Real Estate Acquisition for Public Projects What Municipal Attorneys Should Know About Eminent Domain

Real Estate Acquisition for Public Projects What Municipal Attorneys Should Know about Eminent Domain

Joseph J. Rolling Michelle E. Martin von Briesen & Roper, s.c. Axley Brynelson, LLP 10 E. Doty Street, Suite 900 N20 W22961 Watertown Road Madison, Wisconsin 53703 Waukesha, Wisconsin 53186 (608) 661-3974 (262) 409-2288 [email protected] [email protected]

I. BACKGROUND

Eminent domain is the power of the sovereign to condemn property. The power of eminent domain “appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty.” Mississippi & Rum River Boom Co. v. Patterson, 98 U.S. 403, 406, 25 L. Ed. 206 (1878).

The United States and Wisconsin Constitutions require payment of just compensation for private property taken for public use. The Fifth Amendment to the United States Constitution provides in relevant part: “nor shall private property be taken for public use, without just compensation.” U.S. Const. amend. V. This “Takings Clause [is]…made applicable to the States through the Fourteenth Amendment.” In re Country Side Rest., Inc., 2012 WI 46, n. 10, 340 Wis. 2d 335, 814 N.W.2d 159 (citing Lingle v. Chevron U.S.A. Inc., 544 U.S. 528, 536, 125 S. Ct. 2074, 161 L. Ed. 2d 876 (2005)); see also Chicago, B. & Q.R. Co. v. City of Chicago, 166 U.S. 226, 17 S. Ct. 581, 41 L. Ed. 979 (1897).

The “Takings Clause ‘does not prohibit the taking of private property, but instead places a condition on the exercise of that power.’ In other words, it ‘is designed not to limit the governmental interference with property rights per se, but rather to secure compensation in the event of otherwise proper interference amounting to a taking.’” Lingle, 544 U.S. at 536–37 (quoting First Eng. Evangelical Lutheran Church of Glendale v. Los Angeles Cty., Cal., 482 U.S. 304, 314–15, 107 S. Ct. 2378, 96 L. Ed. 2d 250 (1987)).

The Wisconsin Constitution is similar, providing that, “The property of no person shall be taken for public use without just compensation therefor.” Wis. Const. art. I, § 13. Thus, a “taking”1 of private property for public use requires the award of just compensation under both the United

1 The constitutions of some states also provide for just compensation for “damages” to private property. See e.g., Minn. Const. art. I, § 13 (“Private property shall not be taken, destroyed or damaged for public use without just compensation therefor, first paid or secured.”). Wisconsin’s does not. See Wis. Const. art. I, § 13. States and Wisconsin constitutions. E-L Enterprises, Inc. v. Milwaukee Metro. Sewerage Dist., 2010 WI 58, ¶ 21, 326 Wis. 2d 82, 785 N.W.2d 409 (citations omitted).

II. WHAT CAN BE ACQUIRED AND WHEN IS IT NECESSARY TO FOLLOW THE CONDEMNATION PROCESS?

A. What can be “taken?”

Wisconsin law recognizes a variety of rights and interests in property. Wisconsin Med. Soc'y, Inc. v. Morgan, 2010 WI 94, ¶ 42, 328 Wis. 2d 469, 787 N.W.2d 22.

These include, for example:

Access Rights — See e.g. Eberle v. Dane Cty. Bd. of Adjustment, 227 Wis. 2d 609, 595 N.W.2d 730 (1999); see also Lee v. State of Wisconsin Dep’t of Transp., 2015 WI App 75, 365 Wis. 2d 195, 870 N.W.2d 247 (unpublished per curiam); Cf. Hastings Realty Corp. v. Texas Co., 28 Wis. 2d 305, 137 N.W.2d 79 (1965).

Leases lasting longer than 1 year — Wis. Stat. § 32.19(4m)(b); see Van Asten v. State, 214 Wis. 2d 135, 571 N.W.2d 420 (Ct. App. 1997); 61 Wis. Op. Att’y Gen. 16, 18 (1972).

Air Space — Brenner v. New Richmond Reg’l Airport Comm’n, 2012 WI 98, 343 Wis. 2d 320, 816 N.W.2d 291

Freedom from Flooding — Hillcrest Golf & Country Club v. City of Altoona, 135 Wis. 2d 431, 400 N.W.2d 493 (Ct. App. 1986); Kohlbeck v. Reliance Const. Co., Inc., 2002 WI App 142, ¶ 23, 256 Wis. 2d 235, 647 N.W.2d 277; Anhalt v. Cities & Villages Mut. Ins. Co., 2001 WI App 271, ¶ 29, 249 Wis. 2d 62, 637 N.W.2d 422.

Vested Rights in Professional Fund Assets — Wisconsin Med. Soc’y, Inc., 2010 WI 94, ¶ 99.

B. When Required

If an agency with condemnation authority desires to acquire property voluntarily, it does not have to use its condemnation powers to do so. It may acquire property voluntarily. If the agency would never acquire the property but voluntarily, then it is not required to follow the condemnation process in Wis. Stat. ch. 32. However, if there is any chance that the agency will use condemnation authority if the property is not voluntarily sold to the agency, then the agency must follow Wis. Stat. ch. 32.

See below for discussion on relocation benefits even in voluntary transactions.

III. PROCEDURES

A. Wis. Stat. § 32.05 and Wis. Stat. § 32.06

Wisconsin Stat. ch. 32 sets out the procedure the government must follow in acquiring private property for public use. E-L Enterprises, Inc., 2010 WI 58, ¶ 36. This chapter yields a complete

Rolling/Martin- 2 - and exclusive method of procedure in condemnation matters. City of Madison v. Tiedeman, 1 Wis. 2d 136, 143, 83 N.W.2d 694 (1957). Wisconsin Stat. § 32.04 states: “All acquisition of property in this state by condemnation, except as hereinafter provided, commenced after April 6, 1960 shall be accomplished in the following manner:”

Wisconsin Stat. §§ 32.05 and 32.06 provide two similar mechanisms for condemnation. The key difference is that use of Wis. Stat. § 32.05 is limited, generally, to transportation facilities or facilities related to sewers, water distribution, and waste disposal.

Another key difference between the two processes is the time it takes to condemn. Wisconsin Stat. § 32.05 is a “Quick Take” process. This means that the condemnation can be completed on the condemnor’s own volition with the filing of an Award of Damages and the payment of just compensation. In contrast, Wis. Stat. § 32.06 requires a condemnor to petition a court for condemnation proceedings. The court will direct the matter to a condemnation commission for hearing on the matter of just compensation. This represents additional steps, making this a slower take.

B. Blight and Condemnation for Urban Renewal

In any city, condemnation for urban renewal pursuant to Wis. Stat. § 66.1333 may proceed either under Wis. Stat. § 32.05 or Wis. Stat. § 32.06 at the option of the condemning authority. Wis. Stat. § 32.05.

There are multiple blight elimination statutes in Wis. Stat. ch. 66. These include, for example, Wis. Stat. § 66.1333, otherwise known as the “Blight Elimination and Slum Clearance Act.”

