assessment violates the unitary tax rule.9     
¶48 In summary, we determine that ABKA’s management income 
from the rental of condominiums was properly included in the 
assessment of the Abbey.  The management income is inextricably 
intertwined with the resort property and is transferable to 
future owners of the Abbey.  It thus appertains to the resort 
property under Wis. Stat. § 70.03.  The assessor followed his 
statutory mandate and also employed proper data and methodology 
                     
8 ABKA misplaces reliance on cases in which the interests 
involved attach to the underlying land. See First Nat. Bank v. 
Charles Henneman Co., 10 Wis. 2d 260, 103 N.W.2d 24 (1960) 
(federal tax lien); Aberg v. Moe, 198 Wis. 349, 224 N.W. 132 
(1929) (leasehold rights); Schmidt v. Town of Almon, 181 Wis. 
244, 194 N.W. 168 (1923) (timber interests); City of West Bend 
v. Continental IV Fund Ltd. Partnership, 193 Wis. 2d 481, 535 
N.W.2d 24 (Ct. App. 1995) (long-term lease); Cornell Univ. v. 
Rusk County, 166 Wis. 2d 811, 481 N.W.2d 485 (Ct. App. 1992) 
(mineral interests).  These cases are factually distinguishable 
because, as we have already determined, the management income is 
value transferable with the resort property and not an interest 
in the real property of the condominiums.  
9 ABKA maintains that a violation of the unitary tax rule 
also constitutes double taxation, yet ABKA fails to develop its 
claim.  This court will not address undeveloped arguments.  
McEvoy v. Group Health Coop. of Eau Claire, 213 Wis. 2d 507, 530 
n.8, 570 N.W.2d 397 (1997). 
No. 
98-0851 
 
24
in his valuation.  Because the 1996 and 1997 assessments of the 
Abbey were made according to law and were supported by a 
reasonable view of the evidence, we conclude that the Board 
properly upheld the assessments.  Accordingly, we affirm the 
court of appeals. 
By the Court.-The decision of the court of appeals is 
affirmed. 
 
 
 
 
 
 
 
 
                                                                  
In addition, ABKA raises the issue of violation of the 
uniformity clause for the first time during the present appeal. 
This court need not address arguments raised for the first time 
on appeal, and we exercise our discretion in declining to 
address ABKA’s uniformity argument.  State v. Van Camp, 213 Wis. 
2d 131, 144, 569 N.W.2d 577 (1997); State v. Wilks, 121 Wis. 2d 
93, 107, 358 N.W.2d 273 (1984). 
No. 
98-0851 
 
25
 
98-0851.jpw 
 
1 
¶49 JON P. WILCOX, J. (dissenting).   Although I agree 
with the majority that the assessor’s inverse methodology and 
his use of estimated figures are supported by a reasonable view 
of the evidence, I disagree with its conclusion that the fees 
received from management of off-site condominiums may be 
included in the assessment of the resort property.   
¶50 Relying heavily on the concept that the management 
fees and the resort property are “inextricably intertwined,” the 
majority fails to articulate clear guidelines for determining 
whether particular business income generated by an owner’s 
contract 
with 
off-site 
property 
may 
be 
included 
in 
an 
assessment.  The inclusion of such off-site income in an 
assessment has no precedent in Wisconsin case law and appears to 
have no basis in the Wisconsin Property Assessment Manual, other 
appraisal literature, or the case law of other jurisdictions.  
The resulting assessment involves the taxation of an intangible 
personal property interest, business income that does not 
“appertain to” the real property.  Because I conclude that the 
assessment is therefore contrary to Wis. Stats. §§ 70.03, 
70.112(1), and 70.32(1), results in double taxation, and 
undermines the Uniformity Clause of the Wisconsin Constitution, 
I respectfully dissent. 
¶51 I agree with the majority that the scope of our 
certiorari review of the Board’s action is narrowly limited.  
Majority opinion at 6; State ex. rel Geipel v. City of 
Milwaukee, 68 Wis. 2d 726, 731, 229 N.W.2d 585 (1975); Darcel, 
Inc. v. Manitowoc Bd. of Review, 137 Wis. 2d 623, 626, 405 
98-0851.jpw 
 
