Court affirms decision to approve renovation of historic hotel

by Victoria Heldt

Frederic E. Mohs, et al. v. City of Madison
(Wisconsin Court of Appeals, October 27, 2011)

In this case, Mohs, among other landowners, challenged the City of Madison Common Council’s decision to grant a Certificate of Appropriateness to Landmark X.  The Edgewater Hotel, owned by the Faulkner family, was in need of renovation in order to be “economically sustainable.”  Landmark X, a development company, planned to purchase the property for redevelopment.  Since the building was located within an historic district, Landmark X needed a Certificate of Appropriateness from the City’s Landmarks Commission.  The Commission denied the certificate, but the City’s Common Council overruled that decision within its jurisdiction and granted the certificate.  The case went to the circuit court, which affirmed the Council’s decision.

The Court begins its analysis by noting that, in a certiorari review, the appellants (in this case the landowners) have the burden to show whether 1) the governmental body’s decision was within its jurisdiction; 2) the body acted according to law; 3) the decision was arbitrary or oppressive; and 4) the evidence of record substantiates its decision.  The Court found that the landowners failed to meet the burden.  They based most of their argument on the governing ordinance which read:

“The Council may, by favorable vote of two-thirds (2/3) of its members, based on the standards contained in this ordinance, reverse…the decision of the Landmarks Commission if, after balancing the interest of the public in preserving the subject property and the interest of the owner in using it for his or her own purposes, the Council finds that, owing to special conditions pertaining to the specific piece of property, failure to grant the Certificate of Appropriateness…will cause serious hardship for the owner, provided that any self-created hardship shall not be a basis for reversal…”

The Landowners first took issue with the word “owner” that appears within the ordinance.  They argued that since Landmark X did not own the property, it could not experience any hardship from the withholding of a Certificate.  The Court rejected this argument, concluding that the existing condition of the building (which the granting of the Certificate hopes to alleviate) presents a hardship for anyone who owns or intends to own the building.

Next, the landowners turned to the ordinance’s requirement that the governing body balance the public and private interest in the property.  They claimed that the Council failed to address this within their ruling.  Landmark X supported the claim with the ruling in Lamar Central Outdoor, Inc. v. Board of Zoning Appeals of Milwaukee in which the Court reversed a municipality’s decision because it lacked an explanation of reasoning.  Here, the Court found that the Lamar claim was forfeited because it was not preserved in trial court.  The claim appeared for the first time in a reply brief, which is disallowed.  The Court clarified that, even if it had reviewed the Lamar claim, it would have been rejected.  It found that comments made by a Council-member expressed that the renovation would serve both public and private interests in the dilapidated building.  These comments constituted a showing that the Council analyzed the situation in light of both public and private interests.

Under the umbrella claim that the Council failed to make required findings Landmark X made several more arguments, all of which the Court rejected.  They argued that the Council failed to meet the “special condition” requirement of the ordinance.  They interpreted the ordinance to mean that the hardships endured by the owner must be unique and, in this case, the conditions were not specific to Edgewater.  They purported that this situation could be similar to that faced by other building and hotel owners.  The Court rejected this argument due to lack of analysis and support.  In the remainder of the opinion, the Court dismissed three more minor claims due to a lack of support and a failure to present a logical argument.  The trial court’s decision was affirmed.

Conditional use permit criteria not vague; recusal of board member negates claim of bias

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.

Liquidated damages not a “tax” for purposes of determining priority of lien in mortgage foreclosure

by Victoria Heldt

Baylake Bank v. Fairway Properties of Wisconsin, LLC
(Wisconsin Court of Appeals, September 15, 2011)

Fairway Properties of Wisconsin, LLC (Fairway) planned to develop a single-family housing complex on a piece of property located in the City of Waupaca.  The property was in a “tax increment district,” which is a mechanism used to allow municipalities to fund public improvement projects by diverting the property taxes to pay for those improvements.  The company entered into a mortgage agreement with Baylake Bank to procure financing for the development.

