On July 20, 2017, state lawmakers Rep. Adam Jarchow (R-Balsam Lake) and Sen. Tom Tiffany (R-Hazelhurst) introduced legislation designed to reverse several important property rights cases recently decided by both the U.S. Supreme Court and Wisconsin Supreme Court. These cases have highlighted the need for legislative action to adequately protect the rights of property owners to reasonably use and develop their property.
Background
Recent federal and state court decisions have highlighted the need for legislative action to adequately protect the rights of property owners to reasonably use and develop their property. The U.S. Supreme Court and the Wisconsin Supreme Court have decided three important property rights cases within the last several months against the interests of property owners:
Murr v. Wisconsin regarding substandard lots and regulatory takings.
AllEnergy v. Trempeleau County regarding conditional use permits.
McKee v. City of Fitchburg regarding vested rights.
Murr v. Wisconsin regarding substandard lots and regulatory takings.
AllEnergy v. Trempeleau County regarding conditional use permits.
McKee v. City of Fitchburg regarding vested rights.
Among other things, these cases demonstrate the need to develop a statutory framework at the state level to address development approval processes at the local level that have become increasingly more subjective, arbitrary and unfair to property owners.
Proposed legislation
In response to these unfavorable court rulings, the WRA, which participated in each of these cases through the WRA Legal Action Program, has worked with state lawmakers to introduce legislation that would better protect property rights, create a more predictable development approval process and encourage greater investment in real estate in Wisconsin. Specifically, the legislation contains the following key provisions:
Substandard lots: The proposal would protect the ability of property owners to develop and sell all substandard lots that were legal when they were created but do not meet current lot size requirements. In other words, all substandard lots would be grandfathered and local governments would be prohibited from requiring adjacent, substandard lots in common ownership to be merged. Currently, over 50 counties have lot-merger ordinances in effect. Finally, the proposal overturns the U.S. Supreme Court’s recent decision in Murr v. Wisconsin, which upheld St. Croix County’s lot-merger ordinance as a reasonable use of the county’s policy power and declared that such lot-merger ordinances did not constitute a regulatory taking. Specifically, the proposal contains the following provisions:
- A definition of “substandard lot.”
- Grandfathering all substandard lots by allowing them to be sold or built upon according to existing building code requirements.
- Prohibiting local governments from imposing lot-merger requirements.
- Identifying each individual lot as “property” for purposes of all government actions and inverse condemnations regardless of whether the lot is contiguous and/or under common ownership with other lots.
- A definition of “substandard lot.”
- Grandfathering all substandard lots by allowing them to be sold or built upon according to existing building code requirements.
- Prohibiting local governments from imposing lot-merger requirements.
- Identifying each individual lot as “property” for purposes of all government actions and inverse condemnations regardless of whether the lot is contiguous and/or under common ownership with other lots.
Conditional use permit: The proposal would create a statutory framework for conditional use permits (CUPs) and provide additional certainty for property owners by establishing a more fair and reasonable approval process. Currently, no statutory framework exists for CUPs. Moreover, property owners are often subjected to decision making and tremendous uncertainty with respect to the CUP process. Finally, the proposal would overturn the Wisconsin Supreme Court’s recent decision in AllEnergy v. Trempeleau County, which held that property owners are not entitled to a CUP if they satisfy or agree to satisfy all the conditions and requirements established by the local government. Specifically, the proposal contains the following provisions:
- A definition of “conditional use.”
- Requiring decisions regarding CUPs to be based upon “substantial evidence.” Substantial evidence means evidence that reasonable persons would accept in support of a conclusion. Public comment based solely on personal opinion, uncorroborated hearsay or speculation does not constitute substantial evidence.
- Requiring all conditions and standards to be reasonable and measurable.
- Requiring local government to grant the CUP if the property owner satisfies or agrees to satisfy all CUP conditions and requirements.
- A definition of “conditional use.”
- Requiring decisions regarding CUPs to be based upon “substantial evidence.” Substantial evidence means evidence that reasonable persons would accept in support of a conclusion. Public comment based solely on personal opinion, uncorroborated hearsay or speculation does not constitute substantial evidence.
- Requiring all conditions and standards to be reasonable and measurable.
- Requiring local government to grant the CUP if the property owner satisfies or agrees to satisfy all CUP conditions and requirements.
Variances: Codifies current law by defining “area variance” and “use variance” and states the burden of proving “unnecessary hardship” can be met by demonstrating that strict compliance with a zoning ordinance would:
- Unreasonably prevent the property owner from using his or her property for a permitted purpose or would render conformity with the zoning ordinance unnecessarily burdensome; area variance.
- Leave the property owner with no reasonable use of the property in the absence of a variance; use variance.
- Unreasonably prevent the property owner from using his or her property for a permitted purpose or would render conformity with the zoning ordinance unnecessarily burdensome; area variance.
- Leave the property owner with no reasonable use of the property in the absence of a variance; use variance.
Vested rights: Clarifies that an application for a development permit is grandfathered from any changes to local ordinances at the time the application is submitted even if the local government has multiple permit requirements for the development. Current law grandfathers the application for a development permit from changes to local ordinances if the application must be approved by multiple local governments but not multiple approvals by the same local government. In doing so, the legislation makes it crystal clear that property owners, like the ones in McKee v. City of Fitchburg, will not have the rules of the game unfairly changed after they begin the development approval process.
Regulatory takings/inverse condemnation: Makes it clear that regulatory takings can occur if a regulation eliminates most, but not all, reasonable use of a property. The bill codifies the Penn Central balancing test adopted by the U.S. Supreme Court in 1978 in the landmark private property rights case, Penn Central Transportation v. New York City, 438 U.S. 104 (1978).
The legislature will likely hold a public hearing on the legislation in September or October when the legislature reconvenes for the fall floor period.
