Mayfair Mall LLC v. City of Wauwatosa

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
February 11, 2025
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2023AP1585 Cir. Ct. No. 2014CV3776

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT I

MAYFAIR MALL LLC,

PLAINTIFF-APPELLANT,

V.

CITY OF WAUWATOSA,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Milwaukee County:
CHRISTOPHER R. FOLEY, Judge. Affirmed.

Before White, C.J., Donald, P.J., and Geenen, J.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2023AP1585

¶1 PER CURIAM. Mayfair Mall LLC (“Mayfair”) appeals from an
order of the remand court1 concluding that the property tax assessments of Mayfair
Mall (the “Mall”), as determined by the City of Wauwatosa (the “City”) for 2013,
2014, and 2015 (the “Assessments”), were not excessive. We affirm.

BACKGROUND

¶2 Mayfair sued the City for a property tax refund under WIS. STAT.
§ 74.37, claiming that the Assessments of the Mall were excessive. A court trial
was held over the course of twenty-nine days. The parties presented the testimony
and reports of several appraisal experts, including, among others, two appraisers
retained by Mayfair, Paul Bakken and Richard Marchitelli; and two appraisers
retained by the City, Mark Kenney and William Miller. A financing appraisal
commissioned in 2013 by Mayfair’s lender was also included in the evidence (the
“Financing Appraisal”).

¶3 After the close of evidence, the circuit court concluded that none of
the Assessments were excessive, and Mayfair appealed. We concluded that the

1
The Honorable Marshall B. Murray presided over the bench trial and issued findings of
fact and conclusions of law concluding that the City’s assessments were not excessive. We refer
to Judge Murray as the circuit court. Mayfair appealed and this court remanded the case to the
circuit court for additional fact finding. Mayfair Mall LLC v. City of Wauwatosa,
No. 2019AP1232, unpublished slip op. ¶30 (WI App May 18, 2021).

On remand, Mayfair filed a request for substitution of Judge Murray, and the case was
reassigned to the Honorable Christopher R. Foley. Judge Foley appointed an expert under WIS.
STAT. § 907.06 (2021-22), held an evidentiary hearing, and issued the order underlying the
instant appeal concluding that the City’s assessments were not excessive. We refer to Judge
Foley as the remand court.

For ease of reading and because the relevant statutory language has not changed over the
course of this litigation, all references to the Wisconsin Statutes are to the 2021-22 version unless
otherwise noted.

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No. 2023AP1585

findings of the circuit court were insufficiently detailed for us to determine
whether Mayfair had overcome the presumption of correctness, so we reversed
and remanded the case for further fact finding “that include[d] the bases and
reasoning upon which the [circuit] court’s findings of fact and conclusions of law
[were] based[.]” Mayfair Mall LLC v. City of Wauwatosa, No. 2019AP1232,
unpublished slip op. ¶30 (WI App May 18, 2021).

¶4 On remand, the remand court appointed an expert under WIS. STAT.
§ 907.06, Dr. Mark Eppli, to assist it in fulfilling our mandate. The remand court
held an evidentiary hearing at which Dr. Eppli testified. The remand court
concluded, as did the circuit court, that none of the Assessments were excessive.

¶5 Mayfair appeals. Additional factual details will be discussed as they
become relevant.

DISCUSSION

I. Standard of Review and Legal Principles

¶6 Mayfair contends that the Assessments were excessive, and that the
circuit court and remand court opinions adopting the City’s valuation were clearly
erroneous. Mayfair argues that the courts erred in the treatment of development
costs related to the Nordstrom store. It makes various arguments that the courts
erred when they relied on the Financing Appraisal that was based on the leased fee
value of the Mall. Additionally, Mayfair challenges the underlying assumptions of
various appraisals, raising issues with the deduction of management costs and
property taxes, the remand court’s finding that actual rental rates reflected the
market rental rates, and the remand court’s reliance on Dr. Eppli’s capitalization
rate. Mayfair also contends that Dr. Eppli is not an expert and his testimony and

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reports should be excluded. Finally, we consider Mayfair’s argument that, in a
valuation dispute, Regency West2 prohibits a court from relying on appraisals that
are higher than the assessed value. We reject Mayfair’s arguments.

