Delafield council denies builders’ appeal seeking accounting, annual reports and refunds for impact fees

The Delafield Common Council voted April 21 to deny five remedies sought in an appeal from the Metropolitan Builders Association of Greater Milwaukee that challenged the city’s use and accounting of developer impact fees. The council rejected demands for retrospective detailed accounting for two multi-year periods, an annual reporting requirement specifically for the builder group, and refunds for fees collected from 2007–2015 and 2016–2023 as requested in the appeal.

The appeal, which the council discussed in open session after a closed-session review with the city attorney, asked the city to produce a line-by-line accounting of impact fees collected and spent, to establish annual reports that would identify fee payors and expenditures going forward, and to refund fees the MBA asserts were improperly used or held beyond statutory time limits. "The statute requires a municipal municipality to conduct a needs assessment," attorney Edie Peterson told the council during the public-comment portion, arguing Delafield has not maintained or updated an appropriate needs assessment and therefore has not complied with Wisconsin law. "The statute requires a refund of fees that are not used in accordance with statute," she said.

Why it matters: Impact fees are one-time charges on new development intended to help cover the cost of public facilities needed for growth. The MBA said improper collection or use of those fees can affect housing affordability and developer costs; the council and staff said the city has documented how fees were collected and used and that refunds would be inappropriate and could shift cost burdens to current taxpayers.

Council and staff presentations City Administrator Tom Hafner told the council that the city has produced spreadsheets showing payors and how impact-fee funds were applied to municipal building borrowing and expenditures. "Each and every impact fee collected from 2000 until the end of the report is identified by who paid it, how much was paid," Hafner said. He and other staff said the available records show the fees were applied to capital projects and debt service tied to municipal facilities.

City Attorney Joe Worth advised the council on legal limits and remedies the appeal could properly demand. Worth recommended the council confine any action to remedies actually requested in the appeal and warned against entering private contracts that would bind future councils. Worth also reviewed a statutory change from 2017 that clarified refunds of unused fees should go to the current owner of the property for which fees were imposed, not necessarily the original payer — a point he raised while describing legislative history of Assembly Bill 770.

Council debate and votes Councilmembers who spoke said the city’s historic needs-analysis work dating to 2000 set a baseline for levels of service and that annual updates and implementation decisions over subsequent years reflected efforts to manage growth and the timing of capital projects. Several alderpersons said they were satisfied fees were used to fund or service borrowing for facilities required by growth, and that refunding those fees now would be inappropriate and could increase tax burdens on current residents.

On each of the five specific remedies listed in the appeal, the council voted as follows: deny a demand for a detailed accounting of impact-fee collection and expenditures for 2000–2015 (motion carried by voice vote; no nays recorded); deny a demand for a detailed accounting of collections and expenditures for 2016–2023 (motion carried by voice vote); decline to require the city to produce an annual, MBA-specific impact-fee report going forward (motion carried by voice vote; council expressed willingness to update the city ordinance to improve public reporting broadly); deny the request for refunds of fees collected 2007–2015 (motion carried by voice vote); and deny refunds requested for fees collected 2016–2023 (motion carried by voice vote). The council recorded that the appellants remain able to seek additional documents under Wisconsin open-records law if they believe more detail is needed.

Next steps and ordinance changes Although the council denied the appeal remedies as presented, multiple members and staff said the city should review and update its impact-fee ordinance to align precisely with state law, clarify whether a separate, interest-bearing account is required, and consider clearer annual public reporting. Worth said an updated ordinance could address account segregation and reporting practices without creating a binding private agreement with the appellants. Council members directed staff to place an ordinance review on a future agenda.

What the appellants asked for The MBA sought five remedies grouped as (1) "accountability" — detailed accounting for 2000–2015 and 2016–2023 and an annual reporting obligation going forward — and (2) refunds — repayment (with interest) for fees the MBA claims were improperly used or held beyond statute-defined periods. Edie Peterson, representing the association, said the city has not held fees in a segregated interest-bearing account and has not performed a needs assessment tied to municipal projects such as the municipal building. "That is not a needs assessment," she said of a plan report in the record.

What the city said in response City staff and several councilmembers said the city provided substantial documentation during the appeal process, that impact fees were applied to capital projects consistent with the needs assessment baseline and subsequent project planning, and that refunds would be neither appropriate nor fiscally prudent. Worth provided the council a statutory reading that any refund required under current law is to the current owner of the property for which the fees were imposed, based on the statute’s wording and legislative history.

Ending The council’s votes close the appeal as presented to the Common Council, but the city signaled it will take legislative cleanup steps: staff and the city attorney were asked to prepare ordinance revisions to clarify recordkeeping, account structure, and public reporting of impact fees in line with state statute. The appellants may pursue open-records requests for additional detail if they determine specific information remains outstanding.