2 
N.W.2d 344 (1987).  However, as the majority acknowledges, one 
of the explicit grounds of our review is “whether the Board 
acted according to law.”  Majority opinion at 6; Geipel, 68 Wis. 
2d at 731; Darcel, 137 Wis. 2d at 626.  Although the Board’s 
view of the evidence is reviewed with great deference, “the 
court may determine whether the assessment was made on the 
statutory basis, for such inquiry involves a question of law.”  
Geipel, 68 Wis. 2d at 732 (citations omitted).  Indeed, both of 
the cases the majority cites in support of the “strictly 
limited” standard of review rejected Board-approved assessments 
after determining that they were not in accordance with the law. 
 See id. at 733-34, 737;  Darcel, 137 Wis. 2d at 624. 
¶52 Any approach to assessment of real property for 
taxation purposes first must conform to the statutory framework 
authorizing taxation.  Taxes are to be levied upon all general 
property that is not exempt, including non-exempt real property. 
 Wis. Stat. §§ 70.01, 70.02.  “Real property” includes the land 
itself, all improvements on the land, and “all fixtures and 
rights and privileges appertaining thereto . . . .”  Wis. Stat. 
§ 70.03.  However, it cannot include intangible personal 
property, which is specifically exempted from taxation.  Wis. 
Stat. § 70.112(1).  Assessors are to value real property at its 
full fair market value, in accordance with the Wisconsin 
Property Assessment Manual and professionally accepted appraisal 
practices.  Wis. Stat. §§  70.32(1), 73.03(2a). 
¶53 We have always recognized that under these statutes an 
assessor must take care to value the real estate, and not the 
98-0851.jpw 
 
3 
business concern using the real estate, in an assessment.  Waste 
Management of Wis., Inc. v. Kenosha County Bd. of Review, 184 
Wis. 2d 541, 565, 516 N.W.2d 695 (1994).  Other jurisdictions 
appear to be in general agreement that business value must be 
separated carefully from real estate value in property tax 
assessments.10  
¶54 In assessing real property, assessors utilize three 
basic approaches: the sales comparison, cost, and income 
approaches. 
 
1 
Property 
Assessment 
Manual 
for 
Wisconsin 
Assessors, ch. 9, at 9-6.  Of these, the “sales comparison 
approach,” which looks to recent arm’s-length sales of the 
assessed property or comparable properties, is preferred because 
it most accurately reflects the property’s fair market value.  
Waste Management, 184 Wis. 2d at 556-57; Bischoff v. Appleton, 
81 Wis. 2d 612, 618-19, 260 N.W.2d 773 (1978).  See also Wis. 
Stat. § 70.32(1)(directing assessors to first consider recent 
sales of the property and comparable properties, and then other 
factors 
affecting 
the 
property’s 
value) 
and 
1 
Property 
Assessment Manual for Wisconsin Assessors, ch. 9, at 9-6, 9-19 
                     
10  See, e.g., Service America Corporation v. County of San 
Diego, 19 Cal. Rptr. 2d 165, 171 (Cal. Ct. App. 1993); New Haven 
Water Co. v. Bd. of Tax Review, 422 A.2d 946, 951-52 (Conn. 
1979); Post-Newsweek Cable, Inc. v. Bd. of Review, 497 N.W.2d 
810, 816-17 (Iowa 1993); Inner Harbor Marina of Baltimore, Inc. 
v. Supervisor of Assessments, No. 6280, 1991 WL 322991, at 1 
(Md. Tax Ct. May 13, 1991); Coastal Eagle Point Oil Co. v. 
Westville Borough, 13 N.J. Tax 242, 281-283 (N.J. Tax Ct. 1993); 
Dublin Senior Community Ltd. Partnership v. Franklin County Bd. 
of Revision, 687 N.E.2d 426, 430 (Ohio 1997); Boise Cascade 
Corp. v. Dep’t of Revenue, 12 Or. Tax 263, 266-269 (Or. T.C. 
1991). 
98-0851.jpw 
 