Defining “blight” Blight generally refers to properties that are “substandard” or “deteriorated” and are detrimental to public health or safety. The broader definition in the Blight Elimination and Slum Clearance Act includes areas or properties that are “predominantly open” and which “because of obsolete platting, diversity of ownership, deterioration of structures or of site improvements, or otherwise, substantially impairs or arrests the sound growth of the community.” Wis. Stat. § 66.1333(2m)(b)3.–(bm)

If a municipality wishes to acquire blighted property via condemnation and then lease or convey it to a private entity (such as a developer), additional steps set forth in Wis. Stat. § 32.03(6)(c) need to be followed.

IV. PROCEDURE

A. Authority to Condemn

1. Enabling Ordinance

Wisconsin Stat. § 32.02 addresses who may condemn. Additionally, specific statutory sections identify entities that may acquire real property. These include, for example, the following:

• Wis. Stat. § 62.22 addresses the acquisition of properties by cities.

Rolling/Martin- 3 - • Wis. Stat. § 61.34(3)(a) authorizes the acquisition of property by villages.

• Wis. Stat. § 59.52(6) authorizes the acquisition of property by counties.

2. Prohibitions

Wisconsin Stat. § 32.03 discussed when condemnation is not to be exercised. Most relevant here, property may not be acquired by condemnation to establish or extend a recreational trail; a bicycle way, as defined in s. 340.01(5s); a bicycle lane, as defined in s. 340.01(5e); or a pedestrian way, as defined in s. 346.02(8)(a). Wis. Stat. § 32.015.

3. Relocation Order/Resolution of Necessity

If a condemnation is going to occur under Wis. Stat.§ 32.05, the typical first step in the condemnation process is for the condemning authority to issue a Relocation Order outlining the project for which the property is being acquired, including a map or plat and the property interests required. Wis. Stat. § 32.05(1)(a).

If a condemnation is going to take place under Wis. Stat. § 32.06, then the condemnor must have necessity to condemn. Necessity is determined pursuant to Wis. Stat. § 32.07.

B. Appraisal

The condemnor is required to have an appraisal made upon which it will base its offer. Wis. Stat. § 32.05(2)(a); Wis. Stat. § 32.06(2)(a).

An appraiser should be familiar with the condemnation process and the requirements for condemnation appraisals. For the practitioner, it is important to recognize the difference between a financing appraisal, like those used in buying a house, and the kind of “full narrative appraisal” used in condemnation. A full narrative appraisal includes a detailed description of the process an appraiser uses to reach an opinion of the property’s fair market value. The opinion must contain the appraiser’s rationale for determining the value and be documented by market data that support the appraiser’s rationale.

Preparing a good appraisal tends to require that the attorney engage the appraiser at least 6 weeks before the due date. This lead time allows them to look up comparable sales, review land use restrictions affecting the property’s use, physically inspect the property, consult with any other experts or officials necessary to value the property, and prepare a report complying with requirements for eminent domain appraisals as well as USPAP.

The Federal Uniform Relocation Assistance and Real Property Acquisition Act (“Uniform Act”) and Wisconsin law require that an invitation be extended to the property owner to accompany the appraiser during the appraiser’s inspection of their property. This invitation can be made in a letter to the owner that includes the appraiser’s telephone number and requests that the property owner respond to the inspection invitation by a certain deadline. The purpose behind extending this invitation to the property owner is to allow the owner to set up a joint inspection with the condemnor’s appraiser, the owner, and any other representative the owner may wish to have present during the appraiser’s inspection. If the landowner refuses, and you deem it important for

Rolling/Martin- 4 - the appraiser to have the opportunity to inspect the property, consider whether you can use the powers under Wis. Stat. § 66.0119 to inspect the property.

C. Pre-Negotiation Disclosures

Statutes require condemnors to commission appraisals and disclose other documents that would help a landowner make an informed decision about the value of the easement being taken. For example, in Wisconsin, condemnors are required to provide the landowner with one or more appraisals, a list of names of 10 other landowners affected by the project and pamphlets titled “the Rights of Landowners Under Wisconsin Eminent Domain Law,” provided online by the Wisconsin Department of Administration. When relocation assistance is involved, the displacee must also be given the brochure entitled, “Wisconsin Relocation Rights Residential” or “Wisconsin Relocation Rights for Business, Farm and Nonprofit Organizations,” also provided online by the Wisconsin Department of Administration.

The condemnor must also make maps and project plans available for inspection. In addition to the appraisal(s) that the condemnor causes to be made, the landowner has the option of having his or her own appraisal prepared and compensated by the condemnor.

D. Landowner’s 60-day Appraisal

A landowner has the option of having its own appraisal prepared, with reasonable costs of that appraisal reimbursed by the condemnor. Wis. Stat. § 32.05(2)(b); Wis. Stat. § 32.06(2)(b). Reimbursement of the owner’s reasonable appraisal expenses is mandatory, so long as the appraisal is prepared by a qualified appraiser and the appraisal is received within 60 days of delivery of the condemnor’s appraisal.

E. Negotiations

Then, the condemning authority begins the negotiation process. Eminent domain procedure requires condemnors to engage in negotiations. Wis. Stat. § 32.05(2a); Wis. Stat. § 32.06(2a). The statute obligates a condemnor to “attempt to negotiate personally with the owner or one of the owners or his or her representative of the property sought to be taken for the purchase of the same” before making a jurisdictional offer. Wisconsin courts have interpreted this to require the condemnor to engage in “good faith negotiations.” The scope of these required good faith negotiations is limited to the issue of just compensation. Zastrow v. Am. Transmission Co. LLC, 2018 WI App 51, 383 Wis. 2d 644, 916 N.W.2d 821.

If negotiations are successful, then the landowner transfers the property to the condemnor. Wis. Stat. § 32.05(2a); Wis. Stat. § 32.06(2a).

After the transfer, the condemnor records the conveyance and provides a copy of the recorded conveyance to all persons having an interest of record in the property immediately prior to the conveyance and a notice of the right to appeal the amount of compensation pursuant under Wis. Stat. § 32.05 or Wis. Stat. § 32.06 within 6 months after the date of the recording of the conveyance. Wis. Stat. § 32.05(2a); Wis. Stat. § 32.06(2a).

Rolling/Martin- 5 - F. If Negotiations Fail — Jurisdictional Offer and Condemnation

If negotiations fail, then the condemning authority serves the owner (or one of the owners) and the mortgagee (if any) with a Jurisdictional Offer setting forth, among other things, the amount of compensation offered, the description of the property being acquired, the purpose for which the property is being acquired, and the owner’s rights to appeal the amount of compensation or challenge the right to acquire the property. Wis. Stat. § 32.05(3); Wis. Stat. § 32.06(3).

1. Wis. Stat. § 32.05

If the condemnation is proceeding under Wis. Stat. § 32.05, if the owner does not accept the Jurisdictional Offer within 20 days from service of the offer, then the condemning authority may issue an award of compensation, also known as an “Award of Damages.” Wis. Stat. § 32.05(7).

The condemning authority must pay the amount of the award to the landowner directly or deposit the amount with the clerk of circuit court of the county for the benefit of the owner of the property and others parties in interest. Wis. Stat. § 32.05(7)(d).

Once the award has been paid, a copy of the award must also be recorded with the register of deeds office in the county in which the property is located. Wis. Stat. § 32.05(7)(c).

Once these steps have been accomplished, then title to the property transfers from the owner to the condemning authority. Wis. Stat. § 32.05(7)(c).

