2017 WI 34
SUPREME COURT OF WISCONSIN
CASE NO.: 2014AP1914
COMPLETE TITLE: McKee Family I, LLC and JD McCormick Company,
LLC,
Plaintiffs-Appellants-Cross-
Respondents-Petitioners,
v.
City of Fitchburg,
Defendant-Respondent-Cross-Appellant.
REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at: 366 Wis. 2d 329, 873 N.W.2d 99
OPINION FILED: April 12, 2017
SUBMITTED ON BRIEFS:
ORAL ARGUMENT: November 3, 2016
SOURCE OF APPEAL:
COURT: Circuit
COUNTY: Dane
JUDGE: John C. Albert
JUSTICES:
CONCURRED:
DISSENTED:
NOT PARTICIPATING: Shirley S. Abrahamson and Rebecca Grassl
Bradley, JJ.
ATTORNEYS:
For the plaintiff-appellant-cross-respondent-petitioners,
there were briefs by Matthew Fleming and Murphy Desmond, S.C.,
Madison, and oral argument by Matthew J. Fleming
For the defendants-respondent-cross-appellant, there was a
brief by Lisa M. Lawless, Ross A. Anderson, Husch Blackwell,
LLP, Milwaukee and Mark R. Sewell, Fitchburg City Attorney, and
oral argument by Lisa M. Lawless
An amicus curiae brief was filed by Thomas Larson, Madison
for Wisconsin Realtors Association, NAIOP Wisconsin and the
Wisconsin Builders Association.
An amicus curiae brief was filed by Ryan J. Walsh, Chief
Deputy Solicitor General with whom on the brief was Brad D.
Schimel, Attorney General and Misha Tseytlin, Solicitor General
for Wisconsin Attorney General and Department of Justice.
An amicus curiae brief was filed by Daniel M. Olson,
Madison for League of Wisconsin Municipalities.
2
2017 WI 34
NOTICE
This opinion is subject to further
editing and modification. The final
version will appear in the bound
volume of the official reports.
No. 2014AP1914
(L.C. No. 2010CV3808)
STATE OF WISCONSIN : IN SUPREME COURT
McKee Family I, LLC and JD McCormick Company,
LLC,
Plaintiffs-Appellants-Cross- FILED
Respondents-Petitioners,
APR 12, 2017
v.
Diane M. Fremgen
City of Fitchburg, Clerk of Supreme Court
Defendant-Respondent-Cross-Appellant.
REVIEW of a decision of the Court of Appeals. Affirmed.
¶1 ANN WALSH BRADLEY, J. Petitioner, McKee Family I,
LLC ("McKee") appeals an unpublished decision of the court of
appeals affirming a circuit court grant of summary judgment in
favor of the City of Fitchburg.1 The court of appeals determined
that McKee did not have a vested right under a planned
1
McKee Family I, LLC v. City of Fitchburg, No. 2014AP1914,
unpublished slip op. (Wis. Ct. App. Nov. 5, 2015) (affirming
judgment and ordered entered by the circuit court for Dane
County, John C. Albert, J., presiding).
No. 2014AP1914
development district zoning classification and that its
constitutional claim failed as a result.
¶2 McKee contends that the court of appeals erred and
that it is entitled to summary judgment in its favor.
Acknowledging the fact that it did not submit an application for
a building permit, it nevertheless argues that it had a vested
right in developing land under the zoning classification.
¶3 According to McKee, vested rights accrue when a
developer has made substantial expenditures or incurred
substantial liability based upon reasonable expectations
established by government action. It contends that to the
extent that the zoning classification is contractual in nature
it also creates expectations upon which developers may rely.
Contingent on its vested rights arguments, McKee further asserts
that it has a claim for damages under the Takings Clause of the
United States Constitution.2
¶4 We conclude that McKee did not have a vested right in
developing the property under the planned development district
zoning classification because it did not apply for a building
permit. Wisconsin follows the bright-line building permit rule
that a property owner's rights do not vest until the developer
has submitted an application for a building permit that conforms
2
The Takings Clause of the Fifth Amendment of the United
States Constitution, made applicable to the states through the
Fourteenth Amendment, provides that private property shall not
"be taken for public use, without just compensation." U.S.