4 
(recognizing that the sales comparison approach should be used 
if applicable, and that other approaches should be considered 
only in the absence of sales comparison information). 
¶55 In sum, although the income approach is not the 
preferred method for valuing real estate, this court has 
permitted the approach to be used in the absence of comparable 
sales and in conformity with the Wisconsin Property Assessment 
Manual.  See Waste Management, 184 Wis. 2d at 560.   
¶56 However, no Wisconsin case has ever allowed a property 
tax assessment to capture income generated by separate, off-site 
property.  Thus, although the majority states that “Wisconsin 
law does not create such an artificial distinction between on-
site and off-site income,” majority at 15, no previous Wisconsin 
case has even suggested that off-site income could properly be 
captured in an assessment.   
¶57 Typically, the income approach is used to value income 
producing properties that generate rental income on site.  The 
approach “can provide a somewhat comfortable fit when used to 
value the more common income producing properties such as 
industrial, office or apartment buildings, or shopping centers, 
uses which often involve long or medium term leases or 
tenancies, which generate ‘rental income’ for the owners.”  
Analogic Corp. v. Bd. of Assessors, 700 N.E.2d 548, 553 (Mass. 
App. Ct. 1998).  
¶58 In these more typical income approach assessments, the 
assessor estimates the property’s income by estimating its 
market rent.  The Wisconsin Property Assessment Manual often 
98-0851.jpw 
 
5 
describes the income approach in terms of rental income.  See, 
e.g., 1 Property Assessment Manual for Wisconsin Assessors, ch. 
7, 7-20, (“[The assessor calculates] an estimate of net income 
by deducting the appropriate expenses from an estimate of the 
market rent of the property.”), and ch. 9, 9-7 (“Potential gross 
income is the income that would be generated if a property was 
100 percent occupied and receiving the market rent.”).   
¶59 Similarly, industry literature recognizes that “[t]he 
income to investment properties consists primarily of rent.”  
The Appraisal Institute, The Appraisal of Real Estate 478 (11th 
ed. 1996).  In the past, this court has approved the inclusion 
of on-site income in assessing the fair market value of rental 
property.  See State ex. rel N/S Assocs. v. Bd. of Review, 164 
Wis. 2d 31, 52, 473 N.W.2d 554 (Ct. App. 1991); Rosen v. 
Milwaukee, 72 Wis. 2d 653, 670-71, 242 N.W.2d 681 (1976).  
Indeed, in this case ABKA agrees that the income derived from 
rental of rooms at the resort property was properly included in 
its assessment. 
¶60 On-site rental income was essentially at issue in N/S 
Associates, the case that first used the phrase “inextricably 
intertwined” on which the majority opinion so heavily relies.  
In that case, the owner of a shopping mall challenged the use of 
a recent sale as an estimate of the mall’s fair market value on 
the grounds that the sale price included business value.  N/S 
Assocs., 164 Wis. 2d at 52.  Obviously mindful of the fact that 
a recent arm’s-length sale is the best information for an 
assessment, see id. at 56-57, the court of appeals held that the 
98-0851.jpw 
 
6 
assessment’s reliance on the recent sale was permissible, even 
though it might include some business value.  Id. at 55.  
Because “the leasing of space to tenants and related activities” 
was a value that would transfer with the mall at sale, it was 
“inextricably intertwined” with the mall.  Id.   
¶61 In contrast, the management fees at issue in this case 
are not generated by the rental of the assessed property and are 
easily separated from the on-site rental income.  The fees are 
generated by the owner’s contracts to manage the rental of the 
off-site condominiums.  There appears to be no precedent for 
including such income in a property tax assessment, and the 
majority cites nothing in the Wisconsin Property Assessment 
Manual or other appraisal industry authorities that explicitly 
justifies its approval of such an assessment. 
¶62 Moreover, the majority seems to give the phrase 
“inextricably intertwined” a different meaning than it had N/S 
Associates, and a different meaning than it is normally 
understood to have.  A common definition of “inextricable” is 
“[d]ifficult or impossible to disentangle or untie.”  The 
American Heritage Dictionary of the English Language 924 (3d ed. 
1992).  “Intertwine” means “[t]o join or become joined by 
twining together.”  Id. at 944.  Thus, to say that something is 
“inextricably intertwined” normally means that it is joined 
together and impossible to disentangle.  The income at issue in 
N/S Associates actually was “inextricably intertwined” with the 
assessed property because, as the court noted, “there was 
substantial evidence before the Board of Review that it was not 
98-0851.jpw 
 