A person with an interest of record in the property may, within two years after the date of taking (the date of the recording of the Award of Damages), appeal from the Award of Damages by filing an action in circuit court. Wis. Stat. § 32.05(9). If the conveyance was accomplished through negotiations rather than an Award of Damages, a person with an interest in the property (including the landowner who “agreed” to the initial amount) may appeal for greater compensation within 6 months.

2. Wis. Stat. § 32.06

If the landowner rejects the Jurisdictional Offer or does not respond within 20 days, the condemnor proceeding under Wis. Stat. § 32.06 may petition the court to have the county condemnation commission determine the appropriate amount of compensation for the taking. Wis. Stat. § 32.06(7). Once the condemnation commission holds a hearing on the amount of just compensation due to the landowner, then the condemnation commission issues an award. Once the award is paid by the condemnor, title to the property interest is obtained by the condemnor. Wis. Stat. § 32.06(9)(b)).

It is not uncommon for a condemnor to attempt to get access to the property quickly by filing a Motion for Immediate Possession with the court under Wis. Stat. § 32.12.

Rolling/Martin- 6 - G. Litigation

1. Just Compensation Appeals

a. Condemnation Commission (Mandatory for actions under Wis. Stat. § 32.06; Optional for Wis. Stat. § 32.05)

In a condemnation action involving Wis. Stat. § 32.06, a county condemnation commission determines just compensation. After a visit to the subject property, the commissioners hear testimony and receive evidence from the landowner and the condemnor as to the taking’s effect on the property’s value. The commission may be comprised of attorneys, real estate brokers, and other private citizens. The rules of evidence are relaxed, but the proceedings follow the typical order of proof. The landowner presents its evidence first. Wis. Stat. § 32.08(6)(a). One quirk is that the condemnation commission must visit the site of the taking prior to hearing evidence. Wis. Stat. § 32.08(6)(a).

A landowner appealing for greater compensation for a taking under Wis. Stat. § 32.05 has the option—but not the obligation—to proceed to the county condemnation commission before taking the matter to a circuit court. Wis. Stat. § 32.05(11).

b. Circuit Court

There are two paths that may lead to the just compensation appeal coming before the circuit court pursuant to Wis. Stat. § 32.05.

First, the landowner may appeal the award of the condemnation commission. The appeal is de novo, and the jury is not allowed to know the amount of the commission’s award (or the award of the condemnor or the jurisdictional offer). Wis. Stat. § 32.05(10)(a).

Alternatively, for condemnations proceeding under Wis. Stat. § 32.05, the landowner appealing for greater compensation may bypass the condemnation commission and proceed directly to the circuit court. Wis. Stat. § 32.05(11).

For just compensation appeals coming before the circuit court pursuant to Wis. Stat. § 32.06, either the condemnor or the condemnee may appeal the decision of the condemnation commission to the circuit court. Wis. Stat. § 32.06(10). Again, the appeal is de novo, and the jury is not allowed to know the amount of the commission’s award (or the jurisdictional offer). Wis. Stat. § 32.06(10). In either situation, the circuit court action proceeds like other civil litigation. The matter is presumed to be tried to a jury unless both parties waive a trial by jury. Wis. Stat. § 32.05(10)(a); Wis. Stat. § 32.06(10). The arguments and proof are like those at the condemnation commission; however, the formality and expense are much greater in the court action. The rules of evidence apply as in all circuit court actions.

A substantial just compensation case will require consultation with several expert and lay witnesses. This is especially true in those cases in which the landowner claims to have lost the ability to develop the property. Civil Engineers may be used to speak to the presence of floodplains or the availability of municipal sewer and water service. Developers or city planning

Rolling/Martin- 7 - experts can testify to the likelihood that the subject property would have been developed or that the landowner’s request for re-zoning would have been approved. Typically, these witnesses testify regarding planning studies, the local comprehensive plan, development trends, zoning, and patterns of rezoning application approvals. As discussed separately below, the appraisers are the focus of the proceeding. As such, they are carefully selected. Indeed, some appraisers specialize in valuing property affected by eminent domain.

2. Challenging the Taking (“Right to Take”)

A landowner has a limited amount of time to challenge anything aside from the amount of compensation or questions of title. These challenges to the taking – otherwise known as “right to take” actions – focus on the condemnor’s authority to condemn. Typically, these cases will focus on some flaw in the process, a failure to negotiate in good faith, or an issue with the scope of the taking.

Importantly, the time in which to bring a “right to take” challenge is within 40 days of service of the Jurisdictional Offer.

If a right-to-take action is filed, it proceeds on a parallel path to the just compensation action. The just compensation action is not stayed. Wis. Stat. § 32.05(5); Wis. Stat. § 32.06(5).

V. PITFALLS

A. Pitfalls with Project Design

• Identify Problem Areas or High-Risk Issues Early • Identity when you need possession/title of the property to determine when you need to begin the acquisition process (calculate backwards). • Identify whether you need to prepare and file an agricultural impact statement with the Department of Agriculture, Trade and Consumer Protection pursuant to Wis. Stat. § 32.035. • Communicate with engineers, acquisition staff, and appraisers. • Can the condemnor modify the project design to avoid or mitigate a high-risk issue?

Project Scope

1. What is the “project” definition? 2. Is the project phased? 3. Is there “project influence”? 4. Is the proposed use a public use? 5. Review project route and impacted properties 6. Determine if any landowners, tenants, or properties qualify for relocation benefits 7. Federal funds involved?

Rolling/Martin- 8 - B. Pitfalls during Negotiations

1. Prohibited Conduct During Negotiations

According to Section 301 of the Federal Uniform Act as implemented by 49 C.F.R. § 24.102(h), the condemnor may not use any technique or take any action, other than the condemnation process itself, which in any way coerces a property owner into selling or donating the property or property interests the condemnor needs to build its project.

In its guidance to the local public agencies, WisDOT lists the following as potentially coercive actions:

• Requesting affected property owners waive their relocation benefits; • Advancing of the time of condemnation; and • Deferring negotiations, condemnation, or depositing of funds with the court.

Any coercive actions or false statements made by an employee or representative of the condemnor, directly or indirectly intimidating, threatening, or coercing any person to induce an agreement on the price to be paid for the property may result in the loss of state or federal funds for the project. Moreover, making false statements during this process may also result in other serious legal consequences, including fines or imprisonment. See Wis. Stat. § 32.29.

A condemnor may not remove a displaced person from the property unless it has provided a comparable replacement property and has provided the landowner/tenant with at least 90 days’ notice. Wis. Stat. § 32.05(8); Wis. Stat. § 32.06(9)(c).

2. Prerequisites to Negotiation

Both Wis. Stat. § 32.05(2a) and Wis. Stat. § 32.06(2a) contain items that the condemnor must provide to the landowner before negotiating.

The relocation assistance rules (Wis. Admin. Code § Adm. 92) require that before an acquiring agency negotiates with the landowner or tenant that certain things must occur.

If an agricultural impact statement is required pursuant to Wis. Stat. § 32.035, negotiations cannot begin until 30 days after the agricultural impact statement is published. Wis. Stat. § 32.035(4)(d).

C. Pitfalls with Title

Under federal law, property acquired for a state or federal-aid transportation project must be adequate for the construction, operation, and maintenance of the resulting facility and for the protection of both the facility and the traveling public. See 23 C.F.R. § 710.305(b). Meeting the adequacy of interest test requires the acquiring authority to acquire clear, marketable title to the real property or real property interest necessary to build the project.

Parties to be included on the Award of Damages (Wis. Stat. § 32.05(7)), a petition for condemnation (Wis. Stat. § 32.06(7)), or recorded documents after an agreed-upon price

Rolling/Martin- 9 - transaction (Wis. Stat. § 32.05(2a) or Wis. Stat. § 32.06(2a)) are all persons “having an interest of record” in the property. The persons with an interest of record include, but are not limited to,

• Lessees of leases that are recorded • Mortgagees • Easement Holders

Should the condemnor determine that the mortgage company or other lien holder will not provide a partial release of mortgage (if the acquisition is a total, fee simple taking, even if it is for only part of the total property) or a subordination/consent agreement (if the acquisition is a taking for an easement), resorting to the condemnation process may be necessary, and recording an award of damages or filing a petition for condemnation could be used to acquire the property with clear title.

Other best practices include the following:

• Obtain and examine the title report for property to be acquired (owners, mortgagees, encumbrances, lien holders, and past due real property taxes). • Determine property interests to be extinguished or acquired. • Update the title report periodically to make sure you know the current persons with an interest of record. • Perform a conflict check for all parties.

D. Pitfalls with Appraisals and Valuation

Risking fee-shifting with a low appraised value:

The specifics of fee-shifting will be discussed later.

Has an appraisal been done?

1. If yes, review and meet with appraiser to discuss any issues raised by owner.

2. If not, meet with appraiser and review legal and valuation issues, i.e. 1. Highest and best use 2. Damages 3. Special Benefits 4. Project Influence Issues

Do you need a non-valuation expert?

1. Traffic Engineer

2. Land Planner/Zoning

3. Cost Estimator

4. Civil Engineer

Rolling/Martin- 10 - E. Pitfalls with Timing

Project Timeline

• When must title be acquired?

• When must possession be obtained? Is the landowner or a tenant entitled to relocation benefits and assistance?

• Is there legal authority (quick take) to acquire property timely?

• When will construction commence?

• Avoid the “Holdout” Problem

• Do not assume that you will be able to obtain the property voluntarily if you need it for your project.

Differences in Timing – Recall Wis. Stat. § 32.05 vs. Wis. Stat. § 32.06

VI. JUST COMPENSATION

• Rules governing the determination of just compensation are set forth in Wis. Stat. § 32.09.

• Applies to matters under Wis. Stat. § 32.05 and 32.06

• As of the date of valuation (theoretical difference between Wis. Stat. § 32.05 and Wis. Stat. § 32.06)

• Total Taking Wis. Stat. § 32.09(5); Partial Taking (Not Easement) Wis. Stat. § 32.09(6); Easement Wis. Stat. § 32.09(6g)

• Partial takings provide the widest range of issues

• Appraisal is the key; comparable sales are historically favored

• Income Approach is now to be considered if used by the appraiser (in the past, it could only be used in very special circumstances)

• Highest and Best Use

• Special Benefits

VII. FEE SHIFTING – WIS. STAT. § 32.28

Perhaps one of the foremost considerations in the landowner’s decision to appeal for greater compensation and in the utility’s negotiation and litigation strategies is fee-shifting. This is because, no matter what it costs you to pay your attorneys to defend a lawsuit, it will certainly to

Rolling/Martin- 11 - cost more to pay for your attorneys as well as the landowner’s attorneys, appraiser, engineers, and other experts.

Most litigated matters are covered by the American rule which dictates that the prevailing litigant is not entitled to collect attorney fees from the opposing party. Gorton v. Hostak, Henzl & Bichler, S.C., 217 Wis. 2d 493, 510, 577 N.W.2d 617 (1998). Eminent domain law in Wisconsin is notable for the fee-shifting provisions in Wis. Stat. § 32.28.

Litigation expenses include costs, disbursements, and expenses including reasonable attorney, appraisal, and engineering fees needed to prepare for or participate in condemnation proceedings. Additionally, litigation expenses include appeal expenses. Joyce v. Sch. Dist. of Hudson, Wis., 169 Wis. 2d 611, 618, 487 N.W.2d 41 (Ct. App. 1992).

The purposes of awarding litigation expenses are twofold: they (1) discourage low offers from the condemnor; and (2) ensure the condemnee is made whole when forced to litigate to get the full value of the property. Standard Theatres, Inc. v. State, Dep’t of Transp., Div. of Highways, 118 Wis. 2d 730, 745, 349 N.W.2d 661 (1984). Allowing a successful condemnee-litigant to recover litigation expenses ensures that part of the award would not have to be used to pay for litigation expenses. Matter of Condemnation by Redevelopment Auth. of City of Green Bay, 120 Wis. 2d 402, 412, 355 N.W.2d 240 (1984).

The requirements for fee-shifting are set forth in Wis. Stat. § 32.28. Generally, a landowner is entitled to payment of litigation expenses if it obtains a condemnation commission award or jury verdict that is at least 15% and roughly $3,000.002 greater than the Jurisdictional Offer or highest written offer prior to the jurisdictional offer.

An award of attorney fees to the successful litigant is mandatory rather than discretionary. The attorney submitting the fee request holds the burden of proving that the fees are reasonable. D.S.G. Evergreen F.L.P. v. Town of Perry, 2007 WI App 115, ¶ 24, 300 Wis. 2d 590, 731 N.W.2d 667. Supreme Court Rule 20:1.5 sets forth factors to be considered in determining the reasonableness of attorney fees. The trial court’s determination of reasonable attorney fees will be sustained unless there is an abuse of discretion. Standard Theatres, Inc., 118 Wis. 2d at 747.

Of course, condemnors may challenge the fees claimed. The burden of proof is upon the attorney submitting the fees to prove the reasonableness of a fee when it is questioned, and the circuit court weighs the evidence submitted. D.S.G. Evergreen F.L.P., 2007 WI App 115, ¶ 24 (citing Standard Theatres, Inc., 118 Wis. 2d at 748). As the most recent opinion that addressed the issue head-on was per curiam and may not be cited in Wisconsin courts but for very limited purposes, it remains unsettled whether a rebuttable presumption limiting attorney fees to three times the amount of compensatory damages pursuant to Wis. Stat. § 814.045 applies in eminent domain actions under Wis. Stat. ch. 32. See Lewis v. Vill. of Hobart, 2014 WI App 90, 356 Wis. 2d 328, 855 N.W.2d 492).

2 This dollar figure is calculated yearly by the Department of Administration. Wis. Stat. § 32.28(4)(b). The dollar figure reflected in Wis. Stat. § 32.28(4)(a), effective January 1, 2021, is $2,914.

Rolling/Martin- 12 - Wisconsin Stat. § 32.28 contains a list of scenarios in which litigation expenses may be awarded. This includes an abandonment of the condemnation proceedings and a finding by the court that the condemnor does not have the right to condemn part or all of the property. Additionally, a plaintiff who successfully brings an inverse condemnation action under Chapter 32 is entitled to litigation expenses. See Wis. Stat. § 32.28(3)(c); Maxey v. Redevelopment Auth. of City of Racine, 120 Wis. 2d 13, 21, 353 N.W.2d 812 (Ct. App. 1984); see also Warehouse II, LLC v. State Dep’t of Transp., 2006 WI 62, ¶ 91, 291 Wis. 2d 80, 715 N.W.2d 213 (Abrahamson, C.J., dissenting) (“When the owner brings the condemnation suit (i.e., inverse condemnation) and wins, the owner is awarded litigation expenses.”).