Const. amend V.
2
No. 2014AP1914
to the zoning or building code requirements in effect at the
time of application. Lake Bluff Hous. Partners v. City of S.
Milwaukee, 197 Wis. 2d 157, 172, 540 N.W.2d 189 (1995).
¶5 Additionally, we determine that a planned development
district zoning classification does not create contractual
expectations upon which developers may rely. There is a very
strong presumption that legislative enactments do not create
contractual or vested rights. Dunn v. Milwaukee Cty., 2005 WI
App 27, ¶8, 279 Wis. 2d 370, 693 N.W.2d 82 (citation omitted).
Further, there must be a clear indication that a legislative
body intends to bind itself contractually in order to overcome
the presumption. Nat'l R.R. Passenger Corp. v. Atchinson,
Topeka and Santa Fe Ry. Co., 470 U.S. 451, 465-66 (1985). McKee
failed to overcome the presumption that Fitchburg did not intend
to enter into a binding contract when it enacted an ordinance
approving the zoning classification.
¶6 Finally, we do not need to reach McKee's
constitutional takings claim because McKee conditioned its
takings claim on its claim for vested rights. Because McKee has
no vested right in a planned development district zoning
classification, it cannot succeed on its asserted contingent
takings claim.
¶7 Accordingly, we affirm the decision of the court of
appeals affirming the circuit court's grant of summary judgment
in favor of the City of Fitchburg.
3
No. 2014AP1914
I
¶8 This case involves a dispute about a change in the
municipal zoning classification of property that McKee owns in
Fitchburg. Specifically, McKee objects to Fitchburg's rezoning
of two lots (53 and 54) from a planned development district
("PDD") zoning classification to a residential-medium ("R-M")
zoning classification. To provide the necessary context, we
begin by explaining Fitchburg's process for adopting a zoning
classification.
¶9 Pursuant to Wis. Stat. § 62.23 (2013-14),
municipalities may use a PDD zoning classification to establish
planned mixed-use developments that have a higher density than
is allowed under an R-M classification.3 The R-M zoning
3
Wis. Stat. § 62.23(7)(b) provides in relevant part:
[T]he council may divide the city into districts of
such number, shape, and area as may be deemed best
suited to carry out the purposes of this section; and
within such districts it may regulate and restrict the
erection, construction, reconstruction, alteration or
use of buildings, structures or land . . . The counsel
may establish mixed-use districts that contain any
combination of uses, such as industrial, commercial,
public, or residential uses, in a compact urban form.
The council may with the consent of the owners
establish special districts, to be called planned
development districts, with regulations in each,
which . . . will over a period of time tend to promote
the maximum benefit form coordinated area site
planning, diversified location of structures and mixed
compatible uses. . . .
All subsequent references to the Wisconsin Statutes are to
the 2013-14 version unless otherwise indicated.
4
No. 2014AP1914
classification allows development of only single-family or
duplex structures.
¶10 Before a property owner can develop land that is zoned
under the PDD classification, Fitchburg's General Ordinances
require the property owner to submit a general implementation
plan ("GIP") to Fitchburg's Plan Commission. Fitchburg, Wis.,
Gen. Ordinances §§ 22-593, 22-594 (2015).4 The Plan Commission
then makes a determination and recommendation whether to advise
the Fitchburg Common Council to approve the rezoning and GIP, to
approve it with modifications, or to deny it. Id. § 22-594(b).
¶11 If Fitchburg approves a general plan, a property owner
is then required to submit a specific implementation plan
("SIP"). Id. § 22-599. A property owner is allowed to apply
for a building permit if Fitchburg approves the SIP. Id. § 22-
597.
¶12 The relevant zoning history of this case extends back
to 1989, when McKee Brothers Partnership agreed to dedicate
approximately 60 acres of farmland to the City of Fitchburg.
This farmland, which became McKee Farms Park, was donated to
fulfill Fitchburg's park land dedication requirements for a
variety of McKee Brothers' projects, including the property at
issue in this case. Credit for the parkland allocation was
determined by a settlement agreement, which gave McKee Brothers
4
The references to the Fitchburg General Ordinances in
paragraph 11 are also to the 2015 version of the ordinances.