7 
possible to separate Southridge mall’s non-transferrable income-
producing capacity from the elements of real estate that are set 
out in section 70.03 . . . .”  N/S Assocs., 164 Wis. 2d at 55. 
¶63 Notwithstanding 
the 
usual 
meaning 
of 
the 
phrase 
“inextricably intertwined,” the majority determines that “the 
issue of severability did not represent the dispositive factor” 
in N/S Associates.  Majority at 15.  The opinion further 
explains that the easy severability of ABKA’s management fee 
income from the income of the resort property itself simply 
“does not alter the outcome” of its analysis of whether the 
income is “inextricably intertwined” with the resort property.  
Majority at 15.   
¶64 Thus, 
in 
the 
majority 
opinion, 
the 
phrase 
“inextricably intertwined” does not seem to have its normal 
dictionary definition or the definition it had in N/S Associates 
itself.  The precise meaning of the phrase is therefore obscure 
and will generate uncertainty in property tax assessments 
throughout the state. 
¶65 To justify its decision that the off-site management 
fees are “inextricably intertwined” with the resort property, 
the majority relies on its conclusions that the income generated 
by the fees is a transferable value, majority at 10-12, and is 
“generated primarily on the resort property itself.”  Majority 
at 15.   
¶66 To begin with, the idea that the income is a 
“transferable value that will survive a sale of the Abbey,” 
majority at 10, appears to be unsupported by the record.  ABKA, 
98-0851.jpw 
 
8 
the owner of the resort, receives the income under one-year 
contracts with the individual condominium owners.  Although the 
record establishes that, on average, 20 to 30 owners have 
contracted for ABKA’s management services each year, there is no 
evidence 
that 
the 
same 
owners 
consistently 
renew 
their 
contracts, and the owners are under no obligation to do so.  An 
owner’s decision whether to renew a particular contract is 
likely to be greatly affected by his or her satisfaction with 
the quality of the services provided.  Thus, nothing in the 
record suggests ABKA’s management income would automatically 
transfer with the assessed resort upon sale.11  This stands in 
contrast to the income generated by renting mall space in N/S 
Associates, which was the mall’s “raison d’etre,” N/S Assocs. at 
55, and would obviously transfer with the mall itself.   
¶67 Likewise, 
the 
majority’s 
conclusion 
that 
“[t]he 
condominium rental fees are generated by the range of services 
and amenities provided on the resort grounds,” majority at 15, 
does not appear to be supported by the record.  In reaching its 
conclusion, the majority is persuaded by the fact that “the 
                     
11 The majority supports its conclusion that the management 
income is a transferable value that will survive the sale of the 
Abbey by relying on the testimony of ABKA’s appraiser, Frank 
Karth, that future purchasers of the resort would expect to 
acquire the interest in managing the condominiums.  Majority at 
12.  However, Karth’s testimony did not suggest that the 
management income is “impossible to disentangle” from the resort 
property or would transfer automatically with it.  To the 
contrary, Karth testified that in order to transform his 
valuation of the resort as a “going concern” into a valuation of 
the property itself for tax assessment purposes, he extracted 
the value of the management income. 
98-0851.jpw 
 
9 
condominiums serve as extensions of the Abbey,” and “[r]enters 
enjoy the same privileges and opportunities as resort guests and 
are not separately identified for revenue or expense purposes.” 
 Majority at 16.   
¶68 These facts do not seem relevant to determining 
whether the condominium management fees appertain to the resort 
property.  The fact that renters may not be aware that the 
condominiums are actually separate properties does not change 
the fact that they are separately owned and separately assessed. 
The renters may indeed be attracted by the amenities available 
at the resort property, just as they are attracted by the nearby 
lake.  However, any member of the public may also make use of 
the resort property’s amenities, on a fee-for-service basis.  
The condominium renters pay the same fees for the use of those 
facilities, and those fees have already been taken into account 
in the assessment.  Thus, the additional income generated by the 
condominium renters’ use of the amenities at the resort property 
are already included in the assessment, before the fees ABKA 
receives for managing the condominiums are added. 
¶69 It seems clear that, rather than being generated by 
the resort property, the management fee income is generated by 
the condominium properties themselves.  A person who rents a 
condominium pays the condominium owner primarily for the 
privilege of temporarily rooming at the condominium.  In 
exchange for half of the rent paid to the condominium owner, 
ABKA 
provides 
services 
such 
as 
reservations, 
check-in, 
switchboard, and cleaning.  Most of the services provided by 
98-0851.jpw 
 