Fairway also signed a development agreement with the City, in which it agreed to meet certain goals each year for eleven years to ultimately build a housing complex with a minimum value of $4,500,000.  In exchange, the City agreed to provide improvements to the property such as sidewalks, wells, and driveway approaches.  The contract contained a clause that required Fairway to pay a “liquidated damages penalty” if it did not meet the specified goal each year.  The fine amounted to the difference between the actual property tax levied for the year and the property tax that would have been levied had the project goal been met (increasing the value of the property.)  This clause ensured that the City would be reimbursed for the funds it used in making the improvements.

Fairway eventually defaulted on its mortgage, prompting the Bank to bring a foreclosure action into district court naming Fairway and the City in the case.  The City answered, alleging Fairway owed over $150,000 in delinquent property taxes and over $80,000 in fines resulting from the violation of the liquidated damages clause.  The Bank agreed that the delinquent taxes took priority over the Bank’s mortgage interests, however claimed the charges under the development agreement’s liquidated damages provision were subordinate to the Bank’s interests.

The issue hinges on whether or not the liquidated damages penalty is considered a tax which, therefore, takes priority over the Bank’s position as mortgagee in a foreclosure action.  In a summary judgment, the district court concluded the damages were “real estate taxes,” relying on the language of the contract which read:  “the payment due is a special charge which may be entered in the tax roll as a charge against the real property identified in Exhibit A then owned by the developer and collected in the same manner as real estate taxes.  The amount due is a lien upon the property superior to all other liens.”  Since the court classified the damages as a tax, they ruled that the Bank’s interests as mortgagee were subordinated to the City’s interests.  The bank appealed.

The Court of Appeals noted that cities have no inherent power to tax and that it may only tax in such cases where statutory or constitutional language authorizes a tax for that specific purpose.  In this case, the court relied solely on language in a contract for the authority to tax.  This is insufficient to give the City the right to classify fines from the liquidated damages clause as a tax.

Next the Court addressed whether the City provided any alternative basis for authority to classify the damages as a tax.  The City relied on the tax increment law (Wis. Stat. §66.1105) for authority to levy the tax.  The language of the law grants the power to create tax incremental districts, prepare projects in the districts, and enter into contracts necessary to proceed with the plan.  The statute is silent, however, regarding a city’s authority to impose taxes on the entities in the district.

The Court concluded that the development agreement’s liquidated damages do not have priority as a property tax.  The district court decision was reversed.

Special assessment for construction of regional trail held invalid

By Melanie Thwing

Hildeband v. Town of Menasha

(May 11, 2011, Wisconsin Court of Appeals)

David and Susan Hildebrand own 6.216 undeveloped acres in the Town of Menasha, WI. The property is zoned commercial but the owners had no current plan for development.  The north side of this property does not have a sidewalk but does abut four-lane arterial street.  In 2007 the town assessed the owners $33,205 for the installation of  the 958-foot section of a 10-foot wide asphalt regional recreation trail.  The section would have connected to the regional trails in several municipalities.

About the same time the Town also applied for grant funding through the Department of Natural Resources.  Under Wis. Admin. Code. § NR 50.06 these projects are given priority based on general public use. The Town specified in the application that the trail would “be used extensively by people outside [its] governmental jurisdiction.”  The project was also continuously referred to as a “recreational trail” not a sidewalk. As the community development director for the Town pointed out unlike sidewalks, the town is not required to maintain the trails if they choose not to.