5
No. 2014AP1914
the right to build 600 dwelling units on a variety of lands it
owned.
¶13 Over the years, the property at issue has been
transferred between various McKee entities. After the parkland
dedication, McKee Brothers transferred the property to MAF
Development, Inc., to create the Plat of Chapel Valley.5 The
plat included four lots, the two undeveloped lots at issue (53
and 54), as well as two additional lots that have already been
developed (10 and 11).
¶14 In conjunction with the creation of the Plat of Chapel
Valley, MAF Development entered into an agreement with Fitchburg
that it would make improvements in preparation for developing
its land. The required improvements included: standard street
improvements, installation of sidewalks, walkways and driveways,
sanitary sewers, water mains laterals and easements, drainage
facilities, grading and landscaping, erosion control, and
electric, communications and gas facilities.
¶15 At the time the plat was created, it had an R-M zoning
classification, but MAF Development applied for and received
approval for rezoning to a PDD classification. When Fitchburg
enacted Ordinance No. 94-O-11 rezoning Lots 10, 11, 53, and 54
from R-M to PDD zoning, it also approved MAF Development's
general implementation plan for developing the property.
5
William F. McKee was the president of MAF Development.
6
No. 2014AP1914
¶16 As the general plan explained, the proposed
development would provide "high quality multi-family housing
that is in strong demand" for "mature adults." Citing the "lack
of housing options for mature adults in the Fitchburg area," the
proposed development was intended to complement the "Independent
Living" and "Elder Care" developments nearby. The GIP explained
that the "formation of such a 'senior community' will serve the
community by making the most efficient use of public and private
services these people will require."
¶17 Lots 10 and 11, which are not at issue in this case,
were developed between 1995 and 2002 under the PDD-GIP zoning
plan with assisted living facilities, senior housing and senior
condominiums. Lots 53 and 54 were not developed and were
eventually deeded from MAF Development to McKee in 2007.
¶18 In 2008, more than a decade after Fitchburg approved
the planned development district zoning and MAF Development's
general implementation plan, McKee and JD McCormick Company, LLC
("McCormick"), entered into negotiations for McCormick to
purchase the undeveloped lots 53 and 54 from McKee. The
purchase agreement was contingent on McCormick's ability to
obtain approval from Fitchburg to build 128 apartment units on
the lots.6
6
McCormick was a plaintiff in this action before the
circuit court granted Fitchburg's motion to dismiss McCormick
from the case for lack of standing. McCormick did not appeal
the order dismissing it from the case and McKee did not raise
the issue on appeal.
7
No. 2014AP1914
¶19 McCormick presented a plan for a 128-unit apartment
complex on Lots 53 and 54 at a Fitchburg neighborhood meeting.
Fitchburg residents expressed concern about the effect of the
proposed development on traffic, crime and housing values. The
neighborhood's objections were set forth in a petition signed by
600 Fitchburg residents detailing concerns about the scale and
density of the proposed development:
If a rental development of this scale and density were
built . . . it would result in significant increases
in and unacceptable levels of traffic, noise, litter,
vandalism, storm water run-off, and would
significantly impact the quality of life and the
property values of those already residing in our
neighborhoods.
In particular, Fitchburg residents were concerned that the
proposed development did not comport with the original PDD-GIP
plan to develop senior housing.
¶20 Despite these objections, McCormick prepared a PDD-SIP
application for the 128-unit apartment complex on lots 53 and
54. The proposed development consisted of four three-story 32-
unit apartment buildings, with a clubhouse and a pool. It hired
an architect, engineer, and landscape architect, but there is no
evidence in the record regarding the costs McCormick incurred.
¶21 After McCormick submitted the specific plan, two
Fitchburg Common Council members submitted a rezoning
application and draft ordinance to rezone lots 53 and 54 from
PDD-GIP to R-M. McKee and McCormick then filed a revised
application for PDD-SIP approval. Following a public hearing,
8
No. 2014AP1914
Fitchburg adopted Ordinance 2009-O-03, which rezoned the
property from PDD-GIP to R-M.
¶22 Under the R-M zoning classification, McCormick was
limited to developing 28 dwelling units, compared to a maximum
of 132 dwelling units under the PDD zoning classification.
