Godfrey & Kahn Updates

"New Wisconsin Law Restricts Condemnation for Economic Development Purposes"
July 26, 2006
by Paul J. Dombrowski

A new Wisconsin law, enacted in response to a recent United States Supreme Court case, limits municipalities’ and other governmental bodies’ ability to condemn property for economic redevelopment. Governor Doyle signed Assembly Bill 657 into law on March 30, 2006, creating new restrictions on the use of the power of eminent domain to spur private redevelopment efforts, especially when eminent domain impacts single family residential property.

A Response to the Kelo Case
The new Wisconsin law responds to one of the most highly-publicized land use cases decided in years by the U.S. Supreme Court, Kelo v. City of New London. In Kelo, the Supreme Court upheld the condemnation of single family homes—even though they were not blighted—to facilitate the redevelopment of a 90-acre, multi-use waterfront project on the Thames River in New London, Connecticut. A number of states throughout the country have considered or enacted legislation in response to the Kelo decision.

Restrictions on Condemnation Relating to Private Development
The new Wisconsin law impacts, among others, counties, municipalities, towns, and the various “authorities” often created under them (such as housing authorities, redevelopment authorities, and community development authorities). Under the new law, the condemning authority cannot condemn land that is not deemed “blighted” under the law if the condemning authority “intends to convey or lease the acquired property to a private entity.”

Additionally, the law creates a new, more restrictive definition of “blighted property,” which is different from the definition of blight applicable to the housing and development authorities under Chapter 66 of the Wisconsin Statutes.

Condemnation of Single Family Residential Properties
The Kelo decision gained much notoriety in large part because it dealt with homeowners losing their houses in the name of economic redevelopment. The new Wisconsin law makes it more difficult to condemn single family homes for economic redevelopment, in that single family residential property must meet a more restrictive standard than other property to be considered “blighted.”

Under the new law, in addition to the standards for “blight” applicable to all property, the condemning authority must make one of the following findings in order for a single family residential property to be considered blighted:

  • The property is not occupied by the owner or a member of the owner’s family; or
  • The crime rate in or near the property is at least three times the crime rate in the remainder of the municipality.

Conclusion
The new Wisconsin law will make it more difficult for private developers to work with municipalities and their housing and development authorities to assemble parcels for redevelopment projects. For further information about the new Wisconsin law, or to discuss other matters relating to condemnation or real estate development, please contact Paul Dombrowski at 608/284-2235 or pdombrowski@gklaw.com, or any other member of Godfrey & Kahn’s real estate team.
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