¶7 Mayfair brought this action against the City under WIS. STAT.
§ 74.37, claiming that it was entitled to partial property tax refunds because the
Assessments were excessive in violation of WIS. STAT. § 70.32. When presented
with excessive assessment claims under WIS. STAT. § 74.37, we review the circuit
court’s determination and not the determination of the taxing district’s Board of
Assessors or Board of Review. Lowe’s Home Ctrs., LLC v. City of Delevan,
2023 WI 8, ¶23 & n.11, 405 Wis. 2d 616, 985 N.W.2d 69. The Assessments are
entitled to a presumption of correctness under WIS. STAT. § 70.49(2) that “may be
rebutted if the assessor did not correctly apply the [Wisconsin Property
Assessment] Manual [the “WPAM”] and Wisconsin statutes or if a challenger
presents significant contrary evidence.”3 Lowe’s Home Ctrs., 405 Wis. 2d 616,
¶32. Whether the Assessments complied with statutory directives is a question of

2
Regency West Apartments LLC v. City of Racine, 2016 WI 99, 372 Wis. 2d 282, 888
N.W.2d 611.
3
Throughout their briefs, the parties argue about whether the circuit and remand courts
properly applied the presumption of correctness. Specifically, Mayfair argues that the
presumption of correctness attaches only to the assessment amount and not to the methodology
and data used by the assessor to calculate it (e.g., the decision whether to deduct the Nordstrom
development costs and the calculation of the Mall’s net operating income). In our view, the
presumption of correctness must apply both to the assessment amount and to the assessor’s
method of calculating the assessment. It would be illogical to presume that an assessment amount
is correct without presuming that the methods and data used to calculate it were also correct (i.e.
lawful). When an assessment is entered into the assessment roll, the amount is presumed correct
and the assessor is presumed to have complied with the WPAM and Wisconsin law. Lowe’s
Home Ctrs., LLC v. City of Delevan, 2023 WI 8, ¶¶35-38, 405 Wis. 2d 616, 985 N.W.2d 69.
Taxpayers can rebut the presumption and have the assessment set aside by showing that the
assessment did not comply with the WPAM, resulting in an excessive assessment, or by showing
significant contrary evidence. Id. at ¶¶35-39.

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law that we review independently, but the circuit court’s factual findings will not
be disturbed unless they are clearly erroneous, i.e., “against the great weight and
clear preponderance of the evidence,” because “[i]t is within the province of the
factfinder to make determinations of the weight and credibility of evidence.” Id.,
¶¶24-25, 68-69.

¶8 Mayfair claims that the Assessments were excessive in violation of
WIS. STAT. § 70.32(1). Section 70.32(1) states that “[r]eal property shall be
valued by the assessor in the manner specified in the [WPAM] … from the best
information that the assessor can practicably obtain, at the full value which could
ordinarily be obtained therefor at private sale.” “Full value” in the statute has
been interpreted to mean “fair market value.” Flood v. Village of Lomira, Bd. of
Rev., 153 Wis. 2d 428, 435, 451 N.W.2d 422 (1990). Section 70.32(1) lists three
sources of information used to determine a property’s fair market value for tax
assessment purposes. “The order in which these sources are listed is indicative of
the quality of information each source provides,” and this methodology has been
described as providing three “tiers” of analysis.4 Lowe’s Home Ctrs., 405 Wis. 2d
616, ¶28.

¶9 This case concerns the third tier of analysis under which the assessor
“may consider all the factors collectively that have a bearing on the value of the
property,” including “cost, depreciation, replacement value, income, industrial

4
A tier one analysis examines recent arm’s-length sales of the subject property as the
best information of a property’s fair market value. Lowe’s Home Ctrs., LLC v. City of Delevan,
2023 WI 8, ¶29, 405 Wis. 2d 616, 985 N.W.2d 69. If the property has not been recently sold, the
appraiser moves to a tier two analysis, examining arm’s-length sales of reasonably comparable
properties. Id. On appeal, neither party argues that a tier one or tier two analysis should have
been used by the City’s assessors in this case. We therefore discuss them no further.