Importantly, litigants who are successful under constitutional claims are not entitled to reimbursement of litigation expenses under Wis. Stat. § 32.28. W.H. Pugh Coal Co. v. State, 157 Wis. 2d 620, 634–35, 460 N.W.2d 787 (Ct. App. 1990). Also, landowners and tenants are not entitled to litigation expenses for claims for relocation benefits.

VIII. RELOCATION –WIS. STAT. § 32.19

Relocation Plan. If the acquisition of the required property interests will involve the displacement of persons, business concerns or farm operations, a Relocation Plan must be developed for the project. This relocation plan must be approved by the Wisconsin Department of Administration. If the project involves state and/or federal aid in right of way acquisition, there may be additional steps in the review process. For example, WisDOT will want a WisDOT Bureau of Technical Services-Real Estate relocation coordinator to review the plan prior to any Relocation Order being approved.

Displacing agencies, as defined in Wis. Admin. Code § Adm. 92, are required to offer relocation benefits. The definition of displacing agencies includes those agencies that have the power of condemnation, even if they are not using it for a particular project. Wis. Admin. Code § Adm. 92.01(13).

Professionals. This is an involved and highly technical area, so to the extent your client’s project could result in a person or business (owner or business) becoming “displaced,” the standard recommendation would be to talk to one of the professionals who handles this area. WisDOT offers a list of approved “Negotiation/relocation consultants” that are approved for use by local public agencies. This list is available online.

IX. INVERSE CONDEMNATION

In contrast to the typical condemnation process, inverse condemnation is the process by which an aggrieved party can petition a court to declare that property has been taken by a condemnor notwithstanding the condemnor’s failure to acknowledge the taking. Put another way, “inverse condemnation” is when condemnation proceedings are pursued by the property owner and not the condemnor.

The purpose of this remedy is to “protect property owners against the slothful actions of a condemnor which, having constructively taken an owner’s property, is in no hurry to compensate the owner.” Kohlbeck, 2002 WI App 142, ¶ 22, (quoting Wikel v. State, Dep't of Transp., 2001 WI App 214, ¶ 2, 247 Wis. 2d 626, 635 N.W.2d 213.

Rolling/Martin- 13 - To establish an unconstitutional taking, a property owner needs to show: “(1) a property interest exists; (2) the property interest has been taken; (3) the taking was for public use; and (4) the taking was without just compensation.” Wisconsin Med. Soc’y, Inc., 2010 WI 94, ¶ 38 (citing Wisconsin Retired Tchrs. Ass'n, Inc. v. Employe Tr. Funds Bd., 207 Wis. 2d 1, 18–24, 558 N.W.2d 83 (1997)). The burden of proof in an inverse condemnation action falls on the property owner complaining of the taking. See In re Baerwolf, 198 Wis. 112, 223 N.W. 571 (1929). This includes proving ownership of the property they allege to have been taken. Skalicky v. Friendship Elec. Light & Power Co., 193 Wis. 395, 214 N.W. 388 (1927).

The plaintiff in an inverse condemnation action is the property owner at the time of the taking. Riley v. Town of Hamilton, 153 Wis. 2d 582, 585, 451 N.W.2d 454 (Ct. App. 1989) (recognizing that the owner at the time of the taking may be different from the owner at the time the action is commenced). The defendant is the condemnor.

A taking can occur by physical invasion, or it can occur absent physical invasion where there is a legally imposed restriction upon the property’s use. Howell Plaza, Inc. v. State Highway Comm., 66 Wis. 2d 720, 727, 226 N.W.2d 185 (1975) (Howell Plaza I). “There may be a fundamental unfairness in permitting a public agency to deal with private property owners in such a way that they cannot make the optimum and normal use of their property because a public condemnation authority is threatening to acquire the land by the power of eminent domain but delays a compensable taking for a long period of time.” Id. “Long delays in actually acquiring property after the public improvements have been announced can result in substantial hardship to property owners, for which they ought in justice to receive compensation.” Id. at 728. A taking can be permanent or temporary. Temporary takings fall under Wis. Const. art. I, § 13. Wisconsin’s constitution and statutes provide two means to bring an inverse condemnation claim: (1) under Wis. Stat. § 32.10 and (2) under Wis. Const. art. I, § 13.

A. Statutory Method – Wis. Stat. § 32.10

Wisconsin Stat. § 32.10 provides a statutory means for a property owner to institute condemnation proceedings against an entity possessing the power to condemn when that entity has taken the landowner’s property without going through the statutory condemnation process or, put simply, without paying the landowner. Koskey v. Town of Bergen, 2000 WI App 140, ¶ 5, 237 Wis. 2d 284, 614 N.W.2d 845.

Inverse condemnation proceedings under this statutory method may not be based upon a temporary taking of land for public use. Andersen v. Vill. of Little Chute, 201 Wis. 2d 467, 475, 549 N.W.2d 737 (Ct. App. 1996).

Unlike constitutional takings claims brought under Wis. Const. art. I, § 13, an action under Wis. Stat. § 32.10 is an action at law, meaning that the notice of claim requirements of Wis. Stat. § 893.80(1d)(a) apply. Thus, a landowner must comply with the notice of claim provisions of Wis. Stat. § 893.80 before bringing a claim against a governmental subdivision, such as a city, town, or county. Olsen v. Spooner Twp., 133 Wis. 2d 371, 376–77, 395 N.W.2d 808 (Ct. App. 1986); see also Hillcrest Golf & Country Club, 135 Wis. 2d at, 437 n.3. Noncompliance with the notice of claim statute is an affirmative defense that must be set forth in a responsive pleading. Maple Grove

Rolling/Martin- 14 - Country Club Inc. v. Maple Grove Ests. Sanitary Dist., 2019 WI 43, 386 Wis. 2d 425, 926 N.W.2d 184.

Actions brought under Wis. Stat. § 32.10 are subject to a three-year statute of limitations. Wis. Stat. § 893.93(1m)(a).

B. Constitutional Method – Wis. Const. art. I, § 13

A constitutional takings claim may be brought directly under Wis. Const. art. I, § 13, which states, “The property of no person shall be taken for public use without just compensation.” Although they cannot be brought under Wis. Stat. § 32.10, actions for temporary takings may be brought under Wis. Const. art. I, § 13. Eberle, 227 Wis. 2d 609, 642; Andersen, 201 Wis. 2d at 476.

When asserting a claim under Wis. Stat. § 32.10, nothing prevents the plaintiff from including a constitutional claim under Wis. Const. art. I, § 13, as an alternative.

Rolling/Martin- 15 - FACT PATTERN

The City needs to acquire land rights to widen Main Street and to install underground sanitary sewer facilities. The land rights it needs to acquire are:

1. A 10-foot strip in fee;

2. A permanent easement for underground sanitary sewer facilities that is 20 feet in width (adjacent to the 10-foot strip); and

3. A temporary easement for construction purposes that is 10 feet wide adjacent to the 20-foot permanent easement strip.

Parcel A is a commercial parcel that has 200 feet of frontage on Main Street. The sign for Parcel A’s business is located partially within the 10-foot strip that is being acquired in fee and will have to be relocated on the Property. Landscaping in both the fee taking area and the permanent easement area will have to be removed.

