Citing a law passed last year in Wisconsin that limited legal opposition to new housing projects, a panel of three judges this week reversed a lower court’s decision that blocked a proposed development on the St. Croix River bluff in Osceola. The state Court of Appeals has now cleared the way for the four-story apartment building at the village’s former hospital site, unless opponents take further action.

“While community concerns remain important in development discussions, this decision makes clear that standing to challenge these decisions in court requires demonstrable and specific harm,” said Osceola village administrator Devin Swanberg in a statement.

In the decision released on Wednesday, the court cited Assembly Bill 266, which was passed in June 2023 as part of a package that proponents said would make it easier to build more housing in the state. The law was passed at the same time the village of Osceola was making decisions about the development that would later be challenged in court (see timeline at bottom of article).

AB 266 strictly limited who can qualify to sue over a development proposal approved by a local unit of government. It says only a person who “sustains actual damages or will imminently sustain actual damages that are personal to the person and distinct from damages that impact the public generally” has legal grounds to stand on.

The village’s lawyers argued that the plaintiffs in this lawsuit did not meet the standard put forth in Bill 266.

“If [degradation of the natural, scenic, and historic qualities of the Village and the portion of the St. Croix River] can be characterized as damages, they are not personal to [St. Croix Scenic Coalition] but impact the public generally,” they wrote.

The appeals court agreed, overturning a district court ruling that halted the project last spring.

“Specifically, the Coalition alleged its members merely faced the possibility of future harm of a type that would affect the public generally rather than the required then-existing individual injury or reasonably certain future individual injury resulting from the local governing body’s decision to approve the application,” the court wrote.

Blufftop building

The Osceola Bluffs proposal calls for a 99-unit apartment building on the edge of the St. Croix River bluff. It would be four stories facing the river and three stories facing the street. During debate over the proposal in 2022 and 2023 and then in the lawsuit, its critics have said it would visually detract from a popular part of the St. Croix River, which is protected by state and federal law.

Supporters of the development proposal say it would finally clean up the dilapidated former hospital, a building that has been empty since 2007 and is in poor condition. They also point to a need for housing in Polk County and Wisconsin as a whole.

While proposal opponents say they support redevelopment of the site, they also feel the large building proposed will replace one eyesore with another. They also say the cost of apartments in such a location will likely be out of reach for people who need housing most.

The lawsuit claimed the village violated its own ordinances in approving the project, as well as state and federal laws specifically passed to protect the St. Croix River. Those issues are now moot, after the appeals court’s decision. The judges made it clear that by disqualifying the plaintiffs, they were not ruling on any of the case’s other merits.

“Because we conclude that the Coalition lacks standing pursuant to the relevant statutory provisions, we need not reach the remaining issues addressed by the circuit court,” the ruling reads.

Reaction to housing shortage

Assembly Bill 266 was part of a package that was promoted as a way to clear hurdles for new housing in the state, which has a shortage of affordable units that some say is hurting employers and residents.

“Access to safe, reliable, and affordable housing statewide is an absolutely critical part of addressing Wisconsin’s long-standing workforce challenges,” said Gov. Tony Evers when signing the bill in June 2023.

Reducing legal challenges was seen as one way to expand affordable housing, which often receives the most opposition from neighbors.

“I’m encouraged by the package of bills proposed as a first step in addressing the issue,” Mary Pustejovsky, a Madison-based affordable housing advocate, told the Wisconsin Examiner when the legislation was introduced. “In particular, [AB 266] is promising.”

Affordable housing is typically defined as costing no more than 30 percent of the area’s median income. With Polk County’s median household income at $74,000, that means affordable housing should cost at most about $1,800 per month, if it is the type of affordable housing targeted by the 2023 legislation. The legislation itself included no definitions or exceptions for housing projects that would be above the affordability threshold, and Gaughan Cos. has not yet revealed pricing for the proposed Osceola Bluffs apartments.

In addition to a shortage of housing construction in Wisconsin, another trend that has contributed to inadequate stock is the rise of short-term rentals like Airbnb and VRBO. With the St. Croix Valley a popular tourism destination and the proposed Osceola Bluffs building offering scenic views located in a walkable downtown, it should be ideal for visitor lodging. The village currently has no ordinance limiting or regulating short-term rentals.

New legal landscape

Most of the support for the 2023 law came from realtors and builders, who should see lower legal costs and better odds of getting project approvals.

“One of the biggest barriers to new homebuilding in communities is the opposition from existing residents or NIMBYs [Not In My Backyard advocates],” Tom Larson, of the Wisconsin Realtors Association told legislators. “Regardless of what new development is being proposed, someone is bound to object.”

Larson cited several common concerns driving opposition to new development, including “loss of open space, increased density, traffic, overcrowding in schools, neighborhood character, property tax increases, or just change in general.”

With the Court of Appeals citing the new law, the case could serve as a critical test and precedent for how parks and public land will be protected in Wisconsin, how environmental laws will be enforced, and how housing will be developed.

The project’s Minnesota-based proposer celebrated the appeals court ruling and pledged to move forward quickly.

“Gaughan is excited to see this project to completion,” the company’s senior vice president Dan Hebert, told the Pioneer Press. He said construction is planned to begin next year.

The plaintiffs in the suit say they are reviewing the decision and considering next steps. The group could ask the Court of Appeals to reconsider or ask the state Supreme Court to review the ruling.

Timeline of legislative and village actions: