Limitations on Security Requirements as Condition of Plat Approval Enacted

April 25th, 2014

On April 16, 2014 Governor Scott Walker signed into law 2013 Wisconsin Act 280 (“the Act”).  The Act has a statewide impact on the terms an approving authority may impose on a developer as a condition of its approval of preliminary and final plats.  The Act applies prospectively to all preliminary and final plats submitted to an approving authority beginning on April 17, 2014.  

Prior to the enactment of the Act, an approving authority could require a developer to execute a surety bond or “other security” to ensure that certain public improvements were made in connection with a proposed subdivision project.  The approving authority was allowed to specify which security instrument a developer could execute to satisfy the terms of its security requirement.

Under the Act, the term “other security” is defined as either a performance bond or a letter of credit.  In addition, the Act makes it the choice of the developer, rather than the approving authority, to decide which instrument it will execute to satisfy an approving authority’s security requirement.  Furthermore, the Act: (1) limits the amount of security an approving authority may require to 120 percent of the estimated cost to complete the required public improvements; (2) prohibits the approving authority from requiring the developer to provide the security for more than 14 months after the date the public improvements for which the security is provided are substantially completed; (3) defines the term “substantially completed”; and (4) upon substantial completion, limits the security an approving authority may require of a developer to the total cost to complete the required public improvements plus 10 percent.

Approving authorities that have codified by ordinance their plat approval process should undertake a review of its language to confirm its compliance with the new Act.  Because the Act is effective immediately, swift action should be taken to amend any ordinances deemed to be out of compliance with the new Act in order to avoid litigation.  In addition, approving authorities should consider developing language for inclusion in developer’s agreements that protects against a developer’s failure to complete required public improvements.  

For additional information regarding the impact of these statutory changes or for assistance drafting or amending compliant plat approval ordinances and developer’s agreements, please contact your Stafford Rosenbaum attorney or an attorney on our Government Law Team.   

Filed Under: Government Law

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