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No. 2023AP1585

conditions, location and occupancy, sales of like property, book value, amount of
insurance carried, value asserted in a prospectus, and appraisals produced by the
owner.” Id., ¶30. As relevant here, “the income approach, ‘which seeks to
capture the amount of income the property will generate over its useful life,’ fits
under the umbrella of tier [three] analysis.” State ex rel. Collison v. City of
Milwaukee Bd. of Rev., 2021 WI 48, ¶26, 397 Wis. 2d 246, 960 N.W.2d 1
(quoting Metropolitan Assocs. v. City of Milwaukee, 2018 WI 4, ¶34, 379 Wis. 2d
141, 905 N.W.2d 784).

II. Nordstrom Development Costs

¶10 In the fall of 2012, Mayfair announced that Nordstrom, Inc.,
(“Nordstrom”) would open and operate a Nordstrom department store at the Mall.
Mayfair indicated it would spend approximately $70 million on improvements and
renovations to the Mall in preparation for the store. That Nordstrom was coming
to the Mall was known to market participants as of January 1, 2013, although
construction did not begin until fall of 2014.

¶11 Mayfair argues that the City improperly assumed the benefits of the
addition of a Nordstrom store when assessing the Mall’s value (e.g., raising the
class of the Mall and lowering its capitalization rate) without accounting for the
costs associated with those benefits. Mayfair claims that the failure to deduct the
Nordstrom development costs when calculating the Mall’s net operating income
(“NOI”) violates the principle of anticipation articulated in the WPAM.

¶12 We reject Mayfair’s argument because it cites no legal authority to
support it, and instead relies solely on the principle of anticipation as described in
the WPAM. It reads, in full:

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No. 2023AP1585

One definition of value is the present worth of
anticipated future benefits. These future benefits can be the
amenities of home ownership, the receipt of an income, a
place to run a business, or any other benefits that may be
projected. It is in the conversion of anticipated future
benefits into a present value that is the basis of the
valuation of property in the income approach.

WPAM 7-14 (2013).5 Nothing in this section directs assessors to deduct all costs
associated with anticipated future benefits under every valuation approach. See
State ex rel. Kalal v. Circuit Ct. for Dane Cnty., 2004 WI 58, ¶¶44-46, 271
Wis. 2d 633, 681 N.W.2d 110.

¶13 Indeed, the evidence that the remand court found credible showed
that, under a direct capitalization approach,6 it is not appropriate to deduct the
Nordstrom development costs because Mayfair expected a return on that
investment. It distinguished these development costs from deferred maintenance
costs, which are commonly deducted from the value of the property being
assessed. Dr. Eppli explained the difference between the treatment of
development costs and deferred maintenance costs, and why it was inappropriate
to deduct the Nordstrom development costs when calculating the Mall’s NOI:

For properties with significant deferred
maintenance, it is common acquisition and valuation
practice to reduce the value of the property by the deferred
capital expenditure that the next buyer is likely to incur to
maintain the property income stream. For instance, if a
mall escalator or roof needs imminent replacement, the
buyer/appraiser appropriately reduces the purchase
price/valuation by that deferred maintenance capital
expenditure amount.

5
The language is the same in both the 2014 and 2015 versions of the WPAM.
6
The direct capitalization approach is a type of tier three income approach that “converts
a single year’s net operating income into an estimate of value.” WPAM 9-14, 9-15 (2013)
(describing how to apply the approach).

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No. 2023AP1585

….

…The argument Bakken [Mayfair’s appraiser]
makes for reducing the market value by the Nordstrom
improvements is that the addition of Nordstrom’s is a
defensive move necessitated by market conditions and that
no additional revenue stream would be realized by the
taxpayer, analogizing the expenditures on Nordstrom’s to
the necessary costs to replace a roof where the property
income stream and property value is maintained but not
grown.

¶14 Dr. Eppli then refuted Bakken’s argument that the Nordstrom
development costs can be deducted as deferred maintenance by citing Mayfair’s
expected increase in income—Mayfair expected an 8% return due to the
Nordstrom expansion—and noting that “the presence of Nordstrom’s explains
much of the growth on inline tenant income from 2015 to 2016,” when the NOI
had been “effectively stagnant for the years 2011-2015, pre-Nordstrom’s[.]”
Dr. Eppli opined that even if the Mall saw no income growth attributable to the
Nordstrom expansion, a scenario he described as “unlikely,” the Mall would
experience a risk reduction by having Nordstrom as an anchor tenant, solidifying
itself as a Class A mall and shrinking the applicable capitalization rate used to
calculate NOI.7

¶15 Dr. Eppli concluded that “[r]educing the property price by the
Nordstrom’s improvement costs falls well outside of normal and customary as the
property NOI will likely benefit from additional inline tenant sales and rent and

7
Dr. Eppli explained during the hearing that a direct capitalization approach requires the
determination of an appropriate market-based capitalization rate. The capitalization rate
determination is based, in part, on the mall’s class designation: higher class malls are assigned
lower capitalization rates resulting in higher property values, whereas lower class malls are
assigned higher capitalization rates resulting in lower property values.

