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  • WisBar News
    June 05, 2017

    Appeals Court: Avenue for TIF Challenge is Certiorari Review

    Joe Forward


    June 5, 2017 – A state appeals court has ruled that plaintiff entities and individuals lack standing to challenge city resolutions concerning Tax Incremental Financing (TIF) districts through declaratory action, but may do so by way of certiorari review.

    An organization called Voters with Facts, four limited liability companies, and 14 individual taxpayers challenged city resolutions to use TIF, a method of municipal financing to develop property in cooperation with private interests, for riverfront areas.

    In this case, the TIF arrangement would allow a private developer to use city funds in demolishing buildings on the National Register of Historic Places.

    Eau Claire’s City Council adopted TIF resolutions to fund demolition and redevelopment, concluding the riverfront areas at issue were “blighted.”

    Under Wis. Stat. section 66.1105(2)(f)1.a., municipalities can use TIF to fund redevelopments if the city finds that at least 50 percent of real property designated for TIF is “blighted area” in need of rehabilitation or conservation.

    The City’s resolutions found the areas designated for redevelopment were blighted properties, and the city asserted authority to move forward since an independent review board found that redevelopment would not occur “but for” the TIF plan.

    The plaintiffs argued that the “blight” determination was not supported by any record evidence. In Voters with Facts v. City of Eau Claire, 2015AP1858 (May 31, 2017), a three-judge panel concluded that plaintiffs lacked standing to challenge the city through a declaratory action, but may proceed through certiorari review.

    The panel noted that Wisconsin TIF statutes do not expressly prohibit municipalities from creating TIF districts unless a property is “in fact” blighted or the development would “in fact” not occur “but for” redevelopment through TIF designations.

    Thus, the “blight” determination is a matter of legislative discretion, Hruz noted. The panel ruled that taxpayers lacked standing to challenge the city’s legislative action on TIF districts through a declaratory judgment action, since it is a legislative decision.

    “Voters does not explain how those findings can be challenged in a declaratory judgment action without a factfinder simply substituting its judgment for that of the municipality,” wrote Hruz, noting the statutes provide no objective legal standard to test whether a city’s “blight” determination is in fact correct. It’s a judgment call.

    And when legislative bodies make judgment calls, Hruz noted, certiorari review provides the framework to challenge such judgment calls, under prior decisions.

    “Certiorari review is a mechanism by which a court may test the validity of a decision rendered by a municipality, an administrative agency, or an inferior tribunal,” Judge Hruz wrote, citing case law.

    “It is well established in this state that where there are no statutory provisions for judicial review, the action of a board or commission may be reviewed by way of certiorari.”

    Judge Hruz noted that certiorari review is limited to deciding whether a municipality kept within its jurisdiction and proceeded on a correct theory of law.

    The reviewing court will also determine if the municipality’s decision was “arbitrary, oppressive, or unreasonable and represented the municipality’s will and not its judgment,” and “whether the evidence was such that the municipality might reasonably make the determination in question.”

    The panel concluded that the legislature vested decision-making authority in local governments to make TIF decisions, and those decisions “are best reviewed under certiorari standards.”

    The panel remanded the case for certiorari review, which plaintiffs sought in the alternative to its declaratory action, to determine whether the city lacked substantial evidence to make the “blight” and “but for” determinations to create TIF districts.

    The Wisconsin Supreme Court recently engaged in the certiorari review analysis the appeals court pinpoints in upholding the denial of a conditional use permit for sand frac mining in Trempealeau County. But the court did not agree on the reasoning.

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