McKee and McCormick filed a lawsuit seeking declaratory
judgment, damages and injunctive relief on the grounds that the
rezoning of the lots was unlawful.
¶23 The amended complaint asserted two claims. First, it
alleged that Ordinance 2009-O-03 is void as a matter of law
because it was adopted by Fitchburg without the consent of the
owner of the property, contrary to Wis. Stat. § 62.23(7)(b).
Second, it alleged that if Fitchburg "wrongfully adopted
Ordinance 2009-O-03, and wrongfully refused to process and
approve the PDD-SIP application," then McKee was deprived of the
full economic use of the property and from earning a reasonable
return on its respective investment. McKee further alleged that
it was deprived of substantive and procedural due process
guarantees in violation of the Fifth and Fourteenth Amendments
of the United States Constitution, and Article I, Section 13 of
the Wisconsin Constitution.
¶24 The parties filed cross-motions for summary judgment.
At issue here is the circuit court's grant of summary judgment
in favor of Fitchburg. On summary judgment, the circuit court
dismissed McKee's first claim, determining that Lots 53 and 54
were rezoned in accordance with Wis. Stat. § 62.23(7)(b) and the
relevant local ordinances. The circuit court did not reach
9
No. 2014AP1914
McKee's constitutional takings claim because it was conditioned
on the dismissed first claim.
¶25 McKee appealed the circuit court's summary judgment
order. On appeal, however, McKee did not argue that the
rezoning ordinance was void under Wis. Stat. § 62.23(7)(b) for
lack of consent. Instead, McKee asserted that it had a vested
right in the PDD zoning classification, that the PDD
classification created a contract that gives rise to
expectations on which developers may rely, and that the rezoning
ordinance constituted a taking under the Fifth Amendment to the
United States Constitution.
¶26 The court of appeals determined that McKee did not
have a vested right in the PDD zoning classification when
Fitchburg rezoned the lots. McKee Family I, LLC v. City of
Fitchburg, No. 2014AP1914, unpublished slip op., ¶32 (Wis. Ct.
App. Nov. 5, 2015). It declined to address McKee's
constitutional taking argument, concluding that it was an
undeveloped argument. Id., ¶32 n.6.
II
¶27 In this case we are asked to review the court of
appeals decision affirming the circuit court's grant of summary
judgment in favor of the City of Fitchburg. We review a
decision granting summary judgment independently of the
determinations rendered by the circuit court and the court of
appeals. Lambrecht v. Estate of Kaczmarczyk, 2001 WI 25, ¶21,
241 Wis. 2d 804, 623 N.W.2d 751. Summary judgment is
appropriate when there is no genuine issue as to any material
10
No. 2014AP1914
fact and a party is entitled to judgment as a matter of law.
Id., ¶24.
¶28 At issue is whether McKee has a vested right in the
zoning classification and whether the classification creates
contractual expectations upon which McKee may rely. We
additionally address whether a constitutional takings claim can
be maintained. These issues present questions of law that this
court reviews independently of the determinations rendered by
the circuit court and the court of appeals. Zealy v. City of
Waukesha, 201 Wis. 2d 365, 372, 548 N.W.2d 528 (1996).
III
¶29 We must address first whether McKee forfeited the
arguments it raised for the first time on appeal. Fitchburg
contends that McKee did not appeal the claims dismissed by the
circuit court on summary judgment. According to Fitchburg,
McKee forfeited the arguments it now advances because they were
raised for the first time on appeal.
¶30 Although the circuit court dismissed McKee's claim
that Ordinance 2009-O-03 was void for lack of consent, it did
not appeal that issue. Instead, on appeal McKee asserts that it
has a vested right in developing lots 53 and 54 under the PDD
zoning classification due to expenditures incurred based upon
reasonable expectations established by government action. McKee
further asserts that to the extent the zoning classification is
contractual in nature, it also creates expectations upon which
developers may rely.
11
No. 2014AP1914
¶31 Contingent on its vested rights arguments, McKee
contends that it has a claim for damages under the Takings
Clause of the United States Constitution.
