Voters With Facts v. City of Eau Claire

Decision Date31 May 2017
Docket NumberAppeal No. 2015AP1858
Citation2017 WI App 35,376 Wis.2d 479,899 N.W.2d 706
Parties VOTERS WITH FACTS, Pure Savage Enterprises, LLC, Wisconsin Three, LLC, 215 Farwell LLC, Dewloc, LLC, Leah Anderson, J. Peter Bartl, Cynthia Burton, Corinne Charlson, Maryjo Cohen, Jo Ann Hoeppner Cruz, Rachel Mantik, Judy Olson, Janeway Riley, Christine Webster, Dorothy Westermann, Janice Wnukowski, David Wood and Paul Zank, Plaintiffs-Appellants, v. CITY OF EAU CLAIRE and City of Eau Claire Joint Review Board, Defendants-Respondents.
CourtWisconsin Court of Appeals

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of Richard M. Esenberg, Thomas C. Kamenick and Michael Fischer of Wisconsin Institute for Law & Liberty, Milwaukee.

On behalf of the defendants-respondents, the cause was submitted on the brief of Stephen Nick, city attorney and Douglas Hoffer and Jenessa Stromberger, assistant city attorneys, City of Eau Claire, and Remzy D. Bitar of Arenz, Molter, Macy, Riffle & Larson S.C., Waukesha.

Before Hruz, Seidl and Reilly, JJ.

HRUZ, J.

¶1 In this tax incremental financing (TIF) dispute, Voters with Facts, four limited liability companies, and fourteen individual plaintiffs (collectively, "Voters") appeal a dismissal on the pleadings granted in favor of the City of Eau Claire (the "City") and the City of Eau Claire Joint Review Board (the "Review Board").1 Voters sought a judgment declaring unlawful and void two resolutions that amended and created Tax Incremental Districts (TID) Nos. 8 and 10, respectively. The circuit court dismissed these claims for a variety of reasons, including that Voters lacked standing and that Voters' constitutional challenges were precluded by Sigma Tau Gamma Fraternity House Corp. v. City of Menomonie , 93 Wis.2d 392, 288 N.W.2d 85 (1980).

¶2 We agree with the circuit court that Voters lacks taxpayer standing to seek a declaratory judgment that Eau Claire acted unlawfully, either under its statutory authority or from a constitutional standpoint, in amending TID No. 8 and creating TID No. 10.

Voters' complaint demonstrates Eau Claire made the required statutory findings when taking those actions, and the complaint therefore fails to allege noncompliance with any statutory directives. Meanwhile, Voters' fear that City payments to a developer might be improperly diverted to reimburse the developer for the demolition of historic buildings is based on speculation, and that claim therefore fails to allege a concrete harm. Finally, Voters' complaint fails to sufficiently allege a violation of the Wisconsin Constitution, on the basis of either uniformity clause principles or the public purpose doctrine. Because Voters' complaint fails to adequately allege Eau Claire acted "unlawfully" in any way, Voters lacks taxpayer standing to challenge the relevant municipal acts through a declaratory judgment action. We therefore affirm the dismissal of Voters' declaratory judgment claims.

¶3 As a corollary to the insufficiency of Voters' pleading, we also conclude declaratory judgment is not an appropriate method by which to challenge the municipality's factual findings required for amending/creating the relevant TIDs—in particular, the City's finding that a sufficient area of the TIDs was blighted, as well as the Review Board's "but for" determination that the development would not occur in the absence of the TIDs. Rather, the validity or "truthfulness" of a municipality's findings when forming a TID is reviewable by certiorari, using the standards applicable to such a review.

¶4 Voters pled a claim for certiorari review as an alternative to its declaratory judgment claims. We reverse the circuit court's dismissal of that claim, which dismissal the circuit court did not explain. We remand for further proceedings on Voters' certiorari claim that Eau Claire's TID resolutions were "arbitrary, capricious, and outside the scope of their lawful authority."

BACKGROUND2

¶5 "At its heart, TIF provides municipalities with a method of financing to develop or redevelop, in cooperation with private interests, unused or underused land." David N. Farwell, Comment, A Modest Proposal: Eliminating Blight, Abolishing But-For, and Putting New Purpose in Wisconsin's Tax Increment Financing Law , 89 MARQ. L. REV. 407, 412 (2005). Wisconsin's "Tax Increment Law" is found in WIS. STAT . § 66.1105 (2013-14).3 Broadly speaking, the statutory TIF process, which involves the creation of specific taxing districts, allows municipalities to finance development in blighted or underdeveloped areas, using the increased tax revenue generated by the resulting increased property value within the TID to repay the costs of the improvements. Farwell, supra , at 415 ; see also Sigma Tau , 93 Wis.2d at 396-97, 288 N.W.2d 85.

