Court of Appeals Determines City Development Condition Is Unconstitutional Taking
This month, the Court of Appeals affirmed a circuit court decision that held that the City of Brookfield engaged in an unconstitutional taking when it conditioned the approval of a subdivision development on construction of a new public street. The Court of Appeals determined that this “exaction” was not permissible because it did not address a need caused by the development proposal and, even if it did, the exaction was not proportional to the conditions sought to be addressed by the City through this exaction.
Bridget Fassett sought approval from the City of Brookfield to split a nearly five-acre property into three single-family lots and an outlot with wetlands to be dedicated to the City. The property is located between two subdivisions, each having a dead-end street named Choctaw Trail. The City anticipated that the dead-ends would eventually connect to form a through road. In 2018, Fassett submitted a request for the proposed subdivision to the City of Brookfield Plan Commission, which included three concept plans: “(1) creating a cul-du-sac connected to the eastern portion of Choctaw Trail, but leaving the dead-end on the western side; (2) connecting both Choctaw dead-ends with a through street; and (3) using a shared driveway for the two proposed southern lots from the east, leaving the two Choctaw Trail dead-ends in the adjacent subdivisions.” Fassett stated that she preferred option 3, which would have left the Choctaw Trail dead-ends in place.
Following a hearing where Fassett presented her request, the Commission approved and recommended that the City’s common council adopt option 2, which required Fassett to install the through street. The common council adopted the Commission’s recommendation.
Over a year later, Fassett submitted a formal application for the approval of the land division under her preferred option, which did not include the through street dedication. The Plan Commission rejected the application because: the previous platting of neighboring subdivisions anticipated the eventual creation of the through street; the City’s ordinances require minimization of dead-end streets; the previously approved plan that included the through street improved public safety response time and snowplow operations; and a public thoroughfare would generally improve the area. The Common Council adopted the Plan Commission findings and recommendation.
Fassett appealed the decision in Waukesha County Circuit Court. The circuit court granted Fassett summary judgment on the grounds that the City engaged in an unconstitutional taking when it conditioned approval of the development on the dedication and construction of a through street for public use. The circuit court ordered the City to approve Fassett’s application with the shared driveway plan.
Court of Appeals Upholds Determination of Unconstitutional Taking
The City appealed the circuit court’s decision on two independent grounds. First, the City contended that Fassett’s appeal was impermissible because she failed to appeal the City’s 2018 decision. Second, the City argued that the through street exaction was not an unconstitutional taking because it advanced public benefits. The Court of Appeals rejected both arguments.
First, the Court of Appeals held that Fassett could appeal the denial of her second application because she had not appealed the 2018 decision. The Court noted that nothing in the law or the City’s ordinances precluded a person from re-filing an application for an approval that was previously addressed.
Next, the Court of Appeals affirmed that the through street condition was an unconstitutional taking. The Court of Appeals analysis focused on whether requiring land dedication and the street connection was a constitutionally permitted exaction. An “exaction” is an approval condition on development requiring the dedication of property or the expenditure of the developer’s funds for public benefit.
Under longstanding U.S. Supreme Court precedent, a constitutional exaction requires: (1) that an “essential nexus” existed between a legitimate government interest and the exaction; and (2) if an essential nexus exists, the governmental entity must demonstrate “rough proportionality” between the exaction and the impact caused by the development. Principally, the government must demonstrate that the proposed development created the need for the exaction, such that a landowner can be required to bear the costs to mitigate anticipated negative impacts of the development, and that those costs roughly offset that created need.
The Court of Appeals held that the City did not establish an essential nexus between public benefits, such as improved public safety response time and easier public travel, and the exaction, because those considerations were not connected to any impact actually caused by Fassett’s subdivision proposal. Exactions must be based on the anticipated impacts of a proposed development, not just whether the City believes eliminating previously-created dead-end streets is a good idea. Having failed to identify any public burdens caused by the proposed subdivision, the City also could not establish the “rough proportionality” required for satisfying the second prong of the analysis.
The Fassett decision is a prime example of why municipalities should be cautious when conditioning developments on the creation of certain public improvements. Although exactions are a common tool used by municipalities to offset municipal costs, this decision underscores the fact that municipalities must carefully analyze the difference between lawful exactions and unconstitutional takings. Stafford Rosenbaum LLP’s skilled and experienced municipal attorneys are no strangers to these issues. Our attorneys are ready to counsel, advise, and problem-solve for Wisconsin municipalities at every step of the development process.