Photo credit: Vijay Kumar Koulampet
At first glance, Wisconsin State Assembly Bill 770 (AB 770) looks to be a standard piece of Republican-sponsored legislation meant to clear away regulations on new housing projects. The legislation reads almost like a developer’s wish list. It would take away local governments’ authority to set storm water and dwelling regulations exceeding the state’s own rules, ban local prohibitions on weekend construction work, let tax-increment financing pay for “workforce housing” and set stricter limits on how governments can collect and spend “impact fees” used to pay for services for new developments.
But not everything in AB 770 has to do with residential construction. In its many lines of text are a series of provisions that would fundamentally rewrite the state’s eminent domain laws—possibly at a great cost to state government, utilities and other entities that routinely buy land to make room for public projects. Matt Fleming, a lawyer representing the city of Middleton in Dane County, said he’s not even sure lawmakers are aware of every provision in AB 770. At a minimum, he said, they seem not to have grasped all the likely ramifications.
Part of the trouble is that lawmakers are in a rush to have the current legislative session wrapped up by March. AB 770 is among the scores of bills that lawmakers are hoping to have passed in the next few weeks if they are to meet their self-imposed deadline. AB 770 has so far been on a rocketing trajectory through the statehouse. Introduced on Monday, Dec. 19, it was given a public hearing on Wednesday, Jan. 3, then heavily amended and voted out of committee on Tuesday, Jan. 9 and finally approved by the Wisconsin State Assembly on Tuesday, Feb. 13. Now all it needs to become law is approval from the Wisconsin State Senate and the governor’s signature.
Reasonable Project Costs?
Fleming said he has the greatest misgivings about a provision that would add to the types of compensation governments must pay when they take property using eminent domain. AB 770 would make governments in Wisconsin responsible for the first time for what are known as “reasonable project costs.” These could include everything up to the cost of starting a business over again at another site. Fleming said the provision opens the door to double payments. Governments in Wisconsin, he said, are already required to pay what are known as “relocation costs” to provide compensation for the fair-market value of a business. If they also had to pay reasonable project costs, they could well end up in situations where they are paying to rebuild the same business twice over.
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Fleming acknowledged that there are probably instances when property owners are not receiving fair compensation. But, he warned, it’s in no one’s interest—including developers’—to make public projects prohibitively expensive. “If we are going to be double paying or unreasonably increasing the cost of eminent domain, I think there will be a lot of projects that won’t happen,” he said. And his concerns with AB 770 don’t stop there. Another of the bill’s provisions would raise the maximum compensation amounts offered to both tenants and property owners. The limit for tenants would go from $30,000 to $80,000; that for property owners from $50,000 to $100,000. Fleming said the proposed increases are not objectionable in themselves. Reasonable people might argue about where the limits should be, he said, but most would agree that they should be raised from time to time.
Far more concerning, Fleming said, is a part of AB 770 dealing with what sorts of entities come under the caps. Current law applies the limits to eminent domain payments made by all sorts of governments and agencies, both local and state. AB 770, if passed by the state senate and signed into law by Gov. Scott Walker, would upend that policy by keeping the caps in place only for cities, villages and towns. All others, most notably the Wisconsin Department of Transportation but also other state agencies and utilities, would theoretically be on the hook for an infinite amount of money when they acquire property for public purposes.
Fleming said he has a hard time believing that’s the outcome supporters of AB 770 really want. “I’ve never really heard any explanation for that,” he said. “It just appeared, and it seems colossally short sighted.” Attempts to reach the author of AB 770 for comment, State Rep. Rob Brooks (R-Saukville), were unsuccessful.
Tom Larson, a lobbyist for the Wisconsin Realtors Association, said the bill is far more benign than critics claim. He said that AB 770 would not get rid of all checks on eminent domain costs. Judges, for one, would still be presiding over condemnation proceedings and deciding what is reasonable compensation and what isn’t. “This doesn’t say the sky is the limit,” Larson said. “They are just going to have to pay for what the property is actually worth.”
Cities and Counties Oppose the Bill
Fleming, though, is not the only one who has misgivings about AB 770 and its provisions concerning eminent domain. The Wisconsin Ethics Commission’s website lists the cities of Madison and Milwaukee, Dane County and the League of Wisconsin Municipalities as being among the officially registered opponents to the bill. Nick Zavos, a lobbyist representing Madison, noted that AB 770 would also mandate something known as the “income approach” for placing a value on properties up for condemnation. This approach tries to take into account the income a business is bringing in at the time it is acquired using eminent domain.
Zavos said the trouble here is that that sort of information is not publicly available, like the comparable sales and cost-to-replace data that governments now rely on. Getting income figures will, at a minimum, entail higher legal expenses, he said. “Certainly, it will increase the cost of condemnations that state and local governments pay when you have to hire those kinds of experts,” Zavos said.
Even a big backer of AB 770 said he is not certain where the parts concerning eminent domain came from. Terrence Wall, president and CEO of Madison-based T. Wall Enterprises, said his support for the bill has almost entirely to do with its provisions on impact fees, weekend construction work and local storm water regulations. Wall said he has particularly strong feelings about a provision that would require local governments to assemble lists of all the impact fees they charge and make that information public. He added that there have been countless times when he thought he paid all the impact fees owed on a particular project only to discover there were more. “This will not only give full disclosure but also create competition between communities, because one might be higher than the other,” he said.
Fleming, for his part, doesn’t deny that there are ways the state might improve its regulations for residential development. He only wishes that some of the sensible proposals in AB 770 weren’t tied to what would amount to a sweeping overhaul of the state’s eminent domain laws. His best hope now seems to lie in the possibility that the state senate won’t get around to taking up the legislation before adjourning for the year. Leaders in the senate have their own list of priorities they hope to have passed this year and could well run out of time for AB 770.
“I really only wish it wasn’t under the gun, so to speak,” Fleming said, “and there wasn’t such a rush to get it passed by the end of this session.”
