Business owners missed appeals window, stuck with bill for special assessments

By Joe Forward, Legal Writer, State Bar of Wisconsin

May 18, 2011 – The Wisconsin statute that gives municipalities power to make special assessments against property owners bars the appeal of business owners who must now pay nearly $160,000 to the Village of Germantown, the Wisconsin Supreme Court recently concluded.

In the late 1990s, Menard sought approval of a retail development plan in the Village of Germantown (Germantown). Germantown and Menard agreed that road improvements were necessary, among others, and relocation of a sewer lift station was also necessary.

Menard agreed to pay, with an understanding that Germantown would reimburse a portion of the cost through special assessments against property owners who benefitted from the improvements. Emjay Investment Co. (Emjay) owned a restaurant located in the “special assessment district.”

The Menard development was completed at the end of 2003. In July of that year, Germantown adopted a preliminary resolution to exercise a power, under Wis. Stat. sections 66.0701 and 66.0703, to levy special assessments against property owners in the special assessment district.

Germantown sent notice to Emjay, which owned two parcels, and other property owners in the special assessment district. A public hearing was held. Allegedly, an Emjay partner called the Village Hall to ask about the assessment, but was told it would not affect Emjay’s commercially developed property.

In June 2004, Germantown adopted the resolution. The Director of Public Works made a benefit determination proposing a special assessment of nearly $160,000 for Emjay’s two properties. The final resolution was published on June 30, 2004. Twelve days later, Germantown mailed notice to Emjay.

In September 2007, Emjay sold the two parcels. Before closing, Germantown claimed the assessment amount, plus 6 percent interest, was due upon sale. Emjay was required to put $235,000 in escrow in order to close on the sale.

In May 2008, nearly four years after the final resolution was issued, Emjay filed a notice of appeal pursuant to section 66.0703(12) to challenge the assessments. However, the circuit court dismissed the case after Germantown argued section 66.0703(12)(a) bars appeals filed 90 days after publication of a resolution. The appeals court affirmed.

In Emjay Investment Co. v. Village of Germantown, 2011 WI 31 (May 17, 2011), the Wisconsin Supreme Court unanimously affirmed, rejecting Emjay’s argument that the special assessments were defective in a number of ways, primarily that they exceeded the value of the benefits accruing to the property.

The supreme court – in an opinion written by Justice Annette Ziegler – clarified that section 66.0703(12) is “the exclusive procedure by which an aggrieved property owner may appeal from the municipality’s adoption of a final resolution to levy special assessments.”

Once Emjay received notice of the final resolution, it had 90 days to appeal, and this appeals process was the “sole remedy” for challenging the assessments issued, the court explained. The two exceptions – appeals asserting fraud or latent defects in construction – were not applicable, the court concluded.

The supreme court also rejected Emjay’s argument that section 66.0703(12)(a) does not apply to contingent special assessments or the assessments are levied after construction of the improvements are completed.

“Had Emjay filed its notice of appeal and complaint within the 90-day period of appeal, the circuit court would have been able to address the merits of Emjay’s arguments – including whether the special assessments were defective or whether Germantown had the power to levy the special assessments in the first instance,” Justice Ziegler wrote.