¶32 Generally, issues not raised or considered by the
circuit court will not be considered for the first time on
appeal. State v. Holland Plastics Co., 111 Wis. 2d 497, 504,
311 N.W.2d 320 (1983). However, it is within this court's
discretion to "disregard alleged forfeiture or waiver and
consider the merits of any issue because the rules of forfeiture
and waiver are rules of 'administration and not of power.'"
State v. Beamon, 2013 WI 47, ¶49, 347 Wis. 2d 559, 830
N.W.2d 681. The arguments raised on appeal have been briefed
and argued by both parties. Accordingly, we choose to address
McKee's arguments set forth above in order to clarify the
important issues of law that are presented in this case.
IV
¶33 The primary issue before this court is whether McKee
had a vested right in the PDD zoning classification before
Fitchburg rezoned the land to the R-M zoning classification.
Despite the fact that it was not eligible for, and did not apply
for a building permit, McKee asserts that it had a vested right
in the PDD zoning classification.
¶34 McKee contends that this court should depart from
Wisconsin's bright-line building permit rule and evaluate
whether a developer has vested rights on a case-by-case basis.
It argues that Fitchburg should not have had the discretion to
change zoning regulations before a building permit was approved
12
No. 2014AP1914
because McKee had already made substantial expenditures in
preparation for development under the PDD-GIP zoning.
¶35 We begin with the basic premise that municipalities
have broad discretion to enact zoning ordinances and land use
regulations for a variety of purposes:
For the purpose of promoting health, safety, morals or
the general welfare of the community, the council may
regulate and restrict by ordinance . . . the height,
number of stories and size of buildings and other
structures, the percentage of lot that may be
occupied, the size of yards, courts and other open
spaces . . . the density of population, and the
location and use of buildings, structures and land for
trade, industry, mining, residence or other purposes
if there is no discrimination against temporary
structures.
Wis. Stat. § 62.23(7)(am). Any ordinance adopted under this
section "shall be liberally construed in favor of the city."
Id.
¶36 Additionally, "reliance on a particular zoning
designation applicable to [a landowner's] property does not
suffice to give the landowner a vested right to such
designation." Rainbow Springs Golf Co. v. Town of Mukwonago,
2005 WI App. 163, ¶12, 284 Wis. 2d 519, 702 N.W.2d 40 (citing
Zealy, 201 Wis. 2d at 381). A "vested right" is a "right that
so completely and definitely belongs to a person that it cannot
be impaired or taken away without the person's consent." Stoker
v. Milwaukee Cty., 2014 WI 130, ¶24, 359 Wis. 2d 347, 857
N.W.2d 102 (quoting Black's Law Dictionary 1520 (10th ed.
2014)).
13
No. 2014AP1914
¶37 The exception to the rule that zoning does not create
vested rights arises when a property owner has applied for a
building permit conforming to the original zoning
classification. See Lake Bluff, 197 Wis. 2d at 182. In Lake
Bluff, this court concluded that the developer "obtained no
vested rights, because it never submitted an application for a
building permit conforming to the zoning and building code
requirements in effect at the time of the application." Id.
¶38 Lake Bluff explained that "[o]ur cases have
consistently held that no rights vest in such an instance" when
a building permit has not been obtained. Id.; see also State ex
rel. Humble Oil & Ref. Co. v. Wahner, 25 Wis. 2d 1, 13, 130
N.W.2d 304 (1964); Vil. of Hobart v. Brown Cty., 2005 WI 78,
¶28, 281 Wis. 2d 628, 698 N.W.2d 83. Therefore, Lake Bluff
reasoned that the developer "did not possess the 'clear,
specific legal right which is free from substantial doubt' that
is required in an action for mandamus." Lake Bluff, 197
Wis. 2d at 182 (quoting Collins v. Am. Family Mut. Ins. Co., 153
Wis. 2d 477, 483, 451 N.W.2d 429 (1990)).
¶39 McKee argues first that Lake Bluff's building permit
rule should be limited to the facts of that case because the
developer in Lake Bluff requested relief in the form of a writ
of mandamus. According to McKee, Lake Bluff declined to
consider the developer's substantial expenditures in determining
whether it had vested rights because a writ of mandamus requires
"strict and complete compliance with all necessary and
applicable provisions of the relevant ordinance . . ." Id. at
14
No. 2014AP1914
174 (quoting 4 Edward H. Ziegler, Jr., Rathkopf's The Law of
Zoning and Planning, § 44.04[1], at 44-14 to 44-15 (4th ed. 1956
& Supp. 1994) (footnotes omitted)). Thus, McKee asserts that
because it brought claims for declaratory judgment and damages
arising from alleged constitutional violations, the permit rule
should not be applied here given that the requested remedies are
distinguishable from the relief requested in the writ of
mandamus in Lake Bluff.