The Hildebrands challenged the assessment in circuit court, arguing that Wis. Stat. § 66.0703 only permits assessments for “special benefits [conferred] upon the property.”  Witnesses for the Town testified that a special benefit occurred because the trail now provided direct and safe access to the property for nonmotorists and enhanced the property value. The circuit court, however, sided with the Hildebrands

The town appealed to the Wisconsin Court of Appeals.  According to the Court of Appeals a general benefit is one that benefits the entire community whereas a special benefit is an improvement that primarily benefits a particular locality and gives special benefits to those properties. By looking at the purpose of the trail the circuit court found that the primary benefit is general in nature.  The court found the trail was more like a park than a sidewalk because it provides recreational benefits to the region, and the landowners are not required to clear snow from the trail (unlike a sidewalk).  The court also noted that the Hildebrands’ property also had another trail running along the south side, and that therefore any special benefit to the property that comes with access to the trail had already been satisfied.  Because of this, there is no appreciable amount of special benefit given to the Hildebrand property by extending the trail.

Fact that variance request was after-the-fact did not by itself justify denial

by Melanie Thwing

Mueller v. Chippewa County Zoning Board of Adjustment
(Wisconsin Court of Appeals, May 3, 2011)

Mark and Barbara Mueller own a home on a Class C highway in Chippewa County, Wisconsin. The County Code requires that all structures be set back at least thirty feet from a Class C highway. In 2001 the Muellers applied for a variance from the set back requirement to build a porch that would come within twenty-five feet of the highway. When applying for the variance the Muellers stated that without the porch the front steps of their home become covered in ice and snow creating a dangerous condition.

The variance was granted in August 2001 subject to certain conditions. The Muellers believed the conditions were too restrictive and asked to have the variance voided, which the Board of Adjustment did. Then in 2003 the county zoning official found the Muellers had gone ahead and built the porch without a variance. The Board denied an after-the-fact variance in March 2003 because the Muellers again rejected the conditions.

An order to remove the porch was issued in 2003 but no follow up occurred until 2008. At this point the Muellers again requested an after-the-fact variance. The Board held a hearing where Barbara Mueller testified that the roofline angle created ice and snow buildup. Also, she noted that before the porch huge icicles would hang off the front of the house. Finally, she pointed that it was an extreme hardship to not enter the house through the front door. The Board ultimately denied the variance.

The Muellers requested certiorari review in circuit court. The case was remanded to the Board for reconsideration because they did not explain reasoning for denying the variance. On remand the Board found that the application did not demonstrate unnecessary hardship as required under Wis. Stat. § 59.694(10).  The Muellers again sought certiorari review and the circuit court reversed the Board’s decision.

The Board appealed to the Wisconsin Court of Appeals arguing that the Muellers did not demonstrate several elements critical to proving unnecessary hardship: 1.) The hardship was not unique to the property, 2.) It was self-created, 3.) There were alternative means to alleviate the hardship, and 4.) The variance was after-the-fact.

The Court of Appeals looked at whether the board was within its jurisdiction, if it proceeded on correct theory of law, and whether the decision was arbitrary.

The Court of Appeals rejected the first argument of the Board – that the hardship was not unique. After testimony from the Muellers the Board simply stated that the condition was not unique. However, the circuit court pointed out that “Most buildings don’t have a buildup of ice creating a hazard.” The board could not have, based on the evidence, found that the hardship was not unique to the property itself.

Secondly, the evidence does not support that the hardship was self-created. The Board identified the hardship as the removal cost of the porch if the variance was not granted; however, the Muellers never argued that the hardship was the expense of removal. Rather, it was because of the ice and snow accumulation.  The Court of Appeals found that the ice and snow accumulation was not “self-created” by the Muellers.

Third, the Court determined that the Board could not reasonably have found that the hardship would be alleviated without the porch. The Board stated that the Muellers and guests could have entered through the garage, or they could pour a heated sidewalk. According to the courts none of these are feasible options.

Finally, from the transcripts it could be concluded that the Board primarily based its decision on that fact that the request was after the fact. Also, the Court pointed out that an identical variance was granted in 2001. Nothing in Wis. Stat. § 59.694(7)(c) distinguishes between before or after-the-fact variances.

