Conditional use permit requirement did not constitute a taking

by Victoria Heldt

Peter J. Butzen, D/B/A Falls Metals, Inc. v. City of Sheboygan Falls
(Wisconsin Court of Appeals, February 29, 2012)

Peter J. Butzen owns a piece of property within the City of Sheboygan Falls that is zoned C2 commercial.  He operated a scrap metal recycling business on the land during the 1990s which grew in size to the point that it appeared to be a junkyard.  In January 2000 the City decided the use of the land exceeded the scope of what was permitted in the C2 district.  It advised Butzen to clean up and make some modifications and apply for a conditional use permit, which Butzen did in February.  In April 2000 (before it considered Butzen’s application) the City amended the ordinance under which Butzen applied with Ordinance 11.  This ordinance eliminated all permitted uses in C2 zoning districts unless the owner received a conditional use permit.  The City advised Butzen that if he performed the specified cleanup actions, the committee would recommend his permit application be granted.  Butzen was given several deadlines through 2001 to complete the cleanup, but never completed the actions.

In November 2007 Butzen filed for a conditional use permit but was denied since the application was incomplete.  In July 2008 the Supreme Court decided Town of Rhine v. Bizzell in which it concluded that a zoning provision such as Sheboygan Falls’ Ordinance No. 11 is unconstitutional on its face if it precludes any use as of right in a zoning district and if the limitation bears no substantial relation to the public health, safety, morals or general welfare.  In response, the Sheboygan Falls passed a moratorium on development in its C1, C2, and C3 zoning districts to prevent any further development until it decided how to move forward after the Town of Rhine ruling.

Butzen continued to use his property and filed a complaint seeking a judicial determination regarding the constitutionality of Ordinance 11 and questioning the validity of the City’s moratorium.  The circuit court, following the lead of the Supreme Court in the Town of Rhine case, declared Ordinance 11 to be unconstitutional.  It did, however, uphold the validity of the moratorium.  Butzen filed an inverse condemnation complaint asserting that the City’s actions amounted to a taking of his property.  He also raised a substantive due process claim under 42 U.S.C. §1983 that the City’s efforts to enforce the ordinance violations were arbitrary and capricious.  The circuit court found that he did not sufficiently establish either of the claims and that they were barred by a statute of limitations.  This appeal followed.

On appeal, Butzen focused only on the “takings” claim.  He asserted that “because of the Town of Rhine ruling, Ordinance No. 11 unconstitutionally eliminated all use of his C2-zoned property without a conditional use permit, resulting in a regulatory taking.”  According to statute, a regulatory taking occurs when a regulation denies a landowner all or substantially all practical uses of his or her property.  The Court noted that Butzen overlooked two key findings within the circuit court’s rulings.  First, the denial of Butzen’s permit was based on the ordinance in effect prior to Ordinance 11, so the determination of Ordinance 11 as unconstitutional was not relevant to his claimed injury.  Second, the fact that Butzen needed a conditional use permit to run the scrap metal shop did not deprive him of “substantially all” beneficial uses of the property since he could still conduct other business there.  The Court concluded Butzen did not sufficiently show that a regulatory taking occurred and affirmed the circuit court’s decision.

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