With the 2015-16 legislative session nearing the end, the Wisconsin Legislature is considering legislation (AB 582/SB 464) aimed at strengthening private property rights by, among other things, codifying current case law, clarifying the intent of current statutes, and enhancing the due process protections for property owners who seek to use and enjoy their property in a reasonable manner.
Background
The private ownership of property is a fundamental right upon which the United States was founded. The right to use property is among the basic elements of property ownership known as “the bundle of rights,” which includes the right to possess, control and dispose of the property. While state and local governments have broad authority to restrict these rights, this authority is not unlimited. State and local regulations must be fair and reasonable, and they must be enacted in accordance with due process requirements such as fair notice and public hearings. Moreover, even if created with the best intentions, regulations affecting the use of property, at some point, can go “too far.”
From a broader perspective, regulatory certainty and predictability are critical components of successful real estate markets. When regulatory uncertainty exists, real estate markets and prices become unstable. Property owners want to know how a property can be used prior to purchasing it because the allowable uses of a property will in large part determine the property’s value.
Proposed legislation
Recently, several court cases and various actions by local governments have prompted state lawmakers to introduce legislation (AB 582/SB 464) that establishes a better balance between local control and private property rights by providing greater protections for property owners. The following is a list of key provisions in AB 582/SB 464:
Ambiguities in local ordinances: Local regulations must be clear and specific to avoid inconsistent and unfair application of those regulations. Property owners should be able to determine the meaning of a regulation and how it impacts the use of their property. As recognized by current case law, AB 582/SB 464 provides that any ambiguities in local ordinances should be resolved in favor of a property owner’s free use of property. In other words, if there is confusion about how a local regulation affects the use of property, the tie goes to the property owner.
Right to alienate any interest in property: A property owner should be free to dispose of or alienate property as desired, which includes the right to sell, lease or give it away. Local governments should not be able to regulate the manner in which a property is owned. If all 1,800 local units of government in Wisconsin had different requirements for how property could be owned, real estate transfers would be horribly confusing. Accordingly, AB 582/SB 464 codifies current case law by prohibiting local governments from restricting the ability of property owners to freely alienate any interest in property.
Assessment for undeveloped land: Some communities are assessing new development, including residential, commercial and industrial properties, at full market value before an occupancy permit has been issued. Until construction is complete and the new owners have occupied the building, a full market value assessment is unfair considering that the property owners have not yet begun using the local services. To address this issue, AB 582/SB 464 requires land to be assessed at no greater than 50 percent of its fair market value until an occupancy permit has been issued.
Direct notice for zoning changes: Current law requires local governments to provide direct notice to property owners of any proposed change to zoning regulations that would change the allowable use or density of a property. However, to receive this notice, the property owner must first notify the community that they want to receive notice and agree to pay for any costs associated with sending that notice. To help ensure that property owners are better informed about public hearings related to proposed regulations affecting the use and value of their property, AB 582/SB 464 makes a few changes to current law, including making it easier for property owners to receive direct notice and eliminating the requirement for property owners to pay for such notice.
Supermajority vote to downzone property: When a community engages in “downzoning” of property, the allowable development density of the property is reduced — for example, from four dwelling units per lot to two dwelling units per lot — and the property’s value generally decreases. Despite this decrease in value, the property owner rarely receives just compensation. To better protect the rights of property owners to use property in the manner in which was allowed at the time of purchase, AB 582/SB 464 requires a supermajority vote by local units of government to downzone a property.
Development moratoria for counties: Because a moratorium on land development completely shuts down development for a specified period of time, it can have a devastating impact on jobs growth, economic growth and the tax base. Accordingly, legislation was enacted a few years ago (2011 Wis. Act 144) to authorize cities, villages and towns to enact development moratoria only under certain limited circumstances. This authority was not extended to counties because of the large geographic region that could be impacted, and the fact that cities, villages and towns within the county were able to enact moratoria if necessary. Accordingly, AB 582/SB 464 clarifies current law by specifying that counties cannot enact development moratoria.
The WRA supports AB 582/SB 464 and will be working with lawmakers and other stakeholders to enact this legislation into law. For more information on AB 582/SB 464, please contact Tom Larson at tlarson@wra.org.
Tom Larson is Senior Vice President of Legal and Public Affairs for the WRA.