Business Litigation Lawyer’s Views on “Blighted” Property

Following the controversial 2005 deeply divided decision by the U.S. Supreme Court in Kelo v. City of New London, a number of states, including Wisconsin, passed legislation to protect owners of private property from unfair “taking.” In Kelo, the U.S. high court held that a local government, using eminent domain laws, could condemn private real estate and convey it to a private owner for development. That a government entity could condemn an owner’s private property in order that a private developer might construct a shopping center seemed inappropriate to many within the Badger State.

Assembly Bill 657

One year after Kelo, Wisconsin’s state legislature passed Assembly Bill 657, which generally prohibits governmental entities from condemning “non-blighted” property for transfer to a private entity. In particular, Wisconsin law now:

  • Prohibits the government from designating large areas as blighted, when the only truly blighted area consists of a just a small portion of the overall property.
  • Requires condemning authorities to prove that any individual residential property is actually blighted before it can commence an eminent domain proceeding.
  • Requires that residential property be “abandoned” or converted from single to multiple units and be in a high-crime area in order for it to be designated “blighted.”
  • Requires that each specific residential property be blighted before it can be acquired and transferred to a private entity.

Small Businesses and Farms Particularly Vulnerable

Many land use experts have noted, however, that particularly when it comes to small businesses and farms, the term “blighted” is still subject to interpretation. To the extent that the government can shift the meaning to suit its overall purposes, those property owners remain vulnerable since, under current law, for owners of these non-residential properties, blight designations may still be based on subjective and vague terms like “obsolescence” and “faulty lot layout.”

Badger State residents will probably recall that a few years ago, the City of Oak Creek sought to condemn farm property owned by 94-year-old Earl Geifer, in order that it be sold for private development. Public outcry changed the minds of city officials, but it should be remembered that Assembly Bill 657 did not prove any significant obstacle to the city’s ability to designate Geifer’s farm as “blighted.”

Somewhat similarly, in another publicized case, the City of Greenfield sought to use eminent domain to acquire a number of businesses along Interstate 894. City officials pointed to Wisconsin’s General Municipality Law (Wis. Stat. 66.1333(2m)(b)3), which, in relevant part, defines a blighted area as one that “substantially impairs or arrests the sound growth of the community.” Critics said that one person’s vision of “sound growth” could easily differ from that of another. Again, public outcry stopped the eminent domain proceeding, but many Wisconsin small business leaders have indicated the state needs a more objective standard. Are owners of commercial or business property entitled to less protection than those who own residential property?

Some Say the Law Still Needs Amendments

Until the State of Wisconsin amends its eminent domain laws to define more specifically what property may be considered “blighted,” some danger remains that a municipality may allow the “promise” of increased tax revenues cloud its judgment and attempt to designate private property as blighted. When a governmental entity has its eyes on your property, it is usually wise to get experienced assistance from a qualified, skilled, and aggressive litigation attorney.

Milwaukee Commercial Real Estate and Business Attorneys

The Milwaukee business litigation firm of Kerkman Wagner & Dunn has more than 50 years of combined legal experience representing commercial real estate owners, property managers, landlords, tenants, and business concerns in Wisconsin. We have assisted in condemnation matters and stand ready to provide any Wisconsin property owner with vigorous legal representation. Our firm has big firm talent and provides small firm attention. Call us at 414-278-7000 or complete our online contact form.

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