Wis. Supreme Court Finds TID Findings are Legislative Determinations, Subject to Certiorari Review

Published by Matthew Dregne on

Wis. Supreme Court Finds TID Findings are Legislative Determinations, Subject to Certiorari Review 

In a recent 5-2 decision, the Wisconsin Supreme Court held, inter alia, that findings of blight and a corresponding need for Tax Incremental Districts (TIDs) were “legislative determinations” and therefore not susceptible to full declaratory judgment review. Voters with Facts v. City of Eau Claire, 2018 WI 63. Voter with Facts strongly suggests, but stops short of directly holding, that certiorari review is the sole method for challenging findings in the creation of TIDs.

Municipalities will need to closely watch the next stages of the Voters with Facts litigation and other similar cases to see how courts conduct certiorari review of TID formation. In particular, it is unclear how courts will review the required finding that a TID is necessary because development of a blighted area would not occur “but for” the creation of a TID. See Wis. Stat. § 66.1105(4m)(b)2. Even under the more forgiving certiorari standard, it will be necessary to have a record supporting the blight and “but-for” determinations.

Voters with Facts Litigation

Plaintiffs, various Eau Claire area businesses and taxpayers, sought a declaratory judgment invalidating two TIDs that were part of the City’s “Confluence Project,” a downtown redevelopment effort. In approving the TIDs, the City found, as required by statute, that at least 50% of the area in the TIDs was “blighted.” 2018 WI 63, ¶ 8. The Joint Review Board (JRB) (also as required by statute) subsequently found that development in the area would not occur “but for” the creation of the TIDs. Id. ¶ 9.

The plaintiffs argued the TIDs were invalid because the City and the JRB failed to “articulate the basis for . . . and the evidence of record that support[ed]” these findings. Id. ¶ 11. In essence, the Plaintiffs wanted to engage in discovery and conduct a trial, seeking a judicial determination of whether the blight and “but for” determinations were justified by the facts on the ground. Alternatively, the Plaintiffs argued that if they could not get a full trial, they were entitled to certiorari review of the City and JRB’s actions. Id. ¶ 14.

The Wisconsin Supreme Court concluded that, because the blight and “but for” findings were “legislative determinations,” they “do not present justiciable issues of fact or law” and are not appropriate subjects for declaratory judgment relief. Voters with Facts v. City of Eau Claire, 2018 WI 63, ¶ 4. The Court noted that because blight findings involve determinations about areas which are “detrimental to the public health, safety, morals, or welfare,” they are a quintessential exercise of municipalities’ “police power,” a legislative power typically accorded deference by courts. Id. ¶ 37. The Court found that like other “[l]egislative determinations of public policy,” for example zoning decisions, TID determinations “[do] not raise justiciable issues,” Id. ¶ 39. The case was remanded to the circuit court with instructions to address the Plaintiffs’ challenges through certiorari review, which the court described as “the appropriate mechanism for a court to test the validity of a legislative determination.” Id. ¶ 5.

Justices Rebecca Bradley and Daniel Kelly authored a joint dissent, criticizing the court’s decision to dismiss the “Plaintiffs’ richly-detailed and amply supported 25-page Complaint . . . .” Voters, ¶ 77. The dissent opined that “[t]he court’s decision forecloses taxpayers from ever seeking declaratory judgment when municipalities violate the TIF statutes.” Id. ¶ 78. The dissent criticized both the majority opinion and the Wisconsin Court of Appeals, arguing (among other things) that: (1) Plaintiffs had standing to bring their declaratory judgment claims; (2) declaratory judgment was appropriate for challenging the TID findings; and (3) the Complaint adequately pleaded facts to support the Plaintiffs’ declaratory judgment challenges to the TID findings. Id.

Certiorari Review 

Certiorari review is generally limited to the “record compiled by the municipality,” and “there is a presumption of the correctness and validity to a municipality’s decision.” Ottman v. Town of Primrose, 2011 WI 18, ¶¶ 35, 48. On review, the court reviews whether the municipality: (1) “kept within its jurisdiction;” (2) “proceeded on a correct theory of law;” (3) “was arbitrary, oppressive, or unreasonable . . . ;” and (4) “whether the evidence was such that it might reasonably make the . . . determination in question . . . .” Voters with Facts, ¶ 71 (quoting Ottman, ¶ 35).

A recent example of just how deferential certiorari review is (at least as understood by the current members of the Wisconsin Supreme Court) is AllEnergy Corp. v. Trempealeau Cty. Env. & Land Use Committee, 2017 WI 52. In that case, the plaintiffs challenged the denial of a conditional use permit for non-metallic mining on several grounds, including that there was insufficient evidence to support the committee’s denial. Id. ¶ 3. While no one opinion garnered four votes, the court upheld the committee’s decision on a 4-3 vote under the certiorari standard. See id. ¶¶ 130, 133.

Justice Ziegler’s concurrence demonstrated a view that certiorari review is very deferential to municipal decisions. Her opinion (joined by Justice Roggensack) summed her rationale in one sentence: “This case should be decided narrowly: ours is a certiorari review.” Id. ¶ 133. Rather than delve into a deep review of the Environment & Land Use Committee’s evidence in the record and rationale, Justice Ziegler pointed out that the Committee’s decision “is entitled to a presumption of correctness and validity.” Id. ¶ 135. Given that presumption, Justice Ziegler could not conclude “that the Committee’s decision [was] invalid.” Id. ¶ 136. 

The dissenters in AllEnergy took another view. Three justices dissented, demonstrating a willingness to undertake a closer review of the Committee’s decision.  The dissent argued that the Committee exceeded its jurisdiction and acted arbitrarily. Id. ¶ 146. The dissent also criticized the record compiled by the Committee, saying that “no evidence” of whether the committee properly evaluated the plaintiff’s proposed mining plans “made its way into the record.” Id. ¶ 183.

The fractious nature of the AllEnergy decision, along with the strong views of the dissenters in AllEnergy and Voters with Facts, suggests that even with a “deferential” certiorari standard, municipal bodies would do well to create detailed records supporting legislative determinations, particularly for TIDs.

Law Clerk Collin Weyers assisted with researching and writing this post.

Filed Under: Wisconsin Supreme Court

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