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Home / Commercial Construction / Developer skips town, loses $250,000

Developer skips town, loses $250,000

Sean Ryan
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As the town of Waukesha gets smaller, so too could the pocketbooks of developers who seek annexation into the neighboring city of Waukesha.

An appeals court Wednesday confirmed that threat by forcing Milwaukee-based 164 of Waukesha LP to pay the town $250,000 for seeking and receiving annexation.

“It costs a lot of money to have a community,” said Town Chairman Robert Tallinger, “so you can’t keep losing it.”

Traditionally, towns have little say-so when a property owner asks a city for annexation, said Carol Nawrocki, legal counsel for the Wisconsin Towns Association. If the city agrees to the annexation, she said, the town loses the land and any investment it put into it but keeps the debt from town construction work that supports the project.

It happened to the town of Waukesha in 2005 when the town approved a grocery store. But, once the building was under construction, the developer asked for and received annexation by the city.

That was the final straw for the town, which, with the next project proposal, sought assurances it would get something in return when a developer skips town.

Developer Robert Patch, of 164 of Waukesha, in 2005 represented the next project proposal. He sought approval for a commercial development, but the town, as a condition of approving the project, required the developer sign a contract promising not to ask the city to annex the property.

Two months after gaining town approval to build a family entertainment center in 2007, though, the developer asked the city to annex the property, prompting a town lawsuit. Waukesha County Circuit Court backed the town by ruling 164 of Waukesha owes $250,000, which is the penalty the town and developer agreed to in the contract. And this week, a state appeals court upheld the ruling.

Patch would not comment for this story.

The 164 of Waukesha site — now in the city — is at East Broadway and the Highway 164 bypass. No construction has occurred there.

Although the town lost the property, Tallinger said, he is glad the courts supported the town’s ability to require the nonannexation agreement. The town might require a similar agreement for a Walgreens project in town, he said.

Such agreements may be a town’s only recourse to discourage annexations, according to the Wisconsin Towns Association, which filed a brief in the case supporting the town.

“There’s really nothing we can do,” Nawrocki said, “to prevent the village or city from doing what they want to anyway.”

The town did not offer to build anything for the 164 of Waukesha project because there was nothing to offer beyond low taxes and fire and police services, Tallinger said.

The city of Waukesha, on the other hand, offered water and sewer lines for the project. The offer is in keeping with a city preference to keep as many new developments as possible from using septic tanks, which are all the town can offer, said Steven Crandell, the city’s director of development.

“The city decided that it was advantageous to have it in the city of Waukesha,” he said, “and on city services.”

Tallinger said there are no city annexations on the horizon, except possibly land the Waukesha Water Utility is eyeing for new water wells. But the threat of having the town swallowed up a bit at a time over the long term is always there, he said.

“It isn’t big,” Tallinger said of the town, which has roughly 3,000 houses and 45 businesses, “and as things move on and every time somebody annexes something from the city, that’s less tax base.”

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