The City has provided the landowner with an appraisal for the fee taking, the permanent easement, and the temporary easement. The landowner has provided the City with an appraisal pursuant to Wis. Stat. § 32.05(2)(b). All of the prerequisites to negotiation have occurred pursuant to Wis. Stat. § 32.05(2a), and the parties are now ready to negotiate before the City issues a jurisdictional offer for the takings.

The items for negotiation include the following:

1. Compensation for the fee taking; 2. Compensation for the permanent easement; 3. Compensation for the temporary easement; 4. Severance Damages; 5. Sign; and 6. Landscaping.

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Real Estate Acquisition for Public Projects: What Municipal Attorneys Should Know about Eminent Domain August 31, 2021 League of Wisconsin Municipalities – Municipal Attorneys Institute JJ Rolling & Michelle Martin

Overview

1. Background – What is Eminent Domain? 2. What can be acquired and when is it necessary to follow the condemnation process? 3. Typical Procedures for Eminent Domain in the Municipal Context 4. Procedure 5. Pitfalls 6. Just Compensation 7. Fee‐Shifting 8. Relocation 9. Inverse Condemnation

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I. Background – What is Eminent Domain?

• Simply put, it is the “taking” of private property for public use. • “appertains to every independent government. It requires no constitutional recognition; it is an attribute of sovereignty.” Mississippi & Rum River Boom Co. v. Patterson, 98 U.S. 403, 406, 25 L. Ed. 206 (1878). • Subject to (1) Public Use and (2) Payment of Just Compensation • U.S. Const. amend. V • Wis. Const. art I, § 13

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II. What can be acquired? When required?

II. What can be acquired? When required? – What can be “Taken?”

• Wisconsin law recognizes a variety of rights and interests in property. Wisconsin Med. Soc'y, Inc. v. Morgan, 2010 WI 94, ¶ 42, 328 Wis. 2d 469, 787 N.W.2d 22. • Fee, permanent limited easements, temporary limited easements (construction easements) • Access rights • Leases lasting longer than 1 year — Wis. Stat. § 32.19(4m)(b) • Sign permits • Air space • Freedom from flooding • Vested rights in professional fund assets

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II. What can be acquired? When required? – When is it necessary to follow condemnation steps?

• Entities with condemnation authority • If the agency would never acquire the property but voluntarily, then it is not required to follow the condemnation process. • If there is any chance that the agency will use condemnation authority if the property is not voluntarily sold to the agency, then the agency must follow Wis. Stat. ch. 32. • Relocation benefits even in voluntary transactions

III. Procedures

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III. Procedures – Wis. Stat. ch. 32

• Wisconsin Stat. ch. 32 • “All acquisition of property in this state by condemnation, except as hereinafter provided, commenced after April 6, 1960 shall be accomplished in the following manner…” Wis. Stat. § 32.04 • Sets out the procedure the government must follow in acquiring private property for public use • E‐L Enterprises, Inc., 2010 WI 58, ¶ 36. • Complete and exclusive method of procedure • City of Madison v. Tiedeman, 1 Wis. 2d 136, 143, 83 N.W.2d 694 (1957)

III. Procedures – Wis. Stat. §§ 32.05 and 32.06

Wis. Stat. § 32.05 Wis. Stat. § 32.06 • Limited, generally, to transportation facilities or • Other non‐transportation, non‐sewer facilities facilities related to sewers, water distribution, and waste disposal • Slower take – requires petition • Generally the procedure is largely similar, except, • “Quick Take” under sec. 32.06, if the JO is not accepted, the • Procedure is faster, mainly because it allows condemnor must petition the circuit court for condemnor to simply record “Award of Damages” condemnation proceedings and then a hearing is to acquire title without consent of owner and held before the county’s condemnation without proceeding to Circuit Court / commission and after the hearing it is the Condemnation Commission. commission that makes the award.

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III. Procedures – Blight and Condemnation for Urban Renewal

• In any city, condemnation for urban renewal pursuant to Wis. Stat. § 66.1333 may proceed either under Wis. Stat. § 32.05 or Wis. Stat. § 32.06 at the option of the condemning authority. Wis. Stat. § 32.05. • Multiple blight elimination statutes in Wis. Stat. ch. 66. Wis. Stat. § 66.1333, otherwise known as the “Blight Elimination and Slum Clearance Act.” • Defining “blight” Blight generally refers to properties that are “substandard” or “deteriorated” and are detrimental to public health or safety.

III. Procedures – Blight and Condemnation for Urban Renewal

• Defining “blight” (continued) The broader definition in the Blight Elimination and Slum Clearance Act includes areas or properties that are “predominantly open” and which “because of obsolete platting, diversity of ownership, deterioration of structures or of site improvements, or otherwise, substantially impairs or arrests the sound growth of the community.” Wis. Stat. § 66.1333(2m)(b)3.–(bm) • If a municipality wishes to acquire blighted property via condemnation and then lease or convey it to a private entity (such as a developer), additional steps set forth in Wis. Stat. § 32.03(6)(c) need to be followed.

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IV. Procedure

IV. Procedure – Authority to Condemn

Who may condemn • Set forth in Wisconsin Stat. § 32.02 • Property Acquisition Ordinances • Wis. Stat. § 62.22 addresses the acquisition of properties by cities • Wis. Stat. § 61.34(3)(a) authorizes the acquisition of property by villages • Wis. Stat. § 59.52(6) authorizes the acquisition of property by counties

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IV. Procedure ‐ Authority to Condemn (ctd.)

Prohibitions • Wisconsin Stat. § 32.03 discusses when condemnation is not to be exercised. • Property may not be acquired by condemnation to establish or extend a recreational trail; a bicycle way, as defined in s. 340.01 (5s); a bicycle lane, as defined in s. 340.01 (5e); or a pedestrian way, as defined in s. 346.02 (8) (a). Wis. Stat. § 32.015.

IV. Procedure – Relocation Order/Resolution of Necessity

• If a condemnation is going to occur under Wis. Stat.§ 32.05, the typical first step in the condemnation process is for the condemning authority to issue a Relocation Order outlining the project for which the property is being acquired, including a map or plat and the property interests required. Wis. Stat. § 32.05(1)(a ). • If a condemnation is going to take place under Wis. Stat. § 32.06, then the condemnor must have necessity to condemn. Necessity is determined pursuant to Wis. Stat.§ 32.07.