¶40 We decline McKee's invitation to limit Lake Bluff to
cases in which a developer seeks relief in the form of a writ of
mandamus. The Lake Bluff court did not base its decision on the
developer's requested remedy. Instead, it reasoned that "[f]rom
the very beginning of zoning jurisprudence in this state [] a
building permit has been a central factor in determining when a
builder's rights have vested." Id. at 172.
¶41 Indeed, Lake Bluff considered prior Wisconsin case law
on this issue in reaching its decision and explained that "a
common factor . . . was the presence or absence of a building
permit." Id. at 172. As Lake Bluff explained, Building Height
Cases examined three separate cases and ruled on the nature of
the vested rights, if any, in each case. Id. at 171 (citing
State ex rel. Klefisch v. Wisconsin Tel. Co. (Building Height
Cases), 181 Wis. 519, 195 N.W. 544 (1923)). In two of the cases
it examined whether there were vested rights when the developer
obtained a permit. However, in the third case where there was no
application for a permit, there were no vested rights. Id. at
172.
15
No. 2014AP1914
¶42 Underlying the vested rights doctrine is the theory
that a developer is proceeding on the basis of a reasonable
expectation. Id. at 175 (citing State ex rel. Cities Serv. Oil
Co. v. Bd. of Appeals, 21 Wis. 2d 516, 528-29, 124 N.W.2d 809
(1963); 8 McQuillin Mun. Corp. § 25:157 at 701 (3d ed. 1991).
As Lake Bluff explained, "[r]equiring an application for a
building permit which conforms to applicable zoning or building
code requirements in order to show a clear legal right also
serves the goals of the vested rights doctrine." 197 Wis. 2d at
175.
¶43 Wisconsin applies the bright-line building permit rule
because it creates predictability for land owners, purchasers,
developers, municipalities and the courts. See, e.g., Guertin
v. Harbour Assurance Co. of Bermuda, 141 Wis. 2d 622, 634-35,
415 N.W.2d 813 (1987) (explaining that bright line rules provide
predictability and protect all parties). It balances a
municipality's need to regulate land use with a land owner's
interest in developing property under an existing zoning
classification. A municipality has the flexibility to regulate
land use through zoning up until the point when a developer
obtains a building permit. Once a building permit has been
obtained, a developer may make expenditures in reliance on a
zoning classification.
¶44 In contrast, the rule proposed by McKee, which would
require a case-by-case analysis of expenditures, would create
uncertainty at the various stages of the development process.
Nevertheless, McKee urges this court to follow other
16
No. 2014AP1914
jurisdictions, which it contends recognize expenditures made
after a municipality approved the development of plats of land.
See, e.g., Telimar Homes, Inc. v. Miller, 14 A.D.2d 586, 587
(1976); Milcrest Corp. v. Clackamas Cty., 650 P.2d 963, 967
(1982). According to McKee, "the concept of fair play and
protection of settled expectations demands a more flexible and
searching inquiry than bright-line rules such as the building
permit test can provide."
¶45 For the reasons set forth above, we decline to adopt
this approach. Additionally, we observe that even if this court
were to determine that a rule based on substantial expenditures
should apply here, McKee's claim would fail because it has not
introduced evidence supporting its claims.
¶46 We previously addressed the two-fold impediments of
failure to apply for a building permit along with the failure to
present evidence in support of the claim. In Zealy, the court
determined that the developer did not have a vested right to the
former residential zoning on his land. 201 Wis. 2d at 381-82.
It reasoned that "Zealy has not shown that he made any
expenditures in reliance on the zoning, nor has he ever
submitted an application for a building permit proposing a
residential use of the land." Id. McKee's claim suffers from
the same lack of evidence of expenditures made in reliance on
the PDD zoning as well as the failure to submit an application
for a building permit.
