Columbus Park Housing Corp. v. City of Kenosha

SHIRLEYS. ÁBRAHAMSON, C.J.

¶ 47. 0dissentin-g). Applying a strict but reasonable interpretation to tax exemption statutes,1 I would affirm the decision of the court of appeals and the judgment of the circuit court. I dissent because the majority opinion's approach is more strict than reasonable.

¶ 48. The issue in this case is whether Columbus Park Housing Corp., a not-for-profit benevolent housing association, is entitled to a tax exemption under Wis. Stat. § 70.11(4). The City of Kenosha stipulated that Columbus Park is a benevolent association within the meaning of § 70.11(4). Indeed, the City granted tax exemptions to Columbus Park's properties while they were being rehabilitated. The City denied exempt sta*88tus to the properties only when the properties were subsequently occupied by low-income individuals. The sole dispute between Columbus Park and the City is over whether Columbus Park satisfies the lessee identity requirement contained in the preamble of Wis. Stat. § 70.11.

¶ 49. The court of appeals in this case concluded that the City's interpretation of Wis. Stat. §§ 70.11 and 70.11(4) produces an absurd result, namely, that Columbus Park qualifies for a tax exemption so long as it does not rent its properties to low-income individuals. The incongruity arises because Columbus Park cannot be a tax-exempt benevolent association to provide low-income housing to the poor and at the same time provide the benevolent service if it wishes to take advantage of the property tax exemption under §70.11(4). In essence, the majority opinion's interpretation undermines the benevolent purpose of the benevolent institution. This is a strange interpretation and outcome, and our court has consistently held that "an absurd or unreasonable" construction of a statute is to be avoided.2 An exemption should not be construed so narrowly as to defeat the legislative purpose.

¶ 50. The legislative history of Wis. Stat. § 70.11(4) shows that similar restrictions on leasing *89have been part of the statute since the 19th century. The statutory history about the meaning of the restriction is inconclusive. I agree with Columbus Park that the primary concern of the legislature and courts seems to have been to limit the leasing of otherwise tax-exempt property for commercial purposes, not to prevent leasing to individuals who are the objects of a benevolent association's benevolent activities.

¶ 51. The majority opinion makes much of the fact that the word "lessee" is an unambiguous legal term and resorts to the legal dictionary for its meaning.3 Yet case law has recognized that the word "leased" in a statute does not always mean leased4 and that the word "owned" in a statute does not always mean absolute ownership.5 These words depend on their context and legislative intent.

¶ 52. The majority opinion focuses on the fact that an individual signs the "lease," and the individual, not the Kenosha Housing Authority, is evicted on a breach of that lease.6 While these are legitimate points that explain why, as conceded by the court of appeals, the Housing Authority is not a true lessee, the majority opinion does not account for the fact that the low-*90income tenants aremot true lessees. True lessees do not require large subsidies from the government to secure housing. Likewise, true lessees need not comply with the stringent requirements of a government agency in order to maintain their leasehold.7

¶ 53. The court of appeals wisely acknowledged that although the Housing Authority "is not the true lessee of the properties within the technical definition of the term, the Authority's control is a relevant consideration in making a determination as to the ability of [Columbus Park] to qualify for an exemption."8 The court of appeals determined that even though the Housing Authority's name is not on the lease, "to pretend that [Columbus Park's] tenants are independent lessees ignores the role of the Authority in administering and subsidizing the tenants."9 I agree with the court of appeals that the Kenosha Housing Authority's pervasive control over the housing rentals coupled with its substantial financial contribution to the rent of the *91low-income occupants rendered the Housing Authority a lessee for purposes of this tax exemption statute.

¶ 54. A strict but reasonable construction of Wis. Stat. §§ 70.11 and 70.11(4) would appreciate that the relationship between the Housing Authority and the low-income individuals occupying Columbus Park's housing is sufficiently substantial to qualify the Housing Authority as a lessee for purposes of § 70.11. This interpretation of the statute is the better interpretation because it avoids the illogical result of discouraging benevolent associations created to provide low-income housing from providing low-income housing.

¶ 55. For the foregoing reasons, I dissent.

Deutsches Land, Inc. v. City of Glendale, 225 Wis. 2d 70, 80, 591 N.W.2d 583 (1999).

See, e.g., State v. Delaney, 2003 WI 9, ¶ 14, 259 Wis. 2d 77, 658 N.W.2d 416 ("[W]e may construe a clear and unambiguous statute 'if a literal application would lead to an absurd or unreasonable result1"). For cases reiterating the same interpretive rule, see, e.g., State v. Jennings, 2003 WI 10, ¶ 11, 259 Wis. 2d 523, 657 N.W.2d 393; State v. Zielke, 137 Wis. 2d 39, 51, 403 N.W.2d 427 (1987); DeMars v. LaPour, 123 Wis. 2d 366, 370, 366 N.W.2d 891 (1985); Green Bay Redevelopment Auth. v. Bee Frank, Inc., 120 Wis. 2d 402, 409, 355 N.W.2d 240 (1984); City of Madison v. Town of Fitchburg, 112 Wis. 2d 224, 236, 332 N.W.2d *89782 (1983); Braun v. Wis. Elec. Power Co., 6 Wis. 2d 262, 94 N.W.2d 593 (1959); Guse v. Indus. Comm'n, 189 Wis. 471, 476, 205 N.W. 428 (1925); Ricco v. Riva, 2003 WI App 182, ¶ 35, 266 Wis. 2d 696, 669 N.W.2d 193.

Majority op., ¶ 18.

Town of Menominee v. Skubitz, 53 Wis. 2d 430, 438, 192 N.W.2d 887 (1972) (the term "leased lands" in a tax statute "should be construed broadly enough to encompass a multitude of situations").

State v. Jelco, 1 Wis. 2d 630, 635, 85 N.W.2d 487 (1957) (the word "owned" can be used to designate a great variety of interests in property and does not have to be restricted to absolute ownership).

Majority op., ¶¶ 19-24.

As the court of appeals explains:

The Authority: (1) requires new tenants of publicly-subsidized housing in the City to attend an orientation session that the Authority holds, (2) issues vouchers to income-qualified tenants that allows them to participate in the Section 8 housing program, (3) conducts an initial inspection of any Columbus Park rental unit selected by an income-qualified tenant to ensure compliance with applicable minimum housing standards, (4) conducts an annual inspection of Columbus Park's Section 8 rental units to ensure compliance with applicable minimum housing standards, (5) requires reports to be made by Section 8 tenants directly to the Authority showing any changes in monthly income, and (6) makes monthly adjustments to Section 8 tenants' rent subsidies based on changes in their income.

Columbus Park, 259 Wis. 2d 316, ¶ 25 n.4.

Id., ¶ 26.

Id.