May 21, 2024 – A village acted rationally when requiring a developer to commit to building an access road and perform other actions before granting a proposed land division, the U.S Court of Appeals for the Seventh Circuit has held in Greenwald Family Limited Partnership v. Village of Mukwonago, No. 21-3237 (April 29, 2024).

In September 2014, the Greenwald Family Limited Partnership (the Partnership) offered to buy four acres along the eastern edge of a 19.6-acre parcel known as Chapman Farms in Waukesha County.

Under the terms of the offer, the Partnership would sever the four acres from the 19.6 parcel, contingent upon the Village of Mukwonago (Village) approving the land division.

To approve the land division, the Village required a certified survey map that met its requirements.

The Partnership’s agent, Tamara Towns-Pozorski, filed an application for a certified survey map with the Village’s plan commission.

The Village’s planner, Bruce Kaniewski, told Towns-Pozorski that to approve the application, the Village would require a developer’s agreement that: 1) was backed by a letter of credit that provided surety; and 2) evidenced the Partnership’s promise to make required infrastructure improvements, including an access road from State Highway 83, which abutted and ran parallel to the Chapman Farms property.

Not Really an Agreement

Towns-Pozorski replied to Kaniewski with a revised application and a document labeled “Statement and Developer’s Agreement.”

That document was signed by Towns-Pozorski and a representative of Chapman Farms but was not actually a developer’s agreement. It included no development plans or details about the access road or utilities and didn’t include a surety.

Nevertheless, the Village’s plan commission approved the revised application, contingent upon the Partnership submitting a developer’s agreement that included:

• a promise to build the access road;

• preliminary construction drawings;

• a construction timeline; and

• a surety.

Collapse of the Deal

The deal between the Chapman family and the Partnership eventually fell through.

The Village then bought eight acres of the Chapman Farms land – including the four acres that were part of the development proposed by the Partnership – built the access road, and sold the land to another developer.

Road Re-routed

In 2017, Douglas DeBack requested that the Village re-route a proposed road away from the Partnership’s property, to serve a new development located southeast of the junction between State Highway 83 and I-94.

The Partnership objected to DeBack’s proposal and asked the Village to keep the original route for the proposed road. The original route would have seen the road run from Maple Center, a proposed mixed-use development, to East Wolf Run, an existing street.

But the Village disagreed and eventually used eminent domain to condemn five acres of the Partnership’s property so that DeBack Drive, the road proposed by DeBack, could be built.

Takings Lawsuit

The Partnership sued the Village in Waukesha County Circuit Court.

The Partnership claimed that the Village’s condemnation violated the Fifth Amendment’s Takings Clause.

The Partnership later added a claim that the Village had singled it out for unfair treatment in violation of the Equal Protection Clause of the Fourteenth Amendment, a claim known as a “class-of-one” claim.

The Village removed the case to the U.S. District Court of the Eastern District of Wisconsin. After the district court entered summary judgment for the Village, the Partnership appealed.

‘Heavy Burden’

Chief Judge Diane Sykes began her opinion for a three-judge panel by explaining that under Seventh Circuit caselaw, a plaintiff bears a ‘heavy burden’ in making a class-of-one claim – the plaintiff must show that: 1) the government treated it differently from similarly situated parties; and 2) there was no rational basis for the different treatment.

Sykes concluded that the each of the Village’s challenged decisions had a rational basis.

“The Village made each land-use and public-funding decision based on taxpayer costs, commercial benefits, land-use planning objectives, and other community needs,” Judge Sykes wrote.

“In other words, the Village acted rationally and was guided by the factors that a municipal land-use and development body would be expected to consider.”

Road Requirement Was Rational

Sykes reasoned that the Village’s requirement that the Partnership promise to build an access road to State Highway 83 was rational, because the road was important to both future development on the property and traffic flow in an adjacent subdivision.

“The road was also necessary to ensure that the remnant portion of the Chapman Farms property would not be landlocked after the Partnership’s proposed purchase of the four-acre plot,” Judge Sykes wrote.

The Partnership argued that the fact the Village later bought the four acres, built the access road, and sold the land to another developer undercut the validity of the requirement that the Partnership commit to building the access road before approving the land division.

But that argument was immaterial, Judge Sykes concluded.

“The Village’s later conduct did not involve the Partnership at all,” Sykes wrote.

Road Preference Was Rational

Chief Judge Sykes also concluded that the Village’s decision to approve the construction of DeBack Drive instead of the north-south road favored by the Partnership was rational.

Sykes pointed out that: 1) the north-south route favored by the Partnership had no infrastructure and provided for a less direct connection between Maple Centre to East Wolf Run; and 2) building the Partnership’s proposed road would have cost several million dollars more than building DeBack Drive.

“The Village prioritized local taxpayers over the Partnership’s preferences,” Judge Sykes wrote.

“It chose the most cost-effective option to connect a proposed development to a nearby road and refused to finance new infrastructure without the promise of an economic return.”