Law Update: Winter '98 Case Notes

By Richard Lehmann
WAPA Legal Counsel
Boardman, Suhr, Curry and Field

A property owner sought to build a home on a property with unique circumstances involving being bisected by a creek.

Looking at the proceedings, the Court of Appeals concluded that the "no reasonable use" test of the State v. Kenosha County Board of Adjustment case, 218 Wis.2d 396, 577 N.W.2d 813 (1988) was not satisfied: "There was no evidence presented that a different design of the house could not incorporate the setback requirement ... The property owner must present evidence demonstrating that no other home design could incorporate the setback requirement."

In a concurring opinion, Judge Nettesheim wrote that the effect of the (Supreme) Court's (in the Kenosha County case) is to significantly curtail a board of adjustment's discretion in (variance) matters. It will be a rare case in which a landowner will be able to meet the "no feasible use" test.

State ex rel. Spinner v. Kenosha County Board of Adjustment, Case No. 97-2094, decided November 11, 1998 by the Court of Appeals. (1998 WL 782004 (Wis.App.)

A property owner was erroneously issued a permit in 1984 allowing construction of a home with a basement floor elevation 3.7 feet below the regional flood elevation level. The permit was erroneously issued by a town building inspector who failed to refer the matter to the county. In 1995, the property owner sought a permit from the county for an addition. The county then discovered the problem. The property owner applied for an after-the-fact variance for the basement. The board of adjustment approved on grounds that removing the basement would be a major burden and the property owner shouldn't be put through that burden when they had received a permit. The Wisconsin Department of Natural Resources sued; the trial court upheld the zoning board's decision and the State then appealed to the Court of Appeals. The Court of Appeal decision holds that the proper standard for the hardship test for variances is whether no feasible use can be made of the property without the variance being granted. In this case, the property can clearly be used for residential purposes without having a basement below the flood elevation. The property owners argued that their situation was unique. The court said uniqueness has to involve some special feature of the land, not the circumstances of the owners.

Finally, the Court of Appeals reiterates prior rulings that the erroneous issuance of a building permit does not give a permit holder a vested right to continue an unlawful use of the property. The property owners "cannot argue hardship due to the negligence of the town's building inspector."

State v. Outagamie County Board of Adjustment, Case No. 98-10460, decided September 22, 1998 by the Court of Appeals. Unpublished.

Property owners sought a variance from the shoreland setback rule to allow the addition of a bedroom to an existing home. The property owners argued that any other location on the property would require relocating all or part of the driveway, the swimming pool, the septic tank or the septic drain field. The court said that these arguments do not satisfy the standard of "no feasible use."

"Although it may be expensive (to modify other features of the lot to create a space for the bedroom that does not infringe upon the 75-foot setback), this is a practical, straightforward alternative to a variance and we are satisfied that the board could rationally rule that it gave (the property owners) feasible use of their property. The additional costs of such action does not change this; economic factors are not controlling."

Cervanka v. Sawyer County, Case No. 98-0623, decided September 22, 1998, by the Court of Appeals. Unpublished.

Property owners had won a victory at the trial court level in challenging the down- zoning of their property. The City of South Milwaukee then appealed to the Wisconsin Supreme Court. Eventually, the Wisconsin Supreme Court upheld the down zoning against the property owners' claim that they had vested rights to proceed under the pre-existing zoning because they had submitted plans under that zoning. This was the Lake Bluff Housing Partners v. City of South Milwaukee case of 1995, 197 Wis.2d 157, 540 N.W.2d 189 (1995).

While that case was on its way to decision at the State Supreme Court, the property owners took out permits and built the building. The permits were issued with a notation warning that if the City succeeded in getting the down-zoning sustained, the permits would be revoked.

This is exactly what happened, after the Supreme Court decision, which was after the building was constructed. The City revoked the building permits and issued orders to raze the building.

The developer then challenged these orders to the Court of Appeals.

The Court of Appeals said the following: Lake Bluff (the developer) gambled on a favorable outcome of the prior litigation. It lost. It seeks to retain the benefit of its gamble, nonetheless, and avoid the mandate of Wisconsin Statute §62.23(8) (allowing the City to seek removal of an illegal building) because it completed the development while the lawfulness of that development was being litigated and South Milwaukee did not seek a stay of the trial court order pending appeal. This it may not do. The court went on, however, to note that it had recently decided the Forest County case in which trial courts are granted limited authority to allow illegal buildings to stand. Accordingly, the Wisconsin Court of Appeals sent the matter back to the trial court asking it to examine whether the rulings in the Forest County case apply to zoning by a city and, if so, whether the "totality of the circumstances" justify the abatement order.

Lake Bluff Housing Partners v. City of South Milwaukee, Case No. 97-1339, 1998 WL 665396 (Wis.App.) decided September 29, 1998 by the Court of Appeals. Recommended for publication.

The Calumet County Exclusive Agricultural Zoning District does not list dog breeding as an allowable use. Dog breeding is a conditional use in the nonexclusive Agricultural District. When that is the case, the use must be limited to the district in which it is listed.

Property owners claimed that the dogs were a hobby, not a business. The County said that the volume of puppy production, advertising for puppy sales and write-offs on income tax returns indicate that the hobby had crossed the line and become a business. "This is a nonagricultural use of the land."