The Board argues that granting an after-the-fact variance would, “unduly undermine the zoning code’s requirement of needing a permit or variance before beginning any construction” and would be against public interest. If this reasoning were correct, no person would ever be able to obtain a variance after-the-fact. Further, the Board did not cite any authority to support this argument. The decision of the circuit court was affirmed.

Whether condemnation of avigation rights was sufficient to avoid takings claim requires further fact finding

by Melanie Thwing

Brenner, Wickenhauser and Seidling v. City of New Richmond

(Wisconsin Court of Appeals, May 10, 2011)

Robert Brenner, Steven and Cristy Wickenhauser and Allan and Susan Seidling (landowners) all own land in the vicinity of the New Richmond Regional Airport in the City of New Richmond, WI. In 2007 the City extended the main runway by 1,500 feet. Sixty-two acres of the Wickenhausers’ land was condemned by the City as well as condemning an avigation easement over another four acres.

The avigation easement alone prohibits buildings and trees exceeding between twenty-six and thirty-eight feet tall depending on the location. This easement states it is for the use and benefit of the public and includes the right to cause sound, noise, vibration and dust that is inherent with the operation of aircrafts. It goes on to state that the noise impacts may be “annoying” to land users.

After experiencing the runway expansion’s effects that included odors, dust, vibrations, sound, low overhead flights, and runway strobe lights the landowners filed an inverse condemnation claim in circuit court under Wis. Stat. § 32.10, claiming that the operation of the airport deprived them of all property rights (not just those condemned through the avigation easement). The circuit court found that because the landowners had not been deprived substantially of all beneficial use of the properties there was no taking.  The landowners appeal to the Wisconsin Court of Appeals, arguing that the circuit court applied the wrong standard when it concluded there no taking.

Wis. Stat. § 32.10 allows landowners who believe property has been taken by the government to bring an inverse condemnation claim for compensation. It is intended to deal with eminent domain, where the government occupies private property and plans to continue this occupation. The facts must show either an actual physical taking or a government-imposed restriction that deprives the owner of beneficial use of his property.  According to the Wisconsin Court of Appeals this essentially means that landowners do not need to demonstrate that they have been deprived of all or substantially all beneficial use. The court points that if this were the case then public entities would rarely be required to compensate landowners.

Under § 32.10 (6g) the loss of air rights is identified as a compensable loss. The City acknowledges this, but argues that a taking occurs only if flights have a direct, immediate, and substantial effect on the enjoyment of the land. In this case the FAA-approved flight paths do not fly over the landowners’ homes.  The Court disagreed with the city’s argument because it fails to to take into account that flight paths may cross above other portions of the landowners’ properties (not just their homes) and ignores the finding of the circuit court that the space above the homes are in fact used by airplanes and helicopters regardless of the identified routes of the FAA-approved flight paths.

The actual determination of whether a taking has occurred depended on further fact finding. The Court of Appeals remanded the case to the circuit court for fact finding to determine whether there was a partial taking.

Redetermination of high water mark does not invalidate previous permit

by Melanie Thwing

Oneida County v. Collins Outdoor Advertising
(Wisconsin Court of Appeals, April 26, 2001)

Collins Outdoor Advertising began looking into constructing a billboard in the Town of Sugar Camp, Wisconsin in 2003. The Town of Sugar Camp is generally un-zoned, but Oneida County has zoning authority over land within 1,000 feet of the ordinary high water marks of navigable lakes. In this particular area there are two lakes, Jennie Webber Lake and an unnamed lake 34-16.

Keith Carson, a Collins’ employee, obtained a lease from the landowners of the desired location. A signature was given from the Town’s foreman stating the land was un-zoned and the Department of Transportation (DOT) approved a permit application. The DOT also instructed Carson to check with the Department of Natural Resources (DNR) because the land boarded a swamp. The DNR approved the site but then instructed Carson to check with the County to make sure no zoning authority existed.