¶6 The TIDs at issue here were intended to support a development known as the "Confluence Project." A new performing arts center and residential development were to be constructed on a riverfront site in downtown Eau Claire. The developer purchased the properties used for the Confluence Project site in three separate transactions between May 2012 and June 2014. The developer has demolished several buildings that were formerly located on these properties and listed on the National Register of Historic Places.

¶7 The City's agreement with the developer required the developer to make improvements related to the Confluence Project. The project plan for TID No. 10 states the City would pay the developer $10.4 million toward certain development costs. The project plan for the amendment to TID No. 8 states that $11.1 million of the project costs will fund a parking ramp intended, among other purposes, to provide parking for the new performing arts center. The City would make an additional $1.5 million payment to the developer under that project plan. The funds paid to the developer depended upon its achieving specified milestones, but the funds are paid in a lump sum once those milestones are reached.

¶8 At a public meeting on August 18, 2014, the City plan commission voted to endorse the project plans for TID No. 10 and the amended TID No. 8. The City held open public hearings, at which numerous City residents, including many of the individual plaintiffs, objected to the TIDs. Nonetheless, the Eau Claire City Council—which is the applicable "governing body" for purposes of the Tax Increment Law—adopted resolutions approving the TIDs. Both resolutions specifically stated it was the City's finding that "not less than 50%, by area, of the real property within the amended boundary area of the District is a ‘blighted area’ and is in need of ‘rehabilitation or conservation’ within the meaning of [ WIS. STAT . § 66.1105(2)(ae)1. ]." As Voters admits, both resolutions therefore contained the specific findings required by § 66.1105(4)(gm) 4.a.

¶9 The matters were then sent to the Review Board, a body comprised generally of representatives of affected taxing authorities. See generally WIS. STAT . § 66.1105(4m). On September 26 and October 22, 2014, the Review Board adopted resolutions approving the amendment to TID No. 8 and the creation of TID No. 10, respectively. Both resolutions contained the statutorily required finding that the development described in the respective project plans would not occur without the creation or amendment, as applicable, of the TID. See WIS. STAT . § 66.1105(4m)(b)2.

¶10 According to the complaint, Voters with Facts is an "unincorporated association of grassroots citizen volunteers and [local] taxpayers who question the propriety" of the developments related to TID Nos. 8 and 10. On November 10, 2014, Voters sent a notice of claim to the City clerk. The following day, the City Council voted to adopt a resolution approving the City's 2015-2019 Capital Improvement Plan, which included appropriations of several million dollars to be spent on TID Nos. 8 and 10 in 2015. At the same meeting, the City Council also adopted a resolution authorizing the issuance of bonds, the repayment of which was to be funded by the incremental tax revenue generated by TID Nos. 8 and 10. The City did not respond to Voters' notice of claim and it was disallowed by inaction pursuant to WIS. STAT . § 893.80(1g).

¶11 Voters filed the present action in March 2015. The complaint sought a declaratory judgment invalidating the pertinent resolutions because: (1) Eau Claire allegedly failed to follow the statutory requirements when amending TID No. 8 (Count 1); (2) Eau Claire allegedly failed to follow the statutory requirements when creating TID No. 10 (Count 2); (3) TID funds allegedly could be used unlawfully to reimburse the developer for the cost of demolishing historic structures, contrary to WIS. STAT . § 66.1105(2)(f) 1.a. (Count 3); and (4) the TIDs allegedly operated in violation of the Wisconsin Constitution's Uniformity Clause, WIS. CONST . art. VIII, § 1, because the cash payments to the developer functioned as a tax rebate or credit (Count 4). Voters' final assertion was that, if declaratory judgment was an improper mechanism for judicial review of Eau Claire's actions related to the TIDs, review was alternatively available by certiorari, and Eau Claire's actions were "arbitrary, capricious, and outside the scope of [its] lawful authority" (Count 5).

¶12 Eau Claire filed a motion to dismiss. The motion advanced nine bases for dismissal, including that Voters lacked standing to prosecute its declaratory judgment and certiorari claims; that Voters' constitutional challenge was in fact a facial challenge to legislation that had already been upheld against constitutional attack; and that Voters' historic building allegations in Count 3 failed to state a claim.

¶13 At the decision hearing, the circuit court focused its attention largely on Voters' allegation that the area within the TID did not satisfy the statutory definition of "blight." The court rejected this claim, reasoning that the...

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1 cases
  • Voters With Facts v. City of Eau Claire, Case No.: 2015AP1858
    • United States
    • Wisconsin Supreme Court
    • 6 d3 Junho d3 2018
    ...regard to these TIDs. We review here a published decision of the court of appeals, Voters with Facts v. City of Eau Claire, 2017 WI App 35, 376 Wis. 2d 479, 899 N.W.2d 706 [hereinafter Voters ], affirming the Eau Claire County circuit court's2 dismissal of Plaintiffs' complaint as to declar......

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