Calumet County v. Schroeder, Case No. 98-1196, Court of Appeals decision dated September 30, 1998. Unpublished.

Washburn County Board of Adjustment granted a conditional use for a gravel pit. Neighbors challenged arguing, among other things, that the berms required on the perimeter of the property violated the highway setback. The court rejects this argument stating that neither the gravel pit nor the temporary berms were to be considered as structures for purposes of determining their allowability within a highway setback.

Jacobs v. Washburn County Board of Adjustment, Case No. 98-0878, decided October 6, 1998 by the Wisconsin Court of Appeals. Unpublished.

A county zoning ordinance had language on signage that was extremely ambiguous. Rules supposedly applicable to signs in commercial districts were found under a heading addressing only signs in residential districts. Earlier court cases have said that regulatory language in an ordinance must be clear in order to be enforceable. Here the court found a purpose of regulating signs and a history of treating commercial properties under the rules found within the residential districts sufficient to indicate a legislative intent that the residential language applied to commercial properties.

State ex rel. Hoey Outdoor Advertising, Inc. v. Polk County Board of Adjustment, decided November 3, 1998 by the Court of Appeals. Unpublished.

A special state statute separate from the regular zoning enabling laws, allows a local government that owns an airport to adopt and enforce an ordinance regulating land use to "protect the aerial approaches to . . . the airport." These ordinances can extend three miles from the boundary of the airport. Wis. Stats. §114.136. Outagamie County owns an airport. It adopted an ordinance dividing the three-mile area into three zones. One of the zones allowed residential use at one-acre minimum lot size per dwelling unit. A property owner that wanted to build duplexes on lots smaller than two acres challenged the county airport approach protection zone on the grounds that such zoning could only regulate building height, not residential density. The Court of Appeals disagreed, holding that the statute allows regulation of use and location, as well as regulation of height and size of buildings. The property owner then argued that the density rule had no rational relationship to the purpose. The county argued that the density rule was to allow enough space to accommodate vegetation to buffer noise, to limit the number of residences impacted by airport noise and to lessen exposure in case of emergency or crash landings. The court accepted the reduced exposure argument and the safety argument.

Northwest Properties v. Outagamie County, Case No. 97-3653, decided December 1, 1998. Unpublished.

A fast growing Ohio community (Beavercreek, near Dayton) developed an impact fee for transportation funding, based substantially on the APA literature. The rate was $356 per dwelling unit for multi-family, $594 per dwelling for single-family, and $3,267 per 1,000 square feet of building space for commercial development, and $1,010 per 1,000 square feet for office development. The rates were based upon trip generation. The calculations behind the fee isolated transportation expenses attributable to new growth. New growth was not charged for transportation costs to meet pass-through or pass-by traffic needs. The Ohio Court of Appeals has struck down the transportation impact fee in a decision issued October 23, 1998. The City is seeking to appeal to the State Supreme Court.

Several issues are discussed in the 125-page opinion. The City collected approximately $2 million in impact fees in the first 21/2 years. All of these fees were spent fairly promptly, although a substantial amount was spent defending the fees against the lawsuit brought by the Builders Association. However, within the same 21/2 years, the City put only $25,000 from local taxes or state or federal funds into the transportation improvements that were predominantly funded by the impact fee revenues. Furthermore, the City had not obligated itself, within its impact fee ordinance, to fund the portion of the transportation improvements that were attributable to pass-through or pass-by traffic. This was the single strongest reason why the fee was struck down. The calculations gave a credit to the fee payers for the property taxes they would pay toward meeting the pass-through and pass-by needs. This was not enough; the City must commit itself to funding the "match."

Other criticisms raised by the court with respect to the fee program dealt with the fact that the City had not documented LOS standards in order to determine whether there were either existing deficiencies or excess capacity, whether the addition of sidewalks, curbs, gutters and storm sewers in new road construction, whereas many of the old roads were rural cross sections, constituted a change in level of service. The court went along with curb and gutter, but balked at sidewalks and storm sewers, in the absence of more precise proof by the City.

The Builders Association also introduced a memo from the State DOT saying that traffic projections used by the City were excessive. The accounting for the collected fees placed them in a separate account. However, interest earned on that account was moved to the City's General Fund. This offended the court.

It is important to note that the Ohio decision was not based upon the unique wording of an Ohio impact fee statute. There is no impact fee statute in Ohio, or at least there was none during these court proceedings. Additionally, the court adopted doctrines on burden of proof and review standards that were essentially the same as the doctrines in Wisconsin law, independent from the Wisconsin Statute on impact fees. For this reason, the principles of the Ohio case need to be taken seriously in Wisconsin.

If new development is paying only a portion of the cost of an improvement because the remainder of the cost is attributable either to making up deficiencies or accommodating growth pressures originating outside the municipality or the impact fee district, it is not enough simply to scale back the amount of the costs that are assigned to the impact fee and to give credit for tax contributions or other contributions that new development will make to the old growth or pass-through portion of the cost package. It is necessary for the portion of costs attributable to sources other than new growth to be funded and for the City to make commitments to that effect at the same time the impact fee is put in place.