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No. 2023AP1585

have increased value attributable to a lower capitalization rate.” The circuit court
“fully agree[d]” with Dr. Eppli’s analysis.

¶16 Mayfair argues that Dr. Eppli contradicted his report when he
testified that a buyer would take the Nordstrom development costs into account
when negotiating a purchase price for the Mall. However, a close examination of
Dr. Eppli’s testimony reveals that he did not contradict his report. He explains
that, in a tier two sales comparison approach like the one conducted in City
appraiser Kenney’s first appraisal,8 it is appropriate to deduct capital expenditures
like the Nordstrom development costs. However, Dr. Eppli further explained that
it is not appropriate to deduct those costs in a “tier three [direct] cap[italization]
rate approach” like the one conducted in Kenney’s second report, which does not
deduct the Nordstrom development costs. At least insofar as the direct
capitalization approach is concerned, which was the approach found credible by
the remand court, all of the City’s experts and Dr. Eppli agreed that the Nordstrom
development costs should not be deducted.

¶17 Accordingly, we reject Mayfair’s argument that the failure to deduct
the Nordstrom development costs violated Wisconsin law or the WPAM. The
remand court’s finding that the Nordstrom development costs should not be
deducted in calculating the Mall’s NOI is not “against the great weight and clear
preponderance of the evidence.” Lowe’s Home Ctrs., 405 Wis. 2d 616, ¶25.

8
Kenney later withdrew this appraisal report and replaced it with a second that
performed a tier three direct capitalization approach.

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No. 2023AP1585

III. Leased Fee Value and Market Rent

¶18 The circuit court and remand court opinions relied on appraisals that
calculated the Mall’s leased fee value as opposed to its fee simple value. Mayfair
argues that the courts’ reliance on those appraisals was erroneous. Citing
Walgreen Co. v. City of Madison, 2008 WI 80, ¶45, 311 Wis. 2d 158, 752 N.W.2d
687, Mayfair claims that leases have no role to play in valuing a property for tax
assessment purposes because assessments must be based on the fee simple interest
of the property, and leases are not part of the bundle of rights to be assessed.

¶19 Mayfair misunderstands Walgreen and omits a critical section of the
opinion that resolves the “leased fee” versus “fee simple” issue as it applies to this
case. In Walgreen, it was undisputed that the rents involved in that case were
above market. The issue was “whether a property tax assessment of retail property
leased at above market rent values should be based on market rents (as Walgreens
argues) or if such assessments should be based on the above market rent terms of
Walgreens’ actual leases (as the City [of Madison] argues).” Id., ¶2. The court
concluded that, when conducting a tier three income approach of a leased retail
property, the assessment must “be based on market lease rates, not actual contract
rates,” id., ¶3, because Wisconsin law “proscribes assessing real property in excess
of market value.” Id. (citation omitted).

¶20 The Walgreen court “made a narrow determination regarding how
above-market rent is to be treated for tax assessment purposes.” Lowe’s Home
Ctrs., 405 Wis. 2d 616, ¶52. In doing so, it clarified that “‘[i]f the contract rents
are at market levels, the leased fee interest is the same as a fee simple interest.’”
Walgreen, 311 Wis. 2d 158, ¶10 n.5 (citing WPAM). The remand court correctly

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No. 2023AP1585

recognized that leased fee values and fee simple values are the same if the rents
are market rate.

¶21 The question, then, is not whether the circuit and remand courts
erred by relying on appraisals that calculated the Mall’s leased fee value as
opposed to its fee simple value. The question is whether the actual rents were
above market rate. If the actual rents are market rate, then a leased fee value
calculated using actual rents would be the same as a fee simple interest. See id.