After meeting with Theresa Kennedy, a permit specialist for the County, and looking at several zoning maps and aerial photographs it was determined the location would not pose a problem with Jennie Webber Lake. It was Carson’s responsibility however to determine the distance from 34-16 which he did with a handheld GPS. This also met the 1,000 foot requirement.

In July 2003 the billboard was erected. Then, in October the County sent a letter indicating there had been complaints that the sign was illegally constructed. This letter referenced a “large wetland complex” attached to Jennie Webber Lake and stated that, when taking these wetlands into account, the sign was only 10 feet from the high water mark.  Collins responded to this complaint in January of 2004 with a letter reciting the above facts.  The County did not respond again until September 2006.  The County stated it had re-determined the high water mark and, as a result, had determined that the sign was 600 feet away from Jennie Webber Lake.  In August 2008 the County filed for injunctive relief and damages in the circuit court. Summary judgment was granted in favor of the County. Collins was ordered to remove the sign and pay $25,000 in forfeitures.

Collins appealed to the Wisconsin Court of Appeals, arguing that when the sign was originally constructed the County’s zoning map identified the shorelines and any redeterminations cannot render the sign unlawful.

Under Wis. Stat. § 59.692(1m),(6) the state is required to adopt and enforce shoreland zoning ordinances. Each county is required to include “[m]apped zoning districts and the recording, on an official copy of such map, of all district boundary amendments.” Wis. Admin. Code § NR 115.05(4)(i). Also the DNR must be given notice for any interpretation of a map or amendment.  The County argued that it was unreasonable for Carson to rely on the zoning map rather than on-site measurements; however the Court rejected this argument.  The Court of Appeals observed that if Carson had determined the measurements of high water mark himself they would have no legal force. The ordinance does not give landowners authority to determine high water marks. That burden is placed on the County and DNR to set ordinary high water mark.  This determination can be very subjective. 

The County’s argument that “[t]he standards for such determinations are clearly set forth in the ordinance,” was found to be unpersuasive.  The County’s argument would require landowners to roam large portions of private property to identify the correct high water marks. Carson followed the ordinance by contacting the zoning department who ultimately provided the map for determination.

Finally there is no conflict between the zoning map and the zoning ordinance. Ordinary high water marks are usually identified on official maps or on aerial photographs. If the public were not allowed to put any reliance on the maps, the Court questions why they are required or why the DNR must be contacted when a question arises about the maps.

It is undisputed that at the time the sign was built it was over 1,000 feet from the shoreline as then determined, and the County does not dispute that the sign would be legal as an existing nonconforming structure using that determination. The decision of the circuit court was reversed and remanded.

Wisconsin village entitled to entire tax payment under MFL program

by Melanie Thwing

Town of Somerset v. Wisconsin Department of Natural Resources
(Wisconsin Court of Appeals, March 29, 2011)

J. Peterson owned property in the Town of Somerset, Wisconsin. In 1987 he enrolled the property in the Department of Natural Resources’ managed forest land (MFL) program. The program encourages, “management of private forest lands for the production of future forest crops for commercial use through sound forestry practices.” By enrolling the property the landowner commits to the program for either twenty-five or fifty years.  In return the landowner receives reduced property taxes. If the property is withdrawn from the program the landowner must pay the Department a withdrawal tax pursuant to Wis. Stat. § 77.82(2)(h).  Under Wis. Stat. § 77.89(1) the Department is then required to pay the withdrawal tax to “each municipality in which is located the land to which the payment applies.”

When Peterson’s property was first enrolled in the MFL it was located within the Town of Somerset. In November 2007 the property was purchased by the Village of Somerset and annexed to the Village.  In August 2008 the Village withdrew the property from the program. A withdrawl tax of $43,597.28 was paid to the Department by the Village, but that money was then refunded back to the Village because the property was in the Village at the time of withdrawl.

