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April 10, 2006Client Alert

Governor Doyle signs Assembly Bill 657

On March 30, 2006, Governor Doyle signed into law Assembly Bill 657, the Wisconsin State Legislature's response to the recent United States Supreme Court decision on eminent domain entitled Kelo v. City of New London. This new law will undoubtedly have an effect on the ability of local governments to engage in economic redevelopment activities. The new law alters the long-standing statutory definition of "blight", adds a new definition for what is an "economic development" taking, and expressly prohibits the taking of "non-blighted property" for economic development.

Eminent domain refers to the power granted to federal, state and local governments to take private property for public use. The Fifth Amendment of the United States Constitution guarantees that when private property is taken for public use, just compensation is paid. The Wisconsin Legislature has previously enacted a series of law pertaining to local redevelopment efforts found in Chapter 66 of Wisconsin Statutes. These laws include: (1) sec. 66.1331, "Blighted Area Law"; (2) sec. 66.133, "Blight Elimination and Slum Clearance Act"; (3) sec. 66.1337, "Urban Renewal Act"; and (4) sec. 66.1105, "Tax Increment Law".

AB 657

  • Under the new law, property that is not blighted property may not be acquired by condemnation if the condemnor intends to convey or lease the acquired property to a private entity.
  • The law also provides a new definition of "blighted property", a definition that does conflict with the long-standing definition of "blight" set forth in Chapter 66 of Wisconsin Statutes. The new definition is more restrictive and carves out a special provision for dwelling units. The new law provides that even if a property meets the new definition of "blighted property", if the property contains one dwelling unit - a municipality is still prohibited from taking the blighted property unless: (1) it is abandoned; or (2) the crime rate in, on, or adjacent to the property is at least three times the crime rate in the remainder of the municipality in which the property is located.

The meaning of the new law and the proper coordination and integration with the other fully developed Wisconsin Statutes will need to be sorted out in the years to come. Based solely on the new definition of "blight", as applied to some well-known projects, it is questionable at best whether they could have been built under this new legislation. These include, for example, Grand Avenue Mall in Milwaukee, WI; Bayshore Town Center in Glendale, WI; Overture Center in Madison, WI; Younkers Store in Greendale, WI; and the Harbor and River Projects in Sheboygan, Burlington, Kenosha and Racine, WI.

For more information regarding the impacts of this new legislation, please contact Alan H. Marcuvitz at 414.225.4927, or ahmarcuvitz@michaelbest.com or Charles P. Graupner at 262.956.6555, or cpgraupner@michaelbest.com.

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