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Taxpayer needs pecuniary loss to have standing

Nettesheim
Hon. Harry G. Snyder

Without a pecuniary interest, a taxpayer cannot bring a suit for declaratory judgment challenging a municipality’s zoning amendment or the creation of a Tax Incremental Financing District (TID), the Wisconsin Court of Appeals held on Nov. 13.

In 1998, the Hartland village board passed a resolution creating a TID, which zoned all land within the boundaries B-5 (light industrial). The Village then began discussions concerning possible conveyance of one of the lots, which was owned by an entity known as Wispark, to the YMCA, to build a recreational facility.

Wispark transferred the property to the Village in partial satisfaction of obligations to pay impact fees owed because of another development.

Because the B-5 classification did not permit the recreational development, the Village began to reclassify the lot as P-1 park district.

Lake Country Racquet & Athletic Club, Inc., filed an action against the Village, seeking a declaratory judgment that the rezoning and the contemplated conveyance of the land to the YMCA violated village ordinances and state laws pertaining to the acceptance, dedication and use of park land.

What the court held

Case: Lake Country Racquet & Athletic Club, Inc. v. Village of Hartland, 02-0198.

Issue: Does a taxpayer have standing to bring a declaratory judgment action challenging an ordinance amendment and contract which effect the sale of municipal-owned property to another party?

Holding: No. Absent a personal stake, or direct pecuniary interest, the taxpayer lacks standing.

Counsel: James W. Hammes, Waukesha, for appellant; Raymond J. Pollen, Milwaukee; Amy J. Doyle, Milwaukee; Everett E. Wood, Milwaukee, for respondent.

The matter was assigned to Waukesha County Circuit Court Judge Katherine Foster. Judge Foster ruled that the rezoning was void because it violated the provisions of the TID Project Plan.

In response to this ruling, the Village amended the B-5 zoning regulations to allow for recreational uses as conditional uses. The Village later approved recreational use as a conditional use on the lot in question.

After soliciting offers for the lot, and receiving only one, from the YMCA, the village contracted to sell the lot to the YMCA for $400,000.

Lake Country then brought suit for declaratory judgment again, and this time, the case was assigned to Judge Donald J. Hassin.

Lake Country made several arguments: (1) the conveyance was void because it violated the restrictions imposed by acceptance of the dedication of the lot in accordance with sec. 236.29; (2) the conveyance was void because it had not been approved by the Village of Hartland Park Board; (3) the conveyance violated the terms, conditions and restrictions imposed by the impact fees ordinance and the enabling statute, sec. 66.0617; and (4) the issuance of a conditional use permit is prohibited until termination of the TID.

The Village moved for summary judgment, challenging whether Lake Country had standing to bring the action, and Judge Hassin granted the motion, holding that Lake Country had suffered no individual pecuniary loss.

Lake Country appealed, but the court of appeals affirmed in a decision by Judge Neal P. Nettesheim.

No Controversy

Applying the declaratory judgment statute, sec. 806.04, the court found that standing was lacking because there was no justiciable controversy. A controversy is justiciable when four factors are present: (1) a controversy in which a claim of right is asserted against one who has an interest in contesting it; (2) the controversy must be between persons whose interests are adverse; (3) the party seeking declaratory relief must have a legal interest in the controversy; and (4) the issue involved in the controversy must be ripe for judicial determination. Putnam v. Time Warner Cable, 2002 WI 108, par. 41, 649 N.W.2d 626.

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Wisconsin Court of Appeals

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Case Analysis

The court found that the third element was lacking, concluding, “Lake Country fails to allege any facts even remotely suggesting that it is adversely affected, financially or otherwise, by the Village’s actions.”

The court distinguished the case of Weber v. Town of Lincoln, 159 Wis. 2d 144, 463 N.W.2d 869 (Ct. App. 1990), in which the court of appeals held that town residents had standing to bring a declaratory judgment action challenging the town’s repeal of its zoning ordinance.

The court reasoned, “This case is markedly different from Weber. Here, the Village has rezoned a single parcel of land to allow for certain conditional uses and has then conveyed the parcel to a private party for use consistent with one of those uses. That is a far cry from Weber where the Town’s repeal of the zoning code eliminated the universal protections provided by the code to all Town residents.”

Because Lake Country failed to demonstrate any risk of pecuniary loss or substantial injury, the court concluded it had no personal stake in the action, and the action was properly dismissed for lack of standing.

Click here for Case Analysis.

David Ziemer can be reached by email.

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