The Town filed for judicial review of the Department’s decision. They argued that the Department did not interpret Wis. Stat.  § 77.89(1) correctly, or alternatively that the statute is “unconstitutional on its face in that it deprives [the Town] of a protected property interest, contrary to [the] Wisconsin Constitution.” The town argues the withdrawal tax payment should have been split between the municipalities where the land was located while the tax burden was lessened.

The Department moved to dismiss this claim and the circuit court granted the motion. They found (1) the Town lacked standing to challenge the Department’s decision, (2) the Department’s interpretation of the statute was entitled to deference, and  (3) the Town lacked standing to challenge constitutionality of § 77.89(1).

The Town then appealed to the Wisconsin Court of Appeals who finds that the circuit court was correct in dismissing the Town’s petition. Wis. Stat. § 77.89(1) requires the Department to pay “100 percent of each withdrawal tax payment received under 77.88(7) to the treasurer of each municipality in which is located the land to which the payment applies.” The present tense of the statute indicated that the payment should be made to where the property is located currently. The Town claims the statute is ambiguous because the statute states, “each municipality.”  The Court of Appeals did not consider this argument to be reasonable because it again ignores the present tense of the statute. The language “each municipality” simply directs the payment in cases where the land is presently located in more than one municipality.

Finally, the court concluded that municipalities do not generally have standing to challenge the constitutionality of statutes. The only exception to this is if the issue is of great public concern. However this exception only applies “to cases where a private litigant and a creature of the state are involved, and not to suits limited to creatures of the state.” No private litigants are present here and it involves a state agency and two municipalities. Because of this the great public concern exception cannot be applied. The decision of the circuit court was affirmed.

Nonconforming use not allowed to be rebuilt/reestablished on different parcel

by Melanie Thwing

Coon Creek Sportsman’s Club v. Town of Beloit
(Wisconsin Court of Appeals, March 31, 2011)

In January 2007 Michael Toubl and James Bryden (club owners) applied for a conditional use permit (CUP) for Coon Creek Sportman’s Club which would operate as a bird hunting reserve in Beloit, Wisconsin. The CUP was authorized in July 2007 to operate the reserve and to use a clubhouse as a legal nonconforming structure that existed on one of the parcels. However, in September the building was destroyed in a fire.

The board renewed the CUP on April 7, 2008. The reference to a clubhouse was not removed from the renewed permit. On May 14, 2008 the club owners signed the CUP and agreed to abide by its terms. During this time the club owners applied for a building permit to construct a new building on a different parcel of land. The application listed the building as “ag building.” The application was approved and the permit stated “agricultural use only.”

Several months later the Town supervisors learned the new building was being used as a clubhouse. A letter was sent to the club owners to cease using the building as a clubhouse but they continued to. In April 2009 they applied for an amendment to the CUP to allow the new building to be used as the clubhouse. The planning commission tabled the application waiting for the submission of a site plan but none was submitted.

In January 2010 at a public hearing the board voted to revoke the CUP, concluding that the club owners had violated the conditions. The club owners filed a motion in circuit court seeking a permanent injunction claiming the board’s decision was arbitrary.

The circuit court ruled in favor of the club owners, stating that the board acted arbitrarily because (1) both CUPs referred to the “clubhouse,” (2) the renewed CUP was effective in May 2008, (3) the building permit was renewed before the CUP was renewed, and (4) the only structure on the property in May 2008 was the building described in the building permit.  The circuit court determined that the Town, “intended in the issuing of a conditional use permit that the [new] building would be used at least in part as a clubhouse. Otherwise that provision in the conditional use permit would be meaningless.” The circuit court granted the club owners’ injunction.

The Town appealed to the Wisconsin Court of Appeals arguing that it acted reasonably in revoking the CUP.  The Court of appeals found error in the final three conclusions of the circuit court.    First, the circuit court found that the renewed CUP was not effective until May. However, the CUP states that it became effective in April, regardless of the date the club owners signed and agreed. Because of this the courts finding that the building permit was issued before the CUP is erroneous, and no building existed in May 2008.