10
ABKA could be managed from a building miles away from the 
condominiums.  Thus, the management fees do not “appertain to” 
the resort property, but to the business that owns and operates 
the resort.  They are not generated by the resort property, but 
by the rental of the separately owned, separately assessed 
condominium properties. 
¶70 Waste Management also fails to support the majority’s 
determination that the condominium management fees appertain to 
the resort property.  That case was a great leap from our former 
precedents, none of which had permitted the inclusion of owner-
operator income in a property tax assessment.  The primary value 
of the landfill property at issue was its ability to receive 
waste.  Id. at 568.  We determined that a significant portion of 
the tipping fees generated on site was “attributable to the 
transferable income-producing capacity of the underlying land 
itself, and not to the labor and skill of the owner.”  Id. at 
569.  
¶71 Although the opinion concluded that there is no 
absolute bar to using owner-operator income to value real 
estate, in the absence of rental income, Waste Management, 184 
Wis. 2d at 563, it repeatedly emphasized caution and warned that 
its reasoning might only apply to the unique circumstances of a 
landfill property.  Id. at 569.  
¶72 The majority opinion in this case is an even greater 
leap from precedent.  The majority does not cite, and I am 
unable to find, any precedent in the case law of Wisconsin or 
other jurisdictions that supports the inclusion of income from 
98-0851.jpw 
 
11
management 
of 
off-site 
property 
in 
an 
income 
approach 
assessment.  As noted above, there seems to be general agreement 
that even on-site business interests must be carefully separated 
from real property interests in property tax assessments.  On 
the rare occasion that off-site income has been considered in a 
property tax assessment, the income has been generated by the 
activity of on-site residents.  See Knollcroft Apartments, Inc. 
v. Borough of Fair Lawn, 3 N.J. Tax 25, 36 (N.J. Tax Ct. 
1981)(allowing an apartment building’s assessment to include 
half of the income from rental of parking spaces on an adjacent 
parking lot that the apartment owner used free of charge in 
exchange for maintaining the lot). 
¶73 In particular, the decision to allow a property tax 
assessment of a hotel property to capture income generated by 
the owner-operator’s contract to manage separate, off-site 
properties appears to be unprecedented.  Indeed, cases reviewing 
income-approach assessment of hotels frequently have cautioned 
that the assessor must deduct non-realty value from the estimate 
of real property’s net income.  See Analogic, 700 N.E.2d at 553; 
Equitable Life Assurance Soc’y/Marriott Hotels, Inc. v. State 
Tax Comm’n, 852 S.W.2d 376, 380-81 (Mo. Ct. App. 1993).  
Analogic cautions that: 
 
Hotels present unique problems to appraisers.  They 
tend to be labor intensive businesses which derive 
only a portion of their income from daily room (space) 
occupancies.  They derive other income from services 
and sales of such items as food and alcohol . . . .  
This “other income,” if not attributable to the 
98-0851.jpw 
 
12
realty, is not “rental income” for purposes of 
valuation under the income capitalization method. 
Analogic, 700 N.E.2d at 553 (citation omitted).  Similarly, as 
we noted in Waste Management, the Wisconsin Property Assessment 
Manual warns that for hotel properties, “the amount of income is 
substantially affected by the quality of management,” and so 
“[t]he assessor should be careful to make sure that only the 
real estate is being valued and not the quality of management or 
goodwill.”  Waste Management, 184 Wis. 2d at 565 (citing 1 
Property Assessment Manual for Wisconsin Assessors, ch. 9, at 9-
24).   
¶74 Moreover, nothing in the Wisconsin Property Assessment 
Manual provides that income like the management income in this 
case should be included in an income approach assessment.  The 
manual states that miscellaneous, non-rental income may include 
“parking, coin operated laundries, and rental of clubhouses or 
party rooms,” but cautions that any assessable items of personal 
property must not be double assessed. 1 Property Assessment 
Manual for Wisconsin Assessors, ch. 9, 9-10.  This passage 
describes only income from operations on the property itself.  
Similarly, The Appraisal of Real Estate provides that “other 
income” includes: 
 
all income generated by the operation of the real 
property that is not derived directly from space 
rental.  It includes income from services supplied to 
the tenants such as switchboard service, antenna 
connections, and garage space; income from coin-
operated equipment and parking fees is also included. 
 Because service-derived income may or may not be 
attributable to the real property, an appraiser might 
find it inappropriate to include this income in the 
98-0851.jpw 
 
