2017 Wis. Act 243 Makes Costly Changes to Wisconsin’s Condemnation and Relocation Statutes

April 16, 2018

Co-authored by Attorney Micheal Hahn.

Governor Walker recently signed 2017 Wis. Act 243 into law, making the most significant changes to Wisconsin’s condemnation statutes in decades. Act 243, which took effect April 5, 2018, has been applauded by businesses who could be displaced by public projects. But the new law will be costly to taxpayers who have to pick up the tab.

Below are the top five provisions in the new law:

1. Nearly Unlimited “Project Costs” for Business Relocations
Act 243 creates a new category of payments available to businesses forced to relocate as a result of public projects. This new category includes “reasonable project costs” that the business “must reasonably incur” to make the business operation a “comparable replacement property.” The costs could include not only actual capital costs for construction of new buildings, but also financing costs, land preparation costs, architectural and engineering costs, and utilities. The Act does not say who decides whether the project costs are “reasonable.”

Villages, towns, and cities can breathe a small sigh of relief: their responsibility for these payments is capped at just $80,000 for tenants and $100,000 for owner-occupants. But for all other condemning authorities such as utilities, co-ops, and the State Department of Transportation, there is no cap. This presents a potentially massive increase in costs for public projects.

2. Business Replacement Payments Uncapped
Act 243 also eliminates caps for payments known as “business replacement payments.” Those payments are intended to help bridge the gap between the amount of compensation paid for a business property and the business’s cost to purchase or rent a replacement property. Previously capped at $30,000 for tenants and $50,000 for owner-occupants, these payments are now uncapped for most condemning authorities.

Business replacement payments by villages, towns, and cities will be subject to increased caps of $80,000 for tenants and $100,000 for owner-occupants. These are the same caps – not a second, cumulative cap – that limit payments for reasonable project costs.

3. Limited Retroactivity
Notably, any owner who previously filed a relocation claim in the last two years can file a new claim for additional payments under the new law. But there is one big limitation: the owner must file the claim within 45 days of the effective date of the new law, which is April 5, 2018. Otherwise, the new law only applies to claims filed after April 5.

4. Fee-Shifting for Relocation Claims – But Not Forever
Act 243 also allows prevailing owners to recover “litigation expenses,” including attorney fees and other costs, for relocation claims. Under the new language in Wis. Stat. § 32.20, the court “shall award” litigation expenses if the court awards relocation payments that are 15% higher than the payments allowed by the condemning authority. Previously, owners had to bear their own costs to litigate relocation claims. Those costs, which can dwarf the amount of the disputed claim, made litigation over those claims rare. We can expect to see more litigation in this area in the year ahead.
The fee-shifting provision applies to claims filed after April 5, 2018. Interestingly, the provision expires on January 1, 2019. So unless the legislature acts again, the fee-shifting provision will be short-lived.

5. Courts Required to Consider the Income Approach
Finally, Act 243 requires courts to consider appraisals using an “income approach” or “cost approach” when determining just compensation for a taking. The income approach evaluates the income derived from the property in order to determine the market value of the property. Wisconsin courts previously found the income approach to be too speculative to be admissible evidence in most cases.

The bottom line is that Act 243 makes significant changes to the condemnation and relocation law in Wisconsin. Property owners and condemning authorities need stay current to ensure that they are complying with the new provisions. If you have questions, contact one of the condemnation law experts at Axley.