Aug. 27, 2009 – An unincorporated town cannot disguise a zone change if the effect of a new development is to introduce nonconforming uses to the area, the Wisconsin Court of Appeals held on Aug. 26.

In State of Wisconsin ex rel Village of Newburg v. Town of Trenton, 2008AP2997, the court of appeals remarked that these towns should seek legislative change rather than “an end-around the law” if they dislike Wis. Stat. § 62.23 (7a), which permits a neighboring municipality to impose a temporary moratorium on rezoning of land next to the municipality’s boundaries.

This moratorium is part of a municipality’s power of extraterritorial zoning, the court explained. The freeze allows time for a municipality to work with each unincorporated town affected by its plans for future expansion and physical development to prepare and adopt a comprehensive plan.

A disputed condominium development

Deerprint Enterprises owned a parcel of land within the Town of Trenton and in the one-and-a-half mile extraterritorial zoning moratorium. The parcel was zoned CES-5 for single-family residential development on large lots. Commercial or industrial activities are not permitted, according to Trenton ordinances.

The Trenton Town Board approved a six-unit condominium development on the Deerprint parcel, comprising five residential units and one commercial/industrial unit. A nonconforming mixed use as part of the Deerprint development violated Trenton’s zoning ordinances, argued the Village of Newburg.

Trenton would have to approve a planned development overlay to allow a flexible development design that would otherwise violate the zoning requirements, Newburg contended. But, Newburg continued, the overlay would be a change in zoning that violates the moratorium. Accordingly, Newburg asked the circuit court to declare Trenton’s approval of the Deerprint parcel to be invalid.

Asking the circuit court to dismiss the complaint, Trenton argued that that its approval rested on the condominium process, not zoning regulations. Consequently, Trenton argued, it did not need to approve an overlay.

The circuit court agreed with Trenton, deeming approval of the development to be for a condominium form of ownership, not for mixed use or rezoning. Because no zoning changes were needed, the circuit court concluded that Newburg lacked standing, granting summary judgment to Trenton.

Newburg has standing

In an opinion authored by Chief Judge Richard Brown, the court of appeals concluded that Newburg did have a legally protected interest in enforcement of the moratorium to constitute standing.

The court of appeals noted that Trenton had acknowledged before the circuit court that it would be in violation of the moratorium if it had to grant an overlay to Deerprint. Consequently, the court of appeals said, “this issue depends on the interpretation of the Town’s zoning ordinances.”

‘Condominium’ not a form of land use

“Condominiums are not a form of land use, so ‘a change in zoning – or other approval under a zoning ordinance – should not be required for condominium conversion, unless a change in the use of the existing property is involved,’” the court quoted from the Wisconsin Condominium Law Handbook.

This case presents just such an instance of changed use, the court concluded.

“We simply do not understand how a condominium unit set aside for commercial use does not run afoul of a zoning ordinance prohibiting commercial use just because it lies within an otherwise residential condominium development,” the court stated.

Next, the court found that Trenton’s ordinances prohibit mixed uses unless an overlay is granted. An overlay allows a “mixing of compatible uses” that do not necessarily comport with Trenton’s zoning ordinances, the court said. “We conclude these ordinances make the Deerprint development nonconforming unless the Town changes the parcel’s zoning,” the court stated.

An instance of ‘de facto rezoning’

The court recalled a similar dispute revolving around a zoning moratorium in City of Waukesha v. Town Bd of the Town of Waukesha, 198 Wis. 2d 592 (Ct. App. 1995).

In City of Waukesha, the Town amended its zoning ordinances to allow planned unit developments, provided that developers obtained a conditional use permit, the court reported. “This meant that the Town could approve nonconforming uses with permits instead of zoning changes,” the court explained.

“We determined that planned unit developments allowed as a conditional use must comport with the zoning restrictions of the designated districts,” the court stated. “And since we concluded that the development approved as a conditional use did not comport with the zoning restrictions in its district, we held that ‘[u]nder the guise of a conditional use, the Town Board in essence rezoned without seeking the necessary approval.’”

Newburg’s actions present “another instance where a Town seeks to escape the confining restrictions integral to the extraterritorial zoning moratorium by aiming to define its action as something other than a zoning change,” the court concluded.

Dismissing Trenton’s efforts to disguise this matter as a condominium issue and not a zoning concern, the court said, “[A] use is a use.”

“So we conclude that what the Town [of Trenton] did was de facto rezoning,” the court said. “Just because the Town did not formally rezone, this sleight of hand did not tell the whole story.”

The court added that the Legislature “put the extraterritorial zoning ordinance in the books for a reason and we cannot allow unincorporated localities to seek an end-around the law.”

“If towns dislike the whole business of extraterritorial zoning moratoriums, their recourse is to obtain a change in the law through legislative means,” the court said.

The court reversed the circuit court and remanded with directions that that the circuit court proceed to the merits of Newburg’s declaratory judgment action.