Neighborhood Electric Vehicles

A bill working its way through the Senate would give municipalities greater ability to permit neighborhood electric vehicles (“NEV”) on their roads. Currrently, the law (Wis. Stat. 349.26) authorizes municipalities to permit NEVs on local roads unless they are connecting highways or cross a state trunk highway, in which case they must get DOT permission. Under the bill, the municipality may permit NEVs on any road within its municipal limits that has a speed limit under 35 mph. If this bill becomes law, I’ll post an update. NEVs are defined in Wis. Stat. 340.01(36r).

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Dangers of Loan Commitments

During the normal course of business, loan commitments are issued by banks to a wide array of businesses. Loan commitments typically provide a conditional commitment to loan a fixed amount of money, at a specified interest rate for a contemplated project. During the real estate boom, many of these loan commitments were issued by banks for commercial real estate development projects.

Unfortunately for such a ubiquitous tool, both the issuing bank and its customer often do not clearly understand or thoroughly consider the legal consequences flowing from the issuance of a loan commitment. The commitment’s terms and conditions are critical to determining whether the bank is obligated to proceed with funding the loan. The lender may believe that the terms and conditions give it sufficient basis to later deny the loan, while the borrower often views the commitment as obligating the lender to make the loan. Many times the “fine print” of the commitment is ignored, and the parties proceed to negotiate and consummate deals based on their sometimes inaccurate understanding of the loan commitment’s terms. (One of Denny Hecker’s claims is that his bankruptcy was caused by Chrysler Credit failing to follow through on a loan commitment.)

For both banks and borrowers, these divergent views can create unintended problems and resulting legal consequences. In Town Bank v. City Real Estate Development, LLC, 2009 WI App 160, the Wisconsin Court of Appeals addressed some of these issues in a very common fact scenario. On May 27, 2004, Town Bank issued to City Real Estate Development, LLC (“Developer”) a loan commitment (“Commitment”) for the development of a condominium project in Milwaukee. Under the terms of the Commitment, Town Bank agreed to provide the Developer with financing in two phases. In the first phase, Town Bank was to loan the Developer $2.5 million to acquire a building, complete demolition, engineer the project, remove asbestos and marketing. In the second phase, Town Bank was to extend the Developer an additional $6.5 million to construct condominium units as presales dictated.

The Commitment contained a number of standard terms and conditions, including that the Developer grant Town Bank a first priority lien on the real estate, fixtures and other assets and provide Town Bank with an assignment of rents, leases and developer’s contracts. In addition, the Commitment contained a provision mandating a $900,000 equity injection by the Developer. Finally, the Commitment would terminate on June 25, 2004, if a credit agreement had not been signed.

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Town Veto of County Rezone

A recent case reminds us that municipal governments should take care to follow statutory procedures to ensure their policy decisions are effective. In Town of Rice Lake v. Barron County, a landowner applied to the County to rezone some property. The Town was notified, and passed a resolution recommending denial of the rezone. After a public hearing and some other procedural steps, the County Board eventually approved the rezone. The Town then passed a resolution purporting to veto the rezone, as it may do under Wis. Stat. 59.69(5)(e)6. The County however decided that the Town action was invalid because the Town had not “strictly complied” with certain procedures. The Town sued and eventually won – the Court deciding that the Town has “substantially complied” and that there was no prejudice to the County. Thus the Town veto was upheld by the Court, but if the Town had followed the procedures correctly in the first place, it may have avoided a costly court battle with the County.

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New Improved Car Boot Law Proposed

A new law allowing municipalities greater power to use immobilization devices, often called “car boots” for parking ticket scofflaws has been recommended for passage by committee, and is now available to be scheduled for a full Senate vote. 2009 Senate Bill 297 would permit a municipality to immobilize a car if the owner has three or more outstanding parking tickets which are at least 28 days old. In order to get his car back, the owner would have to pay the outstanding fees, as well as costs associated with the immobilization, and any subsequent towing and impoundment. Municipalities could eventually sell the car in an attempt to recover their costs under certain circumstances. (This assumes the car has any value – and if it did wouldn’t you think the owner would reclaim it?). This law is similar to 2007 Assembly Bill 618 which failed to pass in 2008. I’ll keep this blog updated if the Senate votes on the bill and we get any closer to a law. You can check out the bill and the legislative analysis at:
http://www.legis.state.wi.uw/2009/data/SB-297.pdf

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Prevailing Wage Update

The new changes to the Prevailing Wage law went into effect on January 1, 2010. (I wrote about these upcoming changes in the July 2009 Edition of the Municipal Law Alert – a copy of which can be obtained by contacting me at Bakke Norman, S.C., at tdunst@bakkenorman.com or by clicking here).

To summarize some of the important changes:

  • The threshold for public works projects has been lowered from $234,000 to $25,000;
  • The law now clearly applies to private developers who build infrastructure that will eventually be turned over to a municipality (this had been a point of contention and some litigation);
  • With some exceptions, the law applies to private projects in which the developer, investor or owner receives $1,000,000 or more in direct financial assistance from a local governmental (including TIF funding).

You can find details about the new law and prevailing wages in general at the DWD website:

http://www.dwd.state.wi.us/er/prevailing_wage_rate.

Plain language trumps in January appellate court decision re shoreland zoning (recommended for publication).

In Propp v. Sauk County Board of Adjustment, 2009AP209, Evelyn Propp began construction of a deck on her lake house within the shoreland setback area. She was given a violation and proceeded to apply for special zoning permission under Wis. Stat. 59.692(1v) and a corresponding county ordinance. These ordinances permit a structure to intrude into the setback area under under certain conditions, one of which is “The total floor area of all of the structures in the shoreland.” Wis. Stat. 59.692(1v)(b). Although the total structure of the deck had more than 200 square feet intruding into the setback area, Ms. Propp removed enough of the floorboards of the deck to bring it within 59.692(1v). The county argued that “floor area” should mean the entire footprint of the structure, not just the actual floor. Relying party on Websters 3rd Dictionary, the court decided the word floor as found in the statute was unambiguous, did not include the support structure of the deck but only the actual floor surface area, and found for Ms. Propp.

Plain Language trumps in January appellate court decision re highway discontinuance (recommended for publication).

In Dawson v. the Town of Cedarburg,2009AP120, the Dawsons had applied to the Towns of Jackson (Washington County) and Cedarburg (Ozaukee County) to discontinue a road. The two town boards met in a joint session, with five members of the Jackson Town Board in attendance, and three members of the Cedarburg Town Board in attendance. The vote, along town board lines, was 5 to 3 to discontinue the highway as the Dawsons wished. The Town of Cedarburg appealed. In an opinion issued January 6, 2010, in an apparent issue of first impression, the court was faced with the following language in Wis. Stat. 82.21(2): “…the governing bodies of the municipalities, acting together, shall proceed under ss. 82.10 to 82.13.” Cedarburg contended that this meant each town board must approve the discontinuance, rather than a simple majority of both boards. The court focused on the words “acting together,” and based on an analogous but unrelated statute and a Minnesota case that they found helpful, decided that “acting together” is plain on its face and requires a majority of both boards, not separate approval by each board.