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IV. Procedure – Appraisal

• Condemnor must have an appraisal prepared • Wis. Stat. § 32.05(2)(a); Wis. Stat. § 32.06(2)(a) • Basis for condemnor’s offer • Full Narrative Appraisal • Landowner to be invited • Dealing with refused inspections

IV. Procedure – Pre‐Negotiation Disclosures

• Appraisal upon which offer is based • List of 10 other landowners affected by the project (or all landowners if fewer than 10) • Department of Administration Pamphlets • The Rights of Landowners Under Wisconsin Eminent Domain Law • Where relocation involved: • Wisconsin Relocation Rights Residential or • Wisconsin Relocation Rights for Business, Farm and Nonprofit Organizations • Maps and project plans available for inspection

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IV. Procedure – Landowner’s 60‐day Appraisal

• A landowner has the option of having its own appraisal prepared, with reasonable costs of that appraisal reimbursed by the condemnor. Wis. Stat. § 32.05(2)(b); Wis. Stat. § 32.06(2)(b) • Mandatory so long as within 60 days, for reasonable expenses • Anticipates costs ranging from $3,500 to $7,000 • Evaluate the appraisal

IV. Procedure – Negotiations

• Negotiations required • Wis. Stat. § 32.05(2a); Wis. Stat. § 32.06(2a) • Condemnor shall “attempt to negotiate personally with the owner or one of the owners or his or her representative of the property sought to be taken for the purchase of the same” before making a jurisdictional offer. • Interpreted to require “good faith negotiations” • Scope of “good faith negotiations” limited to just compensation • Zastrow v. Am. Transmission Co. LLC, 2018 WI App 51, 383 Wis. 2d 644, 916 N.W.2d 821.

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IV. Procedure – Negotiations (ctd.)

• If successful, the landowner transfers the property to the condemnor. Wis. Stat. § 32.05(2a); Wis. Stat. § 32.06(2a). • Condemnor records the conveyance and provides a copy of the recorded conveyance to all persons having an interest of record in the property immediately prior to the conveyance and a notice of the right to appeal the amount of compensation pursuant under Wis. Stat. § 32.05 or Wis. Stat. § 32.06 within 6 months after the date of the recording. Wis. Stat. § 32.05(2a); Wis. Stat. § 32.06(2a). • Any person having an interest in the property may appeal agreed‐price conveyance within 6 months

IV. Procedure – Jurisdictional Offer and Condemnation

• If negotiations fail, then the condemning authority serves the owner (or one of the owners) and the mortgagee (if any) with a Jurisdictional Offer • Jurisdictional Offer • Amount of compensation offered; description of the property being acquired; purpose for which the property is being acquired; right to appeal amount of compensation or challenge the right to acquire. • Wis. Stat. § 32.05(3); Wis. Stat. § 32.06(3) • 20 days to accept before condemnation • 40 days to challenge right to acquire

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IV. Procedure – Jurisdictional Offer and Condemnation

Wis. Stat. § 32.05 Wis. Stat. § 32.06

• “Quick Take” • Not “Quick Take” • Award of Damages – Wis. Stat. § 32.05(7) • Petition the court to assign matter to county condemnation commission for determination of just compensation. Wis. Stat. § 32.06(7). • Condemnor: • Condemnation commission holds a hearing on the amount of just • Pay the amount of the award to the landowner directly or deposit the compensation and issues an award. amount with the clerk of circuit court – Wis. Stat. § 32.05(7)(d) • Once the award is paid by the condemnor, title to the property interest • Has award recorded with the register of deeds – Wis. Stat. § 32.05(7)(c) vests. Wis. Stat. § 32.06(9)(b). • Title vests • Not uncommon for a condemnor to attempt to get access to the property quickly by filing a Motion for Immediate Possession with the court under Wis. • Any person having an interest of record in the property may appeal for Stat. § 32.12. greater compensation. 2 years to appeal. Wis. Stat. § 32.05(9) (versus 6 months for an agree‐price transaction)

IV. Procedure – Litigation

Just Compensation Appeals • Commissioners – typically attorneys, real estate brokers, and other private citizens • May be brought by any person having an interest in the property • Site visit mandatory ‐ Wis. Stat. § 32.08(6)(a) Circuit Court • Amount of offer or agreed price may not be • disclosed • Appeal from condemnation commission’s award, or (only if under Wis. Stat. § 32.05) • Condemnation Commission direct appeal. See Wis. Stat. § 32.05(11). • Mandatory for actions under Wis. Stat. § 32.06; • De novo; jury unless waived by both parties May be bypassed in actions under Wis. Stat. § 32.05 • Fact‐finder is not informed of the amount of the offer or the commission’s award

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IV. Procedure – Litigation (ctd.)

“Right to Take” Challenges • Challenges the condemnor’s authority to acquire – typically focusing on flaw in the acquisition process (including lack of good faith negotiations), scope of the taking, or whether owner will be left with uneconomic remnant • Narrow window – 40 days of service of the Jurisdictional Offer • Does not stay just compensation appeal. Wis. Stat. § 32.05(5); Wis. Stat. § 32.06(5)

V. Pitfalls

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V. Pitfalls – Pitfalls with Project Design

• Identify when you need possession/title of the property to determine when you need to begin the acquisition process (calculate backwards). • Identify whether you need to prepare and file an agricultural impact statement with the Department of Agriculture, Trade and Consumer Protection pursuant to Wis. Stat. § 32.035. • Communicate with engineers, acquisition staff, and appraisers. • Can the condemnor modify the project design to avoid or mitigate a high‐risk issue?

V. Pitfalls – Pitfalls with Project Design

• Identify Problem Areas or High‐Risk Issues Early 1. What is the “project” definition? 2. Is the project phased? 3. Is there “project influence”? 4. Is the proposed use a public use? 5. Review project route and impacted properties 6. Determine if any landowners, tenants, or properties qualify for relocation benefits 7. Federal funds involved?

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V. Pitfalls – Pitfalls during Negotiations

• State and Federal Law prohibits certain conduct • Deferring negotiations, condemnation, or depositing of during negotiations funds with the court • Condemnors may not use any technique or take any • Consequences action (aside from condemnation process itself) which in • Loss of state or federal funds for the project any way coerces a property owner into selling or donating the property or property interests that the • False statements punishable by fines and imprisonment – condemnor needs to build the project Wis. Stat. § 32.29 • Section 301 of the federal Uniform Act as implemented • Comparable replacement property and 90 day by 49 C.F.R. § 24.102(h) notice to displaced landowners and tenants ‐ Wis. • Examples from WisDOT guidance to Local Public Stat. § 32.05(8); Wis. Stat. § 32.06(9)(c) Agencies: • Requesting affected property owners waive their • Prerequisites to Negotiations relocation benefits • Advancing of the time of condemnation

V. Pitfalls – Pitfalls with Title

• Rights acquired must need to meet “adequacy of • Other best practices include: interest” test • Obtain and examine the title report for property to be • Property acquired for a state or federal‐aid transportation acquired (owners, mortgagees, encumbrances, lien project must be adequate for the construction, holders, and past due real property taxes). operation, and maintenance of the resulting facility and for the protection of both the facility and the traveling • Determine property interests to be extinguished or public. See 23 C.F.R. § 710.305(b) acquired. • Update the title report periodically to make sure you • Identifying those persons “having an interest of know the current persons with an interest of record. record” in the property, which may include lessees of leases that are recorded, mortgagees, and other • Perform a conflict check for all parties. rights‐holders. • Partial Releases, Subordination Agreements, or proceeding to condemnation

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V. Pitfalls – Pitfalls with Appraisals and Valuation

• Is the appraisal fair? • Risk of fee‐shifting – Wis. Stat. § 32.28 • Is the appraisal comprehensive? • Highest and Best Use, Damages, Special Benefits, Project Influence issues? • Do you need non‐valuation experts?

V. Pitfalls – Pitfalls with Timing

• Does the Project Timeline work? • When must title be acquired? • When must possession be obtained? Is the landowner or a tenant entitled to relocation benefits and assistance? • Is there legal authority (quick take) to acquire property timely? • Recall differences in Timing – Wis. Stat. § 32.05 vs. Wis. Stat. § 32.06 • When will construction commence? • Avoiding the “Holdout” Problem • Do not assume that you will be able to obtain the property voluntarily if you need it for your project.

