Appeals Court Clarifies State Property Tax Exemption Statute after 2009 Change

By Joe Forward, Legal Writer, State Bar of Wisconsin

Aug. 27, 2012 – A retirement home without a benevolent use is still exempt from property taxes under a state exemption, according to a state appeals court.

That is, nonprofit entities licensed, certified, or registered under Wis. Stat. ch. 50, which governs the licensing procedures for care and service residential facilities, hospitals, rural medical centers, and hospices, don’t need to show benevolence to qualify for the exemption.

Wis. Stat. section 70.11(4) states in pertinent part that property owned by “churches or religious, educational, or benevolent associations, or by a nonprofit entity that is operated as a facility that is licensed, certified, or registered under ch. 50,” is exempt from property taxes.

Beaver Dam Community Hospitals Inc. runs the Eagle’s Wings facility, a community-based residential facility for seniors that operates under ch. 50. Despite the section 70.11(4) exemption, the City of Beaver Dam assessed property taxes against the facility.

It argued that section 70.11(4) applies only to facilities that show a benevolent use of the property. But in Beaver Dam Community Hospitals Inc. v. City of Beaver Dam, 2011AP1479 & 2011AP2693 (Aug. 23, 2012), the District IV Wisconsin Court of Appeals disagreed.

Noting the case as one of first impression, the three-judge panel concluded that following statutory revisions by the state Legislature in 2009, “Chapter 50 facilities owned by nonprofits are now a distinct exempt category within the statute.”

It rejected Beaver Dam’s argument that the new statute creates ambiguity as to whether ch. 50 entities must still show benevolent use, and ambiguity should be resolved against the taxpayer. But the appeals court found the statute to be unambiguously clear on its face.

“The legislature established in the statute that Chapter 50 facilities owned by nonprofit entities are eligible for a statutory tax exemption, regardless whether they are benevolent,” Judge Blanchard wrote. “The wisdom or broader implications of this policy choice was, and remains, for the legislature to decide.”