¶47 In sum, we decline to depart from Wisconsin's bright-
line building permit rule. A property owner's rights do not
17
No. 2014AP1914
vest until the developer has submitted an application for a
building permit that conforms to the zoning or building code
requirements in effect at the time of application. Lake Bluff,
197 Wis. 2d at 182. It is undisputed that McKee did not apply
for a building permit. Like the court of appeals, we conclude
that McKee did not have a vested right in developing the
property under the PDD zoning classification because it did not
apply for a building permit.
V
¶48 We turn next to McKee's argument that to the extent
the zoning classification is contractual in nature it also
creates expectations upon which developers may rely.
¶49 McKee bases this assertion on the City of Fitchburg
Ordinances that set forth the procedures for the PDD zoning
process that were in effect at the time the PDD-GIP was adopted.
Specifically, McKee relies on language in the Ordinances that
referred to a PDD zoning classification as "an agreement [that]
is reached between the property owner and the City of
Fitchburg." Fitchburg, Wis., Gen. Ordinances § 22.82.
Additionally, McKee contends that section 22.91, which stated
that "[t]he City Council shall approve a Specific Implementation
Plan that is reasonably consistent with the previously approved
General Implementation Plan," is an expression of intent to
create expectations upon which developers are expected to rely.
Fitchburg, Wis., Gen. Ordinances § 22.91.
¶50 According to McKee, we should interpret the language
of the Fitchburg Ordinances as expressing an intention to create
18
No. 2014AP1914
expectations upon which developers are entitled to rely. Thus,
McKee asserts that we should decline to apply the building
permit rule, because it contends that a planned development
district is a form of negotiated zoning that a developer may
rely upon once it is adopted by Fitchburg.
¶51 McKee's argument here contravenes the strong
presumption that legislative enactments do not create
contractual rights. Dunn, 279 Wis. 2d 370, ¶8 (citing Morrison
v. Bd. of Educ. of City of W. Allis, 237 Wis. 483, 487-88, 297
N.W. 383 (1941)). Treating legislative acts as contracts would
"enormously curtail the operation of democratic government."
Id., ¶9 (quoting Pittman v. Chicago Bd. of Educ., 64 F.3d 1098,
1104 (7th Cir. 1995)).
¶52 It is a well-established principle that "[o]ne
legislature may not bind a future legislature's flexibility to
address changing needs." Flynn v. Dep't of Admin., 216 Wis. 2d
521, 543, 576 N.W.2d 245 (1998). Accordingly, a current city
government "may not enact a statute which has 'implications of
control over the final deliberations or actions of future
legislatures.'" Id.
¶53 The facts of this case demonstrate why a legislative
body must have the flexibility to adopt and repeal legislation
in response to its community's changing needs. Lots 53 and 54
were undeveloped for fifteen years after Fitchburg approved the
PDD-GIP, yet McKee asserts that the current Fitchburg Common
Council is contractually bound by a city ordinance adopted in
1994.
19
No. 2014AP1914
¶54 The original GIP proposed a development for "mature
adults," citing the "lack of housing options for mature adults
in the Fitchburg area." It was intended to compliment the
"Independent Living" and "Elder Care" developments nearby. The
GIP explained that the "formation of such a 'senior community'
will serve the community well by making the most efficient use
of public and private services these people will require."
¶55 Lots 10 and 11, which are not at issue in this case,
were developed between 1995 and 2002 under the PDD zoning plan
with assisted living facilities, senior housing and senior
condominiums. In 2008, more than a decade after the PDD-GIP
zoning was approved, McCormick presented a plan for a 128-unit
apartment complex on lots 53 and 54 at a Fitchburg neighborhood
meeting. The development proposed in 2008 consisted of four
three-story 32-unit apartment buildings, with a clubhouse and a
pool.
¶56 In a petition signed by 600 Fitchburg residents, the
neighborhood detailed its concerns about the scale and density
of the proposed development:
If a rental development of this scale and density were
built . . . it would result in significant increases
in and unacceptable levels of traffic, noise, litter,
vandalism, storm water run-off, and would
significantly impact the quality of life and the
property values of those already residing in our
neighborhoods.
The primary focus of concern was that the proposed development
did not comport with the original PDD-GIP plan to develop senior
housing.
