MMAC request to halt a tax incentive referendum in Port Washington denied

By CLAUDIA LEVENS

USA Today Network

An Ozaukee County Circuit Court judge denied a request from business groups, including the Metropolitan Milwaukee Association of Commerce, to halt a resident-proposed ordinance up for referendum in the City of Port Washington that would give voters a say in approving large tax incentives for developers, including those for data centers.

On Feb. 23, Judge Adam Gerol rejected the business groups’ motion for preliminary injunction, saying it was not appropriate for the courts to end an election or rule on the constitutionality of a hypothetical ordinance that hasn’t become law. However, he said the court may take up the business groups’ challenges to the ordinance’s constitutionality if and when it’s passed by a majority of Port Washington voters on April 7.

“The ability to submit referendum and petition government is protected speech,” Gerol said at the Feb. 23 hearing.

“People have a right to vote, and elected officials have the right to hear from them, regardless of whether or not a measure is passed or not, and in many ways, regardless of whether the matter is ultimately legal or illegal and whether or not it’s actually sound and can be enforced down the road.”

MMAC and several other Wisconsin business and trade groups sued the City of Port Washington in late January, arguing the proposed ordinance up for referendum was too vague, conflicted with state law and would set a “dangerous precedent” that could chill development, according to their Jan. 29 complaint against the city and its clerk.

The city’s response, filed on Feb. 3, says officials “largely agree” with the business groups but have no choice but to advance the referendum, citing Wisconsin’s laws that allow residents to propose legislation through petition.

Specifically, the proposed ordinance up for referendum would ask whether the city should hold future ballot referendums on tax incremental financing districts over $10 million. It was proposed by a local advocacy group, Great Lakes Neighbors United, which formed in 2025 to organize local opposition to the $15 billion AI data center campus in Port Washington, including $458 million in tax incremental financing approved for the project. The group also filed a lawsuit against the city challenging that TID in early January.

It is still not known exactly what will appear on Port Washington residents’ ballots on April 7. At the previous hearing on Feb. 13, City Attorney Matthew Nugent told Gerol that city officials were still drafting the language that would appear on ballots – to explain the meaning of a yes or no vote and avoid printing the entire roughly 500-word ordinance.

Gerol had directed Nugent to file a draft of that language before the next hearing, but that was never filed with the court by Feb. 23.

“I can’t be asked to rule on what hasn’t been given,” Gerol reiterated.

Also at the Feb. 13 hearing, Gerol grilled the attorneys on why Great Lakes Neighbors United wasn’t named as a party to represent their interests in the case.

Since then, the group filed to intervene in the case and join as a party, which Gerol approved at the Feb. 23 hearing, calling the group’s initial exclusion “a significant procedural weakness in this case.”

“In my opinion, they’re indispensable to a fair resolution of this controversy because, up to this point, there was nobody here to speak on behalf of the public,” Gerol said.

As Gerol explained his denial of the motion for preliminary injunction, he cited previous Wisconsin Supreme Court rulings in similar cases where direct legislation was challenged by city leaders.

Neither the city’s common council nor its clerk has the authority to stall, reject or determine the unconstitutionality of direct legislation lawfully proposed by residents, which is the case here, Gerol said.

Gerol did not buy the business groups’ arguments or the city’s arguments that even the existence of the ballot question would slow development. At the Feb. 13 hearing, neither could identify a specific project that would be affected by a public vote on the proposed ordinance, and it would not affect any existing TIF districts.

Granting a temporary injunction is meant to prevent “irreparable harm,” he noted. But the premise of whether not the proposed ordinance becomes law is currently hypothetical, since it hasn’t been passed by voters, he said.

“Is this concept even amenable to judicial scrutiny at this stage?” he asked rhetorically. “It is not.”

Gerol also said he couldn’t fully buy into the business groups’ argument that the state statutes outlining how TIDs are approved by municipal bodies necessarily prevent the public from also having a say on the matter.

He also said the proposed ordinance wasn’t vague enough to be entirely uninterpretable.

Gerol also reiterated, as he did on Feb. 13, that he believes the attorney general should be notified about the case to weigh in, since it involves challenges to the ordinance’s constitutionality.

The parties will reconvene in court for a scheduling conference on April 16 after the spring election.