by Victoria Heldt

Gage Inc., LLP v. Village of Sister Bay
(Wisconsin Court of Appeals, July 6, 2011)

Gage Inc., LLP wanted to develop a three-story condominium/hotel in downtown Sister Bay.  The district in which they planned to build was zoned “B-3 Downtown Business District” and was adjacent to property owned by the Village president, Denise Bhirdo.  Gage planned to set aside 34 of the units as residential condominiums and utilize the rest of the units as hotel rooms.  While the B-3 district zoning regulations allowed buildings to be used as hotels, a condominium/hotel would require a conditional use permit.  The Village Plan commission recommended denying the permit after several public hearings.  Subsequently, the Village Board voted to deny the conditional use permit.  Gage appealed to the district court, which affirmed the Board’s decision.

Gage first argued that the Village’s conditional use provision in the zoning ordinance was unconstitutionally vague because it failed to describe what factors will influence whether a permit is issued or not issued.  The Court noted that the zoning code defines conditional uses as “uses of a special nature as to make impractical their predetermination as a permitted use in a district…which are designed to cover situations where a particular use, although not inherently inconsistent with the use classification of a particular zoning district, may create special problems and hazards if allowed to develop and locate as a matter of right in a particular zoning district.”  The zoning ordinance also describes the intent of the B-3 Downtown Business District which is to “offer greater flexibility in area requirements and setback requirements than other districts in order to promote the reuse of buildings and lots and the construction of new developments…consistent with the existing scale of development.”  The zoning provision also states that “conditional uses will be reviewed to see if they are in accordance with the purpose and intent of the chapter and is found to be not hazardous, harmful, offensive or otherwise adverse to the environment or the value of the neighborhood or the Village.”  The Court concluded that the conditional use ordinance, in tandem with the B-3 district statement of intent, was sufficiently definite.  The Court noted that general  criteria or standards for conditional uses have previously been accepted by the Court, and that allowing the Board to exercise its discretion is indeed appropriate.  “[For example] an ordinance regulating site development need not be created with a particular degree of specificity other than is necessary to give developers reasonable notice of the areas of inquiry that will be examined in approving or disapproving the development.”  For these reasons, the Court concluded that the conditional use ordinance was sufficiently definite.

Gage also claimed that the Board’s decision was arbitrary and without sufficient evidence.  He argued that the very same building he was proposing would be acceptable if all of the rooms were used as hotel rooms, so the only relevant issue is the intended use of 34 of the rooms.  Therefore, he reasoned that the entire project could not be denied based only one aspect of the project.  The Court noted that Gage cited no authority for this argument and disregarded it.  In any case, the Court ruled that the Board based its decision on protecting the intent of the downtown district.  It was meant to remain a primarily commercial area and to encourage business for the surrounding restaurants and shops.  Residential condominiums have a lower turn-over rate and house residents who are more likely to eat in and not do as much business in the downtown area.  In addition, condominium owners in a vacation area such Sister Bay usually reside more permanently elsewhere, so the condominiums could sit vacant for a good portion of the year.  Therefore, the Court reasoned that the Board correctly based its decision on protecting the welfare of the surrounding area.

Gage also contended that there was a high risk of bias in the decision since Denise Bhirdo (adjacent property owner) sat on both the Village Plan Commission and on the Village Board.  Gage claimed he negotiated with Bhirdo prior to his request for a permit regarding the project and agreed to purchase her property.  He testified that, after his plans changed and he did not need her property, she opposed the plan and influenced the Board.  The Court ruled that there was no impermissible risk of bias since Bhirdo excused herself from all public hearings of both the Planning Commission and the Village Board and did not case any votes regarding the case.

The Court affirmed the district court’s ruling in favor of the Village.