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VI. Just Compensation

• Determination of “Just Compensation.” • Rules set forth in Wis. Stat. § 32.09; apply to matters under Wis. Stat. § 32.05 and 32.06 • As of the date of valuation (theoretical difference between Wis. Stat. § 32.05 and Wis. Stat. § 32.06) • Total Taking Wis. Stat. § 32.09(5); Partial Taking (Not Easements) Wis. Stat. § 32.09(6); Easements Wis. Stat. § 32.09(6g) • Partial takings provide the widest range of issues • Appraisal is the key • Comparable sales are historically favored • Income Approach is now to be considered if used by the appraiser (in the past, it could only be used in very special circumstances)

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VI. Just Compensation (ctd.)

Key Considerations • 4A‐14 Nichols on Eminent Domain, § 14.02: Before condition allowed for enough on‐site • Highest and Best Use circuity to be operated as a large distribution center, but in the after condition only small • Severance Damages diminution of value to delivery trucks can operate on the property. the remainder • Rural residential home with screening and privacy becomes lower‐end residential rental. • Proximity damages • Zoning Nonconformity • Loss of Reasonable Access • Stigma • Change in Highest and Best Use • Loss of Development Potential • Special Benefits

VII. Fee Shifting

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VII. Fee Shifting – Wis. Stat. § 32.28

• Major consideration – one of the biggest • Reasonableness • Wisconsin Stat. § 32.28 contains a list of scenarios in which litigation • Burden on the attorney seeking fees ‐ D.S.G. Evergreen F.L.P. v. Town of expenses may be awarded. These are: Perry, 2007 WI App 115, ¶ 24, 300 Wis. 2d 590, 731 N.W.2d 667 • Just compensation: Generally, property owner receives reimbursement • When challenged, circuit court weighs the evidence submitted. of all reasonable litigation expenses if they obtain judgment 15% or more Erroneous exercise of discretion standard. Standard Theatres, Inc., 118 and ~$3,000 than the Jurisdictional Offer (or higher offer before JO) Wis. 2d at 747 • Inverse Condemnation: Successful landowner under Wis. Stat. § 32.10 – • Three times damages cap pursuant to Wis. Stat. § 814.045? No cite‐able Wis. Stat. § 32.28(3)(c) opinion. See Lewis v. Vill. of Hobart, 2014 WI App 90, 356 Wis. 2d 328, 855 N.W.2d 492 • (not under Wis. Const. art. I, § 13) ‐ W.H. Pugh Coal Co. v. State, 157 Wis. 2d 620, 634–35, 460 N.W.2d 787 (Ct. App. 1990) • Purposes of awarding litigation expenses are twofold: they (1) discourage low offers from the condemnor; and (2) ensure the • Right to Take: The court determines that the condemnor does not have the right to condemn part or all of the property described in the condemnee is made whole when forced to litigate to get the full jurisdictional offer or there is no necessity for its taking; ‐ Wis. Stat. § value of the property. Standard Theatres, Inc. v. State, Dep’t of 32.28(3)(b) Transp., Div. of Highways, 118 Wis. 2d 730, 745, 349 N.W.2d 661 (1984 • Abandonment: The proceeding is abandoned by the condemnor – Wis. Stat. § 32.28(3)(a).

VIII. Relocation

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VIII. Relocation ‐ Wis. Stat. § 32.19

• Displacing agencies are required to offer relocation benefits • includes those agencies that have the power of condemnation, even if they are not using it for a particular project. Wis. Admin. Code § Adm. 92.01(13). • Additional Items Payable • Relocation • Replacement Housing • Replacement Business / Farm • Outsourcing is often the best choice

IX. Inverse Condemnation

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IX. Inverse Condemnation – Unacknowledged Takings

• Condemnation proceedings are pursued by the • Wisconsin Med. Soc’y, Inc., 2010 WI 94, ¶ 38 (citing Wisconsin Retired Tchrs. Ass'n, Inc. v. Employe Tr. Funds property owner and not the condemnor. Landowner Bd., 207 Wis. 2d 1, 18–24, 558 N.W.2d 83 (1997)). petitions court to declare property interest has been “taken” without payment of just compensation • Determined by the Court • Two broad categories: • Successful landowner has matter referred to condemnation commission for determination of just • Physical invasion compensation to be paid • Regulatory takings • Successful landowner will be entitled to fees if • “all or substantially all” brought under Wis. Stat. § 32.10 • Elements: • “(1) a property interest exists; (2) the property interest has been taken; (3) the taking was for public use; and (4) the taking was without just compensation.”

IX. Inverse Condemnation – Statutory and Constitutional Methods

• Statutory Inverse Condemnation ‐ Wis. Stat. • Noncompliance with the notice of claim statute is an affirmative defense that must be set forth § 32.10 in a responsive pleading. Maple Grove Country • Inverse condemnation proceedings under this Club Inc. v. Maple Grove Ests. Sanitary Dist., statutory method may not be based upon a 2019 WI 43, 386 Wis. 2d 425, 926 N.W.2d 184 temporary taking of land for public use. • Constitutional Takings – Wis. Const. art. I, § • Andersen v. Vill. of Little Chute, 201 Wis. 2d 13 467, 475, 549 N.W.2d 737 (Ct. App. 1996) • May be temporary • Notice of Claim – Wis. Stat. § 893.80 • No fee‐shifting • An action under Wis. Stat. § 32.10 is an action at law, meaning that the notice of claim • May be brought together requirements of Wis. Stat. § 893.80(1d)(a) apply.

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Hypothetical Condemnation Scenario

Fact Pattern

• The City needs to acquire land rights to widen Main Street the fee taking, the permanent easement, and the and to install underground sanitary sewer facilities. The temporary easement. The landowner has provided the City land rights it needs to acquire are: with an appraisal pursuant to Wis. Stat. § 32.05(2)(b). All of the prerequisites to negotiation have occurred pursuant to 1. A 10‐foot strip in fee; Wis. Stat. § 32.05(2a), and the parties are now ready to 2. A permanent easement for underground sanitary sewer negotiate before the City issues a jurisdictional offer for the facilities that is 20 feet in width (adjacent to the 10‐foot takings. strip); and • The items for negotiation include the following: 3. A temporary easement for construction purposes that is 10 feet wide adjacent to the 20‐foot permanent easement 1. Compensation for the fee taking; strip. 2. Compensation for the permanent easement; • Parcel A is a commercial parcel that has 200 feet of frontage on Main Street. The sign for Parcel A’s business is located 3. Compensation for the temporary easement; partially within the 10‐foot strip that is being acquired in 4. Severance Damages; fee and will have to be relocated on the Property. Landscaping in both the fee taking area and the 5. Sign; and permanent easement area will have to be removed. 6. Landscaping. • The City has provided the landowner with an appraisal for

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Questions

Joseph J. Rolling Michelle E. Martin von Briesen & Roper, s.c. Axley Brynelson, LLP 10 E. Doty Street, Suite 900 N20 W22961 Watertown Road Madison, Wisconsin 53703 Waukesha, Wisconsin 53186 (608) 661‐3974 (262) 409‐2288 [email protected] [email protected]