A. The circuit court’s finding of fact that the Mall’s actual rents were
market rate is not clearly erroneous.

¶22 Mayfair argues that the record does not support the circuit court’s
finding that the Mall’s actual rents were market rate. Mayfair complains that the
evidence the circuit court relied on supports the opposite conclusion, i.e., that the
Mall’s actual rents were above market.

¶23 Mayfair says that the Financing Appraisal, the valuations by its
appraisers Bakken and Marchitelli, and even the City’s appraiser Kenney, all
agreed that rent was above market. Mayfair says that Dr. Eppli, on whom the
remand court relied and found credible, agreed that rents were above market and
that Marchitelli’s approach using hypothetical rents (calculated as 15% of a
tenant’s retail sales) was credible.

¶24 Mayfair is cherry-picking facts. For example, Kenney performed
multiple different analyses across two appraisal reports (the first of which was
withdrawn and replaced with the second) and testified for over a week. Kenney’s
purported agreement that the Mall’s rents were above market is taken from a small
segment of Kenney’s cross-examination when he was questioned about the direct

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cash flow analysis contained in the withdrawn report. However, Kenney
performed a direct capitalization analysis in his second report, and in that report,
he concluded that the rents were market rate. When asked directly if he had an
opinion as to whether the Mall’s leased fee value was the same as its fee simple
value, Kenney replied that the “the rents are at market and therefore, we are
looking at lease fee interest being equal to fee simple.”

¶25 Mayfair also misrepresents Dr. Eppli’s report to suggest that he
“agreed” with Marchitelli regarding market rate rent at the Mall. Dr. Eppli
explained that although Marchitelli’s process of looking at tenant occupancy costs
was sound, Marchitelli’s actual calculations were inaccurate in this case.
Marchitelli did not determine market rent based on actual market data—that is, the
rents that Mall tenants actually paid Mayfair, but instead calculated a hypothetical
rent by assuming that market rent would be 15% of the retail sales of the Mall’s
tenants. Rather than agreeing with it, Dr. Eppli criticized Marchitelli’s calculation
because “what the tenants are actually paying” is better information to arrive at
market rent “as opposed to pretending that they’re paying 15 percent of their retail
sales[.]” Dr. Eppli opined that Marchitelli applied biased and skewed data, and as
a result, his “hypothetical rents” understated actual rents by between five and six
million dollars per year.

¶26 With respect to the Financing Appraisal, Mayfair again
misrepresents the record. Using a rent-to-sales ratio analysis, the Financing
Appraisal calculated an average market rental rate of between $32.50 and $37.50
per square foot. It determined that the “overall attained rent” for the Mall was
$50.28 per square foot based upon all leases in place. However, Mayfair ignores
that the Financing Appraisal specifically includes the “net effective” rent “that
represents the net effective rent for the tenants in place, as several tenants pay on a

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gross, or modified rent structure.” The net effective rent for tenants at the Mall
was calculated to be $29.27 per square foot, well below the Financing Appraisal’s
average market rate calculation.

¶27 The remand court found that the Mall was a “rental market [u]nto
itself and existing contract rents represent market rents.” The record is replete
with evidence supporting this finding. Kenney testified unequivocally that the
Mall’s rents were market rate, and Dr. Eppli explained in detail, in his report and
in his testimony, why the Mall generates its own unique market rate:

[M]alls generate … their own market rent in the unique
spaces that are provided within that mall…. Data coming
from recently signed leases and not third-party source[s] is
the best market data if recent leases have been contracted.

Every single space within a mall is likely to have its
own market rent. The second floor’s different from the
first floor, being proximate to Apple is—is different from
being down, let’s say, a dead corridor on the way out to the
parking structure.

[E]ach one of those spaces likely have a different
ability to lease at a different rate depending also on the type
of tenant you’re likely to put into that space as well.
Tenant mix matters.

Actual rents are reflective of market rents.

¶28 We conclude that the circuit court’s finding that the Mall’s actual
rents were market rate was not clearly erroneous because the finding is well-
supported in the record. “It is within the province of the factfinder to make
determinations of the weight and credibility of evidence.” Lowe’s Home Ctrs.,
405 Wis. 2d 616, ¶25.