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No. 2014AP1914
¶57 The concerns of Fitchburg's citizens in this case
demonstrate why the legislature must have flexibility to address
the changing needs of the community. See Flynn, 216 Wis. 2d at
543. Although Fitchburg adopted the PDD-GIP in 1994, it needed
to be able to respond to the changing development needs of the
community in 2008.
¶58 Not only was the development far different than what
was originally proposed, McCormick would have been the fourth
owner of the property since McKee Brothers Partnership dedicated
parkland to Fitchburg in 1989. Subsequent to the parkland
dedication, the property was transferred to MAF, which in 1994
applied for and received approval for rezoning to a PDD
classification. Eventually, MAF deeded lots 53 and 54 to McKee,
which now argues that the potential purchaser, McCormick, has
the same zoning right granted to MAF in 1994 and reliance rights
arising from the parkland dedication in 1989.
¶59 As the United States Supreme Court has explained,
there must be "some clear indication that the legislature
intends to bind itself contractually" in order to overcome the
presumption that a law is not intended to create private
contractual rights. Nat'l R.R. Passenger Corp., 470 U.S. at
465-66 (1985). McKee points to no evidence other than the
language of the ordinances in setting forth the development
process as support for its argument that PDD zoning created a
contract upon which it was entitled to rely. Accordingly, McKee
failed to overcome the presumption that Fitchburg did not intend
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No. 2014AP1914
to enter into a binding contract when it enacted the 1994
Ordinance approving the PDD zoning classification.
¶60 Finally, we observe that we need not consider McKee's
argument that the rezoning of Lots 53 and 54 constituted a
taking.
¶61 McKee brought its takings claim as contingent on its
claim for vested rights, contending it had a takings claim only
if this court determined that it had a vested right in the PDD
zoning classification. In its amended complaint, McKee alleged
that it suffered a taking in violation of the Fifth and
Fourteenth Amendments "in the event that the Court finds that
the Defendant wrongfully adopted Ordinance 2009-O-03, and
wrongfully refused to process and approve the PDD-SIP
application . . ." Likewise, in its opening brief McKee argues
that "[f]inding vested rights will revive McKee's takings
claim." Finally, at oral argument, McKee reiterated "you cannot
have a taking without a vested right."
¶62 As asserted, McKee's takings claim is contingent on
the success of his vested rights claim. Having failed on his
vested rights claim, his takings claim does not survive.
VI
¶63 We conclude that McKee did not have a vested right in
developing the property under the planned development district
zoning classification because it did not apply for a building
permit. Wisconsin follows the bright-line building permit rule
that a property owner's rights do not vest until the developer
has submitted an application for a building permit that conforms
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No. 2014AP1914
to the zoning or building code requirements in effect at the
time of application. Lake Bluff, 197 Wis. 2d at 182. It is
undisputed that McKee did not apply for a building permit.
¶64 Additionally, we determine that a planned development
district zoning classification does not create contractual
expectations upon which developers may rely. There is a very
strong presumption that legislative enactments do not create
contractual or vested rights. Dunn, 279 Wis. 2d 370, ¶8
(citation omitted). Further, there must be a clear indication
that a legislative body intends to bind itself contractually in
order to overcome the presumption. Nat'l R.R. Passenger Corp.,
470 U.S. at 465-66. McKee has not overcome the presumption that
Fitchburg did not intend to enter into a binding contract when
it enacted an ordinance approving the zoning classification.
¶65 Finally, we do not need to reach McKee's
constitutional takings claim because McKee conditioned its
takings claim on its claim for vested rights. Because McKee has
no vested right in a PDD zoning classification, it cannot
succeed on its asserted contingent takings claim.
¶66 Accordingly, we affirm the decision of the court of
appeals affirming the circuit court's grant of summary judgment
in favor of the City of Fitchburg.
¶67 SHIRLEY S. ABRAHAMSON and REBECCA GRASSL BRADLEY, JJ.,
did not participate.
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No. 2014AP1914
1
McKee Family I, LLC v. City of Fitchburg
Court: Wisconsin Supreme Court
Date filed: 2017-04-12
Citations: 374 Wis. 2d 487, 2017 WI 34
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