Wisconsin’s bright line “building permit rule” precludes takings claim

by Hannah Dankbar

McKee Family, LLC and JD McCormick Company, LLC v City of Fitchburg
Wisconsin Court of Appeals, November 5, 2015

The City of Fitchburg rezoned property owned by McKee before McKee was able to apply for a building permit. The rezoning reclassified the property from Planned Development District (PDD), which allows high-density and mixed-use development, to Residential-Medium (R-M) district, which permits lower-density development. McKee argued that McKee had a vested right in the preexisting zoning designation and that the rezoning constituted a taking. The lower court concluded that McKee did not have a vested right in the preexisting zoning classification, and McKee appealed.

In Fitchburg, before a property owner can develop land under a PDD classification they have to go through multiple steps including: submitting a proposed general implementation plan to be approved by the City’s Plan Commission and the Fitchburg Common Council; if approved the property owner submits a specific implementation plan before applying for a building permit.  Fitchburg approved the lots in question in 1994 when the McKee’s predecessor owned the lots. In 2008 JD McCormick, working with McKee, submitted the specific implementation plan while two Fitchburg alders petitioned the City to rezone the property. After public hearings, and before reviewing the specific implementation plan, the Council rezoned the property. THe rezoning took effect before any commission review of the specific implementation plan.  The Council concluded that the rezoning was “in the best interest of maintaining a stable surrounding neighborhood to reduce the lots.”  The primary issue was whether McKee had obtained a vested right in the preexisting zoning designation, despite not being eligible for and not applying for a building permit.

The court concluded that there is no vested right based on Wisconsin’s bright-line “building permit rule.”  Wisconsin focuses on building permits and applications for permits to define the point at which a property owner develops a vested interest in the property. Neither McCormick nor McKee ever applied for or received a building permit. McKee argued that Wis. Stat. § 62.23(7) creates private contractual rights for developers, but the Court did not interpret the statute that way. There is nothing in the statute that obligates a municipality to maintain a specified zoning designation. To the contrary the statute authorizes municipalities to amend or repeal zoning designations as long as they follow specific procedures (§62.23(7)(d)(2) and (3)).  McKee argued that they made multiple investments in the property without applying for the permit and these investments demonstrate a vested right and a contract with the City. The court rejected this argument in a prior Wisconsin Supreme Court case, and likewise rejected it here.  The trial court determination was upheld.

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