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No. 2023AP1585

B. Property taxes and management fees were properly taken into
account.

¶29 Mayfair argues that the Financing Appraisal upon which the circuit
and remand courts relied failed to account for property taxes in violation of the
WPAM, resulting in an excessive assessment. It claims that the WPAM requires
assessors to add the tax rate to the capitalization rate (referred to as “loading the
cap rate”) to account for property taxes because future taxes will be based on the
appraised value.

¶30 Mayfair is correct that the WPAM directs assessors to account for
property taxes under a tier three income approach, but it incorrectly asserts that
loading the cap rate is the only way to properly account for property taxes. For
example, property taxes can be accounted for by listing them as an expense when
calculating NOI. The WPAM shows by example that the same property value is
reached whether the assessor loads the cap rate or whether the assessor includes
the amount of property taxes as an expense in the operating statement. WPAM 9-
26 through 9-27 (2013).9 Moreover, Dr. Eppli testified that using actual income
and expenses to calculate NOI, including actual property taxes and tenant
reimbursements, was “the normal course” of accounting for property taxes.

¶31 Mayfair argues that Dr. Eppli’s reliance on the Mall’s actual income
and expenses for the assessment periods violated the WPAM and Wisconsin law
because the Mall’s NOI for any given assessment period is not known until after

9
The same example is provided in the 2014 and 2015 versions of the WPAM.

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No. 2023AP1585

the assessment date. Mayfair points to the Principle of Change detailed in the
WPAM for support:

The factors that affect market value are constantly
changing. Not only are economic, social and government
forces constantly changing, but the property itself is subject
to change. Because change is constant, every opinion of
value is meaningful only in the context of the date to which
is [sic] applied. In Wisconsin, assessment values are
always as of January 1. Any changes to the property,
economy, or any other financial factors affecting value that
occur after that date, are not considered until the following
assessment cycle.

WPAM 7-14 (2013).10

¶32 Mayfair misunderstands the Principle of Change. An assessor’s
reliance on actual income and expenses for an assessment period is backward
looking as of the assessment date, even if all of the data for the entire assessment
period is not available until after the assessment date; it therefore does not include
any “financial factors affecting value that occur after” the assessment date because
the property’s actual income and expenses during an assessment period are
experienced before the assessment date. Additionally, Wisconsin law requires that
assessors base assessments on the “best information that the assessor can
practicably obtain,” WIS. STAT. § 70.32(1), and Dr. Eppli explained that using
actual income and expenses better accounts for increased property taxes and any
corresponding increases in reimbursements from tenants.

¶33 Mayfair complains that the appraisals and evidence relied upon by
the circuit and remand courts failed to deduct the Mall’s management fees,
resulting in excessive assessments. Specifically, Mayfair says that Dr. Eppli relied
10
The language is the same in both the 2014 and 2015 versions of the WPAM.

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No. 2023AP1585

on the Mall’s “CORE NOI” from Bakken’s report, and this figure did not include
management fees as an expense, resulting in an overstatement of the Mall’s
income and an excessive assessment.

¶34 In challenging the treatment of management fees, Mayfair places too
great an emphasis on the remand court’s general reliance on Dr. Eppli, and ignores
that the remand court’s conclusions were supported by other witnesses’ testimony
and evidence. For example, both the circuit and remand courts relied on Kenney
in determining that the Assessments were not excessive, and Kenney’s direct
capitalization approach did deduct management fees. Indeed, Dr. Eppli confirmed
that the Mall’s actual operating statements reflected a management fee for 2013-
2015, and Kenney deducted those fees in his direct capitalization approach
because he relied on the Mall’s historical reported expenses.

¶35 In sum, the circuit court’s finding that property taxes and
management fees were properly taken into account is support by the record and
not clearly erroneous. See Lowe’s Home Ctrs., 405 Wis. 2d 616, ¶25.

C. The capitalization rate adopted by the circuit court was not clearly
erroneous.

¶36 In its next argument contesting the City’s valuation, Mayfair
contends that the circuit court applied an unreasonable capitalization rate in
determining the Mall’s fair market value. Specifically, Mayfair says that although
the remand court heavily relied on Dr. Eppli in its decision, it refused to adopt
Dr. Eppli’s proposed capitalization rates.

¶37 We reject Mayfair’s argument. A direct capitalization approach
requires the appraiser to determine an appropriate market-based capitalization rate.

