Appeals court rules against city ordinance

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A restrictive 2011 city of Delavan ordinance limiting property density to one lot every 35 acres was, in fact, an unlawful zoning restriction that needed approval from the county and surrounding towns, according to a recent Wisconsin appellate court decision.

In Lake Delavan Property Company LLC v. City of Delavan, 2013 AP 1202, the appellate court found that an ordinance passed by the city had stymied a developer’s efforts to plat and subdivide the property for 74 homes into .36 acre parcels, causing its subdivision plat to be wrongfully denied based upon “the proposed use of the land.”

Although cities are given wide authority to regulate the size and use of land in their boundaries, that leeway relates “to the quality of the subdivision,” and not to how the land is otherwise used, the appellate court said.

During the tail end of the economic boom from 2004 to 2006, Lake Delavan Property Co. (ShoDeen) bought up large swaths of property in Walworth County in the town of Delevan and around the outskirts of the city of Delavan. It earmarked the land for later development.

A portion of this property was within 1.5 miles of the boundaries of the city of Delavan, but still in the town of Delavan, an area which is considered to be within the city’s “extraterritorial” boundary lines and over which the city has some control, according to Wis. Stat. 236.02(5).

ShoDeen’s own research before the property was purchased indicated the land was already targeted by area planners as residential and ripe for development. The land was within a planned sanitary sewer district, and was previously designated to be a “traditional neighborhood” in Delavan’s 1999 Comprehensive Master Plan.

Not long after ShoDeen representatives discussed further water systems and sanitary sewer systems with the Delavan representatives, the city proposed and passed an ordinance in November 2009 that changed the categorization of the ShoDeen-owned land from residential to agricultural.

In 2011, the Delavan common council adopted ordinance 14-1-132, which created a density restriction of no greater than one lot per 35 acres, with a minimum lot size of 1 acre on all of its extraterritorial land.

On May 25, 2012, ShoDeen representatives went before the city of Delavan planning committee to present the company’s Mound Road Estates plat for approval, and lost. After a subsequent hearing before the full common council, the city again denied plat approval, citing city ordinance 14-1-132 as the basis of rejection.

ShoDeen filed an immediate certiorari review in the Walworth County district court, asserting that Delavan’s denial of their plat was “arbitrary, unreasonable or discriminatory,” pursuant to Wis. Stat. 236.13(5).

Walworth County Circuit Judge James Carlson found Delavan had in fact wrongfully denied ShoDeen’s plat, and ordered the city to reverse its decision.

In its appellate court argument, counsel for Delavan insisted that the city had taken proper steps when it passed its 2009 and 2011 ordinances, changing the designation of the property, lot size and density. Counsel argued the ordinance was a valid land division ordinance. The Delavan ordinance “only regulates lot size and density,” according to Delavan counsel’s brief, and applies to all land “within the City’s extraterritorial jurisdiction.”

Delavan had in part relied on Town of Sun Prairie v. Storms, 110 Wis.2d 58, a 1983 appellate court case that determined there were some common areas between subdivision controls and proper zoning ordinances.

In Storms, the court found that Sun Prairie had the right to regulate minimum lot sizes under Wis. Stat. 236.45. If that court found that lot size could be controlled by the town, counsel for Delavan argued that the same logic would apply to lot density.

The appellate court failed to see how Delavan’s incremental passage of ordinances amounted to anything but unlawful zoning, however, and criticized Delavan’s reliance on Storms.

Wis. Stat. 62.23(7c) establishes a process for cities and their neighbors to work together to “accomplish extraterritorial zoning” work, such as what was done by the city of Delavan. According to the appellate court, it must be done by a joint committee comprised of members from both the city and each affected town or neighborhood.

“While zoning can prohibit certain uses of property for subdivision purposes,” the court wrote, “(subdivision) regulations are designed to govern the manner in which unrestricted property is developed.”

The court pointed out that the current law was in part a response to Wood v. City of Madison, 2003 WI 24, a case which had allowed a proposed extraterritorial plat to be rejected by a municipality when land use was considered.

Therefore, Wis. Stat. 236.34(3)(b) was created by a legislature that had “definitely determined that a municipality cannot deny extraterritorial plat approval based on land use.”

Additionally, the Storms appeal was not persuasive, the court said, because it was decided more than 25 years before Wis. Stat. 236.45(3)(b) became law and not factually on point with the case at hand.

The appellate court thus affirmed the trial court’s decision against the city of Delavan, confirming that the proposed plat by ShoDeen should be approved.