In Town of Wilson v. City of Sheboygan (2020 WI 16), the Wisconsin Supreme Court upheld the approval of Kohler Co.’s annexation of land from the Town of Wilson to the City of Sheboygan for the purpose of developing a golf course.

Facts & Decision

The Town argued that the City, in adopting the annexation ordinance, failed to meet statutory requirements on contiguity, abused its powers of annexation, and failed to meet signature and population certification requirements.

The Supreme Court held that the city met all statutory requirements for annexation and did not abuse its powers of annexation.

 Contiguity. The court agreed with the Department of Administration’s (DOA) determination that the annexed territory was contiguous to the City.

 Rule of reason. The judicial doctrine of the “rule of reason” determines whether municipalities have abused their powers of annexation. The court found that the City satisfied the rule of reason because:

• The City did not act arbitrarily. When property owners initiate an annexation (as Kohler facilitated the property owners to do here), courts typically do not charge the municipality with arbitrariness unless the municipality is the “real controlling influence” in selecting the boundaries of the annexation or the annexation has an “exceptional” shape. Here, the City was not the real controlling influence behind the annexation petition and the boundaries of the proposed annexation were not an exceptional shape.
• There was a reasonable need for the annexation. The City needed the annexed territory for additional housing and economic development. Kohler needed the annexation for approval of its golf course and for sufficient water resources.
• The City did not abuse its discretion because it conducted a thorough analysis of the annexation petition.

Signature requirements. Wisconsin law (Wis. Stat. § 66.0217(3)(a)1.) requires owners of one-half of the real property in assessed value within the annexed territory to sign the annexation petition. The town argued that the City should have included non-assessed state and city-owned property in the count to determine the signature requirement. However, the court rejected the Town’s argument because the law specifically states the signature requirements are determined by amount of assessed property. The petition here met the signature requirement according to the assessed value determination.

Population certification requirements. The court found that DOA had certified the petition’s population count by accepting the petition for public interest review. DOA did not have to engage in a formal process to certify the population count.

Concurring Opinions

In a concurring opinion, Justice R. Bradley (joined by Justice Kelly) agreed that the petition met statutory signature and population certification requirements, allowing the annexation to move forward. However, the concurring opinion would have overturned precedent (Town of Mount Pleasant v. City of Racine) and abolished the “rule of reason” because the judicially created rule is not based in statute.

In a second concurring opinion, Justice Hagedorn agreed with the points made by Justice Bradley. However, because the parties in this case did not ask the court to revisit the rule of reason, the concurring opinion recommended the court wait for a more opportune case to decide on the rule of reason.