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No. 2023AP1585

This determination is made, in part, by a mall’s class designation: a designation in
a higher class corresponds to a lower capitalization rate, resulting in higher
property values, whereas a lower class designation corresponds to a higher
capitalization rate and results in lower property values.

¶38 Here, the remand court found the Mall to be a Class A mall, and this
finding is well-supported in the record. For example, Mayfair’s own SEC filings
and representations to shareholders acknowledge that the Mall is a Class A mall.
Notwithstanding that the Mall was a Class A mall, the remand court instead
decided to apply a blended capitalization rate that closely aligned with the City
assessor’s rate by averaging the capitalization rates for Class A and B+. The use
of a blended capitalization rate is supported by the evidence. Dr. Eppli pointed out
that the location of the Mall in Southeast Wisconsin could possibly make the Mall
“less than a Class A mall” meaning at the “bottom of the ‘A’ and top of the ‘B+’
mall markets.”

¶39 Accordingly, we conclude that the circuit court’s adoption of a
blended capitalization rate was reasonable and not clearly erroneous. See Lowe’s
Home Ctrs., 405 Wis. 2d 616, ¶25.

IV. Challenges to Dr. Eppli

¶40 Mayfair makes several challenges to Dr. Eppli’s testimony and
opinions. First, Mayfair argues that Dr. Eppli was not qualified to provide his
opinions because he has never prepared an appraisal report and was not a licensed
appraiser or assessor. Additionally, Mayfair complains that it was unable to
depose Dr. Eppli before trial because of tight scheduling caused by the impending
retirement of the remand court. Finally, Mayfair says that Dr. Eppli failed to

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comply and was unfamiliar with the Uniform Standards of Professional Appraisal
Practices (“USPAP”).

¶41 As to the challenges to Dr. Eppli’s qualifications and purported lack
of opportunity to depose Dr. Eppli, we reject Mayfair’s arguments as forfeited.
“Forfeiture is the failure to timely assert a right.” State v. Coffee, 2020 WI 1, ¶19,
389 Wis. 2d 627, 937 N.W.2d 579. “Under the forfeiture rule, a defendant may
forfeit a right if the defendant fails to object at the time the right is violated.” 11 Id.
By failing to timely object to Dr. Eppli’s appointment based on his lack of
qualifications and by not requesting a deposition prior to the evidentiary hearing,
Mayfair has forfeited these issues. See id.

¶42 As to Mayfair’s complaint that Dr. Eppli’s report is not USPAP
compliant, we observe that the WPAM does not require strict compliance with
USPAP. The WPAM (2015) reads:

USPAP is a set of property appraisal standards that were
developed primarily for transactions regulated by the
federal government. Assessors can refer to USPAP for

11
The forfeiture rule fosters the fair, efficient, and orderly administration of justice. Our
supreme court explained:

The purpose of the “forfeiture” rule is to enable the
circuit court to avoid or correct any error with minimal
disruption of the judicial process, eliminating the need
for appeal. The forfeiture rule also gives both parties
and the circuit court notice of the issue and a fair
opportunity to address the objection; encourages
attorneys to diligently prepare for and conduct trials; and
prevents attorneys from “sandbagging” opposing
counsel by failing to object to an error for strategic
reasons and later claiming that the error is grounds for
reversal.

State v. Ndina, 2009 WI 21, ¶30, 315 Wis. 2d 653, 761 N.W.2d 612.

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No. 2023AP1585

guidance, however, Wisconsin statutes, case law and the
[WPAM] contain the standards and practices required of
Wisconsin assessors. DOR is rescinding the requirement
that assessors comply with USPAP, retroactive to January
1, 2013.

WPAM 1-2 (2015).12 Therefore, even if Dr. Eppli’s report is not USPAP
compliant, that fact does not invalidate his opinions or make it erroneous for the
remand court to have relied upon them.

¶43 Mayfair complains that Dr. Eppli used information outside the
record to produce his report, and he did not provide that information to Mayfair
prior to the evidentiary hearing. However, Dr. Eppli testified that the only
information he considered that was outside the record was used to respond to the
specific question asked by the remand court about the reasonableness of the
increase in the assessment between 2012 and 2013. Dr. Eppli’s report includes the
data and information he relied upon to answer the remand court’s question.

¶44 In sum, we reject Mayfair’s arguments challenging Dr. Eppli’s
testimony and opinions.

