May/June 2022 Issue

Also in this issue: Supreme Court Upholds Municipal Sign Ordinance     |     Determining WRS Reportable Earnings with Employee Separations and Settlements     |     Wisconsin Supreme Court: Board of Review Properly Classified Nudo Holdings, LLC Property

Court of Appeals Examines Limits on Municipal Exactions

Jared Walker Smith | 05.24.22

Last month in Fassett v. City of Brookfield, 2021AP269, the Wisconsin Court of Appeals affirmed as an unconstitutional taking the City of Brookfield’s requirement that a subdivider dedicate a part of her property and pay to construct a new street to connect existing dead-end streets. Citing longstanding precedent, the Court of Appeals held that the City failed to establish that there would be any public problems created or exacerbated by the subdivision, and consequently that the City could also not show that the required dedication and construction was proportionate to the impacts of the subdivision.

BACKGROUND

Fassett owned a roughly 5‑are parcel located between two subdivisions in the City of Brookfield. For decades, the two dead-ends of a street named Choctaw Trail terminated in the middle of Fassett’s property. In January 2018, Fassett submitted a written request to the City to divide her parcel into three single-family lots and one outlot. Fassett’s request identified three options for residential lot access: 1) creating a cul-de-sac on one end and leaving the other as a dead-end, 2) connecting both Choctaw dead-ends with a through street, or 3) keeping both dead-ends with lots accessed via a shared driveway. Fassett stated she preferred the third option. In 2018, after a public hearing at which Fassett reiterated her preference and reasons for a shared driveway, the City plan commission endorsed the through street option and the common council adopted the plan commission’s recommendation. 

In late 2019, Fassett submitted an application under the City’s subdivision code with a renewed request to provide property access via a shared driveway and a legal opinion that requiring dedication of the through street was an unconstitutional taking. Nevertheless, the plan commission rejected Fassett’s application and issued specific findings of fact, specifically that: ​“the previous platting of the streets of the subdivisions on each side of the Property was done in anticipation of the street being connected;” City code requires that dead-end streets and cul-de-sacs be minimized; a through street provided benefits to public safety and response times and snowplow operations; and a through street shortened distances for transportation and pedestrians and reduced travel demand on arterial streets and collector streets. 

In January 2020, the common council adopted those findings of fact and the plan commission’s recommendation of denial. Fassett appealed the City’s denial to the Waukesha County circuit court and moved for summary judgment. The circuit court granted Fassett’s motion, holding that the City’s requirement that Fassett construct and dedicate a through street was an unconstitutional taking, and rejecting the City’s contention that the appeal was untimely. The circuit court ordered the City to approve Fassett’s application using the shared driveway concept. The City appealed the circuit court’s determinations. 

COURT OF APPEALS DECISION

The City raised two grounds for its appeal: 1) that Fassett’s petition for review was untimely because she failed to appeal the City’s 2018 approval of the through street concept; and 2) that the City’s exaction was not unconstitutional because the through street advanced public benefits. 

The Court of Appeals quickly rejected the City’s argument that the appeal was not timely. The Court recognized that Fassett’s formal application which was denied by the City was a distinct filing from her initial written request and that the City failed ​“to identify any statute, ordinance, or case that prevents an applicant who first sought a determination of a proposed conceptual land split from submitting a second revised application for approval with a CSM and other supporting documents.” 

On its second argument, the City fared no better. The Court of Appeals determined that the City failed to show that the property dedication and street-connection conditions were required to mitigate any impacts caused by the proposed subdivision, thus making the City’s condition an unconstitutional exaction. 

While both the United States Constitution and the Wisconsin Constitution prohibit the taking of private property for public use without compensation, both Federal and Wisconsin law recognize that governments may require constitutionally permitted exactions. An ​“exaction” is ​“conditioning approval of development on the dedication of property to public use,” which can include ​“conditioning a development approval … upon the developer making some financial commitment” for public benefit. 

Whether an exaction is constitutional depends on the application of a longstanding two-part test — the Nollan/​Dolan test — set forth by the United States Supreme Court: 

1. A municipality must first establish that an ​“essential nexus” exists between a legitimate government interest and the exaction. In other words, that a proposed development would harm the public interest and that the municipality has a legitimate interest in demanding that the developer, rather than the general public, bear the costs to mitigate such harm. 
2. If this ​“essential nexus” exists, then the municipality must demonstrate that the exaction imposed bears a ​“rough proportionality” to the harm caused by the development. For example, that the cost of the exaction to the developer is roughly proportional to the cost to the municipality of the harm of the development. 

The Court of Appeals found that the City failed to meet its burden of proving either part of the test. While the City identified legitimate problems that a through street could resolve or mitigate, the City failed to demonstrate that these problems — or any others — were caused by Fassett’s proposed subdivision/​development. Rather, they were existing problems caused by the platting of the earlier subdivisions and the ​“essential nexus” was therefore lacking. Consequently, since the City failed to demonstrate that the subdivision would harm the City, the City could not meet the second part of the test. The Court of Appeals affirmed the circuit court’s decision, requiring that the City approve the subdivision without establishing a through street.

CONCLUSION

In the end, the holding in Fassett v. City of Brookfield, while potentially troubling precedent for infill development, does not rewrite existing law. Rather, the case emphasizes that a municipality must identify specific anticipated negative impacts caused by a proposed development and the costs to the municipality of those impacts before conditioning approval of the development on an exaction tailored to reasonably mitigate the specific impacts.