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McKee Family I, LLC v. City of Fitchburg

Supreme Court of Wisconsin

April 12, 2017

McKee Family I, LLC and JD McCormick Company, LLC, Plaintiffs-Appellants-Cross-Respondents-Petitioners,
City of Fitchburg, Defendant-Respondent-Cross-Appellant.

          Oral Argument: November 3, 2016

         Circuit Court Dane County, John C. Albert

         REVIEW OF A DECISION OF THE COURT OF APPEALS Reported at: 366 Wis.2d 329, 873 N.W.2d 99

          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, NALOP 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.


         ¶1 Petitioner, McKee Family I, LLC ("McKee") appeals an unpublished decision of the court of appeals affirming a circuit court grant of summary judgment in favor of the City of Fitchburg.[1] The court of appeals determined that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 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 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'1 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.


         ¶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 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 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. 94-0-11 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.

         ¶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]

         ¶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 ...

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