Business groups sue to block Port Washington residents from interfering with TIDs

Business groups are suing the city of Port Washington, challenging the legality of a proposed ordinance that would give residents more power over local development incentives.

The Metropolitan Milwaukee Association of Commerce, along with six other groups, filed the lawsuit against Port Washington and its city clerk in Ozaukee County Circuit Court late last month.

The ordinance in question has been approved to be on the ballot in this year’s spring election after residents collected enough signatures on a petition to force the City Council to take action.

If the measure passes in April, it would require voters to approve any new tax increment district, or TID, with a project cost or projected base value of more than $10 million through a public referendum.

A TID is a geographic area within a municipality that is being targeted for development, where local governments divert increased property tax revenue generated from the district’s growth to finance development infrastructure or incentives.

The proposal comes after Port Washington approved creating a TID for a massive $15 billion data center campus that has drawn strong pushback from local residents. Data center opponents even launched a recall effort against Port Washington’s mayor.

“You slipped the Vantage Data Center project under our feet without giving us a voice, without giving us a vote, without respecting the will of the people you serve,” said Port Washington resident Tracy Finch at a December Council meeting.

In an announcement from the Metro Milwaukee Association of Commerce, the organization’s President Dale Kooyenga said the decision to file the suit was “not taken lightly.”

“State statute already dictates the process in approving TIDs,” he said. “A measure of this nature would not only conflict with state law, it would be devastating for economic development in Port Washington and would set a dangerous precedent with long-lasting economic impacts across the region and throughout the state.”

Groups that joined MMAC in the litigation include the Associated General Contractors of Greater Milwaukee, Building Advantage, the Commercial Association of REALTORS Wisconsin, Wisconsin REALTORS Association, NAIOP Wisconsin and Sid’s Sealants LLC.

In the civil complaint, they argue the proposed ordinance would “irreparably harm employers, taxpayers, and economic development interests in the City of Port Washington and throughout the region.”

Tracy Johnson, president of the Commercial Association of REALTORS Wisconsin, said in MMAC’s announcement that southeast Wisconsin’s success depends on its ability to welcome investment and create jobs. 

“Introducing uncertainty into a process that already includes public oversight will only slow projects, increase risk and push opportunity to other communities,” she said.

In November, Port Washington City Clerk Susan Westerbeke received a “petition for direct legislation” seeking adoption of an ordinance regulating some TIDs, according to the suit. 

Direct legislation is a process where residents — with signatures from 15 percent of the electors who cast votes for governor in the last general election — can bring ordinances or resolutions to a municipality through a petition requesting an ordinance be adopted or placed on the ballot without alteration.

Westerbeke certified the petition in late November and the Port Washington City Council voted in December to put the ordinance on the ballot for the upcoming April election, court documents state.

The business groups argue the ordinance would “exceed the legislative powers” given to the city in state statute related to TIDs. The suit says state law “expressly delegates” the power to create TIDs, approve project plans and incur project costs to municipal governing bodies and joint review boards.

“The proposed ordinance directly conflicts and seeks to override that statutory framework by stripping the Common Council and Joint Review Board of authority granted by the Legislature and substituting ad hoc voter approval requirements that are not authorized by state statute,” the civil complaint reads.

The business groups also argue the ordinance is “vague and internally inconsistent,” while the ballot question for the ordinance fails to adequately explain the proposal’s effects.

Port Washington Mayor Ted Neitzke declined to comment, saying the mayor and city council do not comment on lawsuits or pending litigation. Port Washington City Attorney Matt Nugent also declined to comment.

The city of Port Washington filed its response in court this week. The filing states the city attorney recommended the city council allow the ordinance to be on the April ballot despite “concerns related to the legality of the proposed ordinance” because the council was legally required to either approve it or send it to voters.

“The Defendants find themselves in a position where they are prohibited by law from rejecting the subject legislation even though they largely agree with the concerns outlined in the Complaint,” the city’s filing reads.

The business groups are asking the court to declare the proposed ordinance invalid, that it’s the wrong use of direct legislation, that the ordinance conflicts with state law and that the ballot question is misleading and legally insufficient. They also want the court to prohibit the city from placing the ordinance on the ballot.

A motion hearing in the case is scheduled for Feb. 13.