First State Bank v. Town of Omro
873 N.W.2d 247
Wis. Ct. App.2015Background
- Barony subdivision (74 lots) received final plat approval in 2004; developer (Barony LLC) agreed to construct and pay for subdivision roads and provide a performance guarantee.
- By 2009 the loan defaulted, First State Bank acquired 65 unsold lots; subdivision roads remained unpaved. Three Bank-owned lots (4, 5, 55) fronted on outside, already-paved streets.
- In 2013 the Town of Omro authorized completion (grading and paving) of roads in the subdivision, the engineer filed plans, and the Town levied special assessments on Barony lots to fund the work (total ≈ $219,642 on Bank-owned lots).
- The Bank appealed under Wis. Stat. § 66.0703(12), arguing (inter alia) the Town was bound to look to the developer, the Town violated its Road Development Ordinance (70% development rule), the roads were private at the time, three lots received no special benefit, and procedural defects in the resolutions.
- The circuit court granted summary judgment for the Town. On appeal the court affirmed the assessment generally but reversed as to lots 4, 5, and 55, holding there is a genuine factual dispute whether those three lots received a special benefit.
Issues
| Issue | Plaintiff's Argument (Bank) | Defendant's Argument (Town) | Held |
|---|---|---|---|
| Authority despite development agreement | Town was contractually required to obtain payment from developer only | Development agreement/ordinance do not strip Town of police power to assess when developer defaults | Town may levy assessments; agreement does not bar exercise of police power |
| Ordinance 70% development rule | Ordinance prohibits paving before 70% lots developed, so assessment improper | Ordinance allows Town Engineer/Town Board to deviate; they approved early paving | Town properly relied on engineer recommendation and board concurrence to proceed |
| Public-improvement status of roads | Roads were private when resolution adopted, so not eligible for special assessment | Roads shown on final plat were dedicated to public and Town accepted dedication; improvement is public | Roads constituted public improvements eligible for § 66.0703 financing |
| Special-benefit to lots 4, 5, 55 | These lots do not abut improved roads and thus received no special benefit | Town treated benefit as use/value from internal subdivision roads | Genuine factual dispute exists whether those three lots received a special benefit; summary judgment improper as to them |
Key Cases Cited
- Lac La Belle Golf Club v. Village of Lac La Belle, 187 Wis. 2d 274 (discussion of limits on municipal special-assessment power)
- Genrich v. City of Rice Lake, 268 Wis. 2d 233 (procedural/standard for local special assessments)
- Peterson v. City of New Berlin, 154 Wis. 2d 365 (assessments must be fair, equitable, proportional to benefits)
- Emjay Inv. Co. v. Village of Germantown, 333 Wis. 2d 252 (municipal obligations to follow § 66.0703 procedures)
- Country Meadows West P’ship v. Village of Germantown, 237 Wis. 2d 290 (distinguishable; arose from developer’s breach-of-contract claim)
- Park Ave. Plaza v. City of Mequon, 308 Wis. 2d 439 (definition and factual nature of “special benefit”)
- Thomas v. City of Waukesha, 19 Wis. 2d 243 (failure to follow statutory procedural requirement can be fatal to exercise of police power)