13
property’s potential gross income.  The appraiser may 
treat other income as business income or as real 
property income, depending on its source. 
The Appraisal Institute, The Appraisal of Real Estate 489 (11th 
ed. 1996).  It is true that under these principles, and as Waste 
Management holds, certain business income generated by the real 
estate may be included in an income approach assessment. 
¶75 However, it does not follow from this that income 
generated by the owner-operator of a resort property under year-
to-year contracts to manage the rental of adjacent condominiums 
should increase the resort property’s tax assessment.  Such 
income is easily distinguished from the income generated by the 
rental of the resort property itself. It is intangible personal 
property belonging to the owner of the resort and does not 
appertain to the resort property itself.  Its inclusion in the 
assessment is therefore unlawful under Wis. Stats. §§ 70.03 and 
70.32. 
¶76 In addition to resulting in an inaccurate and unlawful 
calculation of the fair market value of real property, this 
assessment may violate Wisconsin’s unitary taxation rule and 
result in double taxation.  Under Wisconsin law, all real 
property must be assessed to its owner.  Wis. Stat. § 70.17; 
Aberg v. Moe, 198 Wis. 349, 359, 224 N.W. 132 (1929).  Each 
condominium is assessed separately, and a fair market value 
assessment of each condominium would presumably include the 
value of the rental income.  Nonetheless, the record shows that 
the assessor assessed part of this income to the resort 
property. 
 
The 
result 
may 
be 
that 
this 
portion 
of 
a 
98-0851.jpw 
 
14
condominium’s value will be captured in two assessments, the 
assessment of the condominium and the assessment of the resort. 
¶77 Finally, this assessment also appears to violate the 
Uniformity Clause of the Wisconsin Constitution.  Article VIII, 
section 1 of the Constitution provides that “[t]he rule of 
taxation shall be uniform . . . .”  The provision requires not 
“uniformity 
of 
methods 
of 
taxation, 
but 
uniformity 
in 
results . . . .”  State ex rel. La Follette v. Torphy, 85 Wis. 
2d 94, 109, 270 N.W.2d 187 (1978), citing Chicago and N.W. 
Railway Co. v. State, 128 Wis. 553, 614, 615, 108 N.W. 557 
(1906).  Yet, under the majority opinion, the amount of 
management income to be included in an assessment “may vary 
depending on the ability to exploit the income-producing 
capacity that inherently exists with the Abbey.”  This suggests 
that the assessment of the Abbey resort will not be uniform 
because the value of the resort in relation to other similar 
resort properties may vary depending upon the quality of 
management and the amount of entrepreneurial activity by each 
resort’s owner.  This is a serious undermining of the rule of 
uniformity in taxation required by the Wisconsin Constitution. 
¶78 The majority opinion will have serious and far-
reaching repercussions for property tax assessments across 
Wisconsin.  The record shows that the property assessor in this 
case did not “specifically address” the Wisconsin property 
assessment manual and instead relied on interpretation of 
language in N/S Associates and Waste Management.  The language 
of the majority opinion invites even broader interpretation.  
98-0851.jpw 
 
15
The 
opinion 
repeats 
the 
inscrutable 
phrase 
“inextricably 
intertwined” seventeen times, yet never precisely articulates 
which analysis determines whether off-site business income 
appertains to real property. 
 
¶79 In sum, although the majority opinion cautions that it 
is “not to be construed as a broad license to ignore the site of 
income and thus assess income derived from any off-site property 
that may have tenuous relationship to the main property being 
assessed,” majority at 17, I believe that it approves just such 
an assessment.  Because the resulting assessment is unlawful, I 
respectfully dissent. 
¶80 I am authorized to state that Justice David T. Prosser 
joins in this dissenting opinion. 
 
 
98-0851.jpw 
 
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