V. Regency West and Appraisals Exceeding the Challenged
Assessments

¶45 Mayfair argues that the opinions of the City’s experts as to the value
of the Mall should have been excluded from evidence and not considered by the
12
The Wisconsin Department of Revenue (“DOR”) had previously planned on requiring
assessors to comply with certain USPAP provisions by 2012, but that deadline was extended to
2013 “with the understanding that 2013 was to be a year of cooperative learning on USPAP.”
WPAM 1-1 (2015). However, after input received from assessors, municipal officials, and DOR
staff after the year of cooperative learning concluded, DOR determined that USPAP standards
should be treated as guidance for assessors, and it rescinded the requirement that assessors
comply with USPAP retroactive to 2013. WPAM 1-2 (2015).

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No. 2023AP1585

circuit or remand courts because those experts appraised the Mall at a value higher
than those in the Assessments. Mayfair claims that this result is compelled by our
supreme court’s opinion in Regency West Apartments LLC v. City of Racine,
2016 WI 99, 372 Wis. 2d 282, 888 N.W.2d 611.

¶46 We reject Mayfair’s arguments. First, Mayfair has forfeited this
issue because it failed to timely object to the admission of the City’s expert reports
during the bench trial. See Coffee, 389 Wis. 2d 627, ¶19. Second, Mayfair
misreads Regency West and its subsequent clarification in Metropolitan
Associates, 379 Wis. 2d 141.

¶47 In Regency West, the court stated in a footnote: “We do not
consider the appraisals of [appraisers for the City of Racine] because their
appraisals exceeded the valuations of Racine for both 2012 and 2013.” Id., 372
Wis. 2d 282, ¶57 n.19. The court cites Trailwood Ventures, LLC v. Village of
Kronenwetter, 2009 WI App 18, ¶¶12-13, 315 Wis. 2d 791, 762 N.W.2d 841, as
support, explaining that “a taxation district that has accepted the payment it
requested has agreed that its taxation value is the maximum value that it may
seek” and “WIS. STAT. § 74.37 permits a refund to the taxpayer or may uphold the
status quo, but there is no authority for deficiency judgments.” Regency West,
372 Wis. 2d 282, ¶57 n.19.

¶48 In Metropolitan Associates, the court revisited the Regency West
footnote in the context of mass appraisals. In response to the very same argument
Mayfair is making in the instant case (i.e., that assessments cannot be defended by
appraisals where the appraised value exceeds the assessed value), the
Metropolitan Associates court stated that this interpretation of Regency West
“would mean that an assessor would be unable to defend an assessment if the

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No. 2023AP1585

value he or she derived in a single property appraisal exceeded the initial mass
appraisal assessment.”13 Metropolitan Assocs., 379 Wis. 2d 141, ¶64 n.15. This
result is “absurd,” the court says, because the ultimate question to be resolved
when a taxpayer challenges an initial assessment “is not whether the initial
assessment was incorrect, but whether it was excessive.” Id.

¶49 Mayfair argues that the interpretation of Regency West set forth in
Metropolitan Associates is limited to contexts where single property appraisals are
used to defend mass appraisals, but we disagree. Metropolitan Associates
emphasized that the ultimate question in a tax assessment challenge is whether the
assessment is excessive, not simply that the assessment is incorrect, and appraisals
where the value of the property exceeds its assessed value tend to support the
conclusion that the assessment is not excessive.

¶50 We agree with the City that the language of footnote 19 of Regency
West means that, in excessive assessment claims under WIS. STAT. § 74.37, a
court is not able to increase an assessment to bring it in line with an expert’s
appraised value if the appraised value is greater than the assessed value. It does
not prevent those appraisals from being used as evidence that the challenged
assessments are not excessive. Accordingly, we reject Mayfair’s argument that
Regency West required the exclusion of the City’s expert reports and opinions
from evidence.

13
The property in Metropolitan Associates was assessed using mass appraisal, and the
WPAM “dictates that a mass appraisal, if challenged, be defended with a single property
appraisal.” Metropolitan Assocs. v. City of Milwaukee, 2018 WI 4, ¶64 n.15, 379 Wis. 2d 141,
905 N.W.2d 784.

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No. 2023AP1585

CONCLUSION

¶51 For the foregoing reasons, the order of the remand court is affirmed.

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

22