Archive for August, 2014

How do towns become villages? And is an end run illegal?

Tuesday, August 19th, 2014

When driving in rural Wisconsin, did you ever notice upon entering a small hamlet that the welcome sign sometimes says “unincorporated?” It might say something like “Badgertown, Population 450, Unincorporated.”

Wisconsin has four units of local government, counties, cities, villages and towns (sometimes referred to as townships), each with its own jurisdictional limits, and each controlled by a fairly complicated set of statutes, and each somewhat interrelated.  One thing they all have in common is that they are all creatures of the state, defined by state statutes.  But one major difference is the amount of independence each may have.

It is not uncommon for a town to want to become a Village.  Usually, this happens because the local government and enough local citizens want more independence and local control, to be free from county control and to achieve more of a “home rule” status, independent of many state regulations.

Another reason towns sometimes want to become villages is to stop other cities and villages from annexing their territory.  Some towns have disappeared altogether when a city or village has grown and annexed sufficient territory.

But there are very specific statutory and somewhat less specific but still very important case law standards that come along with an attempt to incorporate, and a different set of standards that come along with an attempt to annex territory.

Which brings us to the recent case of Ries vs. the Village of Bristol.  Bristol was a town along the Illinois Border (maybe you’ve heard of the Bristol Renaissance Fair?).  For reasons not relevant to the case, some time ago Bristol attempted to incorporate into a Village.  Originally the incorporation was denied by the state, because the prospective village limits included mostly farmland.  One of the standards for incorporation is that the village has to have some sort of definable village characteristics – the old “if it walks like a duck, quacks like a duck, lays eggs like a duck” then it’s probably a duck.  Conversely, if the proposed incorporation into a village does not “walk like a village, quack like a village, etc.” then it’s probably not a village.

When the incorporation failed, Bristol tried again with a smaller, more village-like proposal. Success, and the Village of Bristol came into existence.  Shortly thereafter, the Village of Bristol began the annexation to bring most of the land from the original proposal into the Village.  This succeeded.  Ries filed a legal challenge.  Although the case is somewhat complicated and filled with what might seem like legalese, the basic gist of Ries’s challenge was that Bristol had done an end run around the rules of incorporation and achieved through annexation what was not permissible through incorporation.

But the court made short work of that.  The court did not even address the underlying motives or whether this was somehow “wrong” to allow Bristol to achieve through annexation what it could not achieve through incorporation.

The court said the standards for incorporation are one thing; the standards for annexation are another thing.  One cannot apply the incorporation statute to annexations.  One must follow the statutory rules for the purpose one is trying to achieve, not a different set of rules for a different purpose.  Although Ries’s challenge seems to make some sense upon first blush in this unusual annexation, it would complicate the more typical annexations to have a court made rule that the incorporation statute also must be applied to annexations.  I think it would prove unworkable for “normal” annexations.  And where would it lead – what other statutes might seem to have some rules that might seem to make some sense in some unrelated situation?

Failed Developments, Unfinished Roads, Who Pays?

Monday, August 11th, 2014

Prior to the real estate market plunge of the recent past, there seemed to be the attitude among certain real estate developers that any corn field could sprout houses and make the developer a millionaire.  This proved to be untrue.

However, many developers with that or something similar in mind did purchase land and put together plans for developing lots and roads.  A number of these developments began in earnest, but stopped in their tracks when the housing market crashed.  This left platted land and unfinished roads.  Some unfortunate home owners were also left in the lurch, with finished homes on unfinished roads.

This general set of facts led to a number of situations where the local municipality had to step in and either finish the road and pay for it out of general funds, or special assess the current homeowners, usually a mix of private residential owners, banks which had foreclosed on the developers, and sometimes some investors or the developers themselves.  Since general taxpayers pretty generally did not want to bail out failed developments, many municipalities turned to special assessments to at least finish roads.

With that background, we come to the recent case of Runkle, et al. v. Town of Albany.  This case focused on the narrow question of whether, by accepting a plat, the Town had accepted a road.  The short answer is yes.  The slightly longer answer is that it appears a town can conditionally accept a plat, which then doesn’t become official until those conditions are met.  However, the conditions had better be spelled out because vague or overly general conditions may be deemed to have been met by very little action on the part of the developer.

The bottom line is, if you want the developer to do something, for example build a road, make sure you get your agreements and financial assurances (e.g. a bond or letter of credit) in place before accepting a plat which dedicates roads to the town or you may end up with an unfinished road you didn’t think you had.  Then you’ll have the homeowners expecting you to finish the road.  But they won’t want you to special assess them, they’ll want you to sue the developer. Aside from the legal challenges and expense of mounting such a lawsuit, the whole reason the development tanked is the developer ran out of money.  If you sue someone who doesn’t have any money, you may win in court, but you won’t get any money.