The renewed CUP permits revocation for any violation of the permit, and is subject to the general conditions of the Town of Beloit Code of Ordinances. The Town argues that the new building is not a legal nonconforming use. The club owners argue that the building is a legal nonconforming use because “the old building was a legal nonconforming structure and they are using the new building in the same manner.” Further they argue that the reference to a clubhouse in the renewed permit means the new building even if it is not a legal nonconforming use.

Wisconsin Stat. § 60.61(5m) states that if a nonconforming use is destroyed by fire it may be rebuilt if it is, “restored to the size,… location, and use that it had immediately before the damage or destruction occurred…”

The Town of Beloit, General Zoning Ordinances § 2.17D.4 states, “If a nonconforming structure is moved for any reason for any distance whatever, it shall therafter conform to the regulations for the district in which it is located after it is moved.” Under the plain language of the statute and ordinance the new building is not a legal nonconforming structure.

The club owners argue that the CUP allows the new building to be used as a clubhouse also fails. Again, the CUP was renewed on April 7, 2008 and the building permit was not filed until April 21, 2008. There is no evidence that the board knew when it issued the CUP the club owners intended to build in a different location. There is no reason to infer that the board intended the new building to be the clubhouse.

Finally, the building permit says the building is for an “ag building,” and is intended for agricultural use only. The renewed CUP does not allow for the club owners to use the new building as a clubhouse, and therefore they violated the CUP. The decision is reversed.

Legal nonconforming use extinguished by evidence of no business income for 12 months

by Melanie Thwing

Wilderness Waters v. Oneida County Board of Adjustment
(Wisconsin Court of Appeals, February 15, 2011)

Until 2006 Roger Van Prooien owned and operated Sunset Resort on Bear Lake in Oneida County, WI. The resort has existed as a legal nonconforming use since the 1950s.  Business began to taper off around 2000, so much so that during 2006 the visitors log only showed eight reservations.  Furthermore, in 2006 no sales tax was collected, and the tax records show that there was no income earned.

Wilderness Waters purchased the resort in December 2006 and did an extensive clean up of the property.  After restoring the property Wilderness Waters applied to the Oneida County Planning and Zoning Committee to convert the resort into condominiums. The Bear Lake Protection and Rehabilitation District opposed the application under Oneida County Zoning and Shoreline Protection Ordinance Art. 10, § 9.99 (C)(2). This ordinance  says that any legal nonconforming use that has been discontinued for twelve straight months looses its legal nonconforming status.

Wilderness Waters failed to present any competent evidence to the Committee of continued operation in 2006, use and the application was denied. This decision was appealed to the Board and an evidentiary hearing was held. Wilderness Waters presented affidavits from individuals who supposedly stayed at the resort in 2006, along with the visitors log; however, a public accountant brought evidence that the tax records showed no business income, no operating expenses, and no deductions for wages, depreciation, or advertising that year. The Board found that the resort had not been in use during 2006 and there for lost its status as a legal preexisting use.

Wilderness Waters then appealed to the circuit court for certiorari review under Wis. Stat.  § 59.694(10). The circuit court affirmed the Board’s decision. Wilderness Waters then appeals to the Wisconsin Court of Appeals arguing that the Board failed to provide rationale for its decision.

In this case the Board is given the benefit of the doubt by the courts. The task of the Court of Appeals is to find whether there is substantial evidence to support the Board’s decision. In the hearing minutes the Board was clear that they were persuaded by lack of income on the tax filings.  Further, the lack of reportable income along with no state sales tax return suggested the income was either under-reported or a non-operating business. The lack of income suggests that no guests paid to stay at the resort. Also, the affidavits provided by Wilderness Waters mentioned no specific dates, and were all from members of the same family. The Court of Appeals affirmed the Board’s decision.

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