An Empower Wisconsin Investigation
Empower Wisconsin | Nov. 22, 2019
By M.D. Kittle
WAUNAKEE, Wis.—Waunakee Village President Chris Zellner wields a lot of power in the rapidly growing Madison bedroom community.
Did he abuse that power to kill a development firm’s multi-family housing proposal to benefit his developer brother and nephew?
That’s the claim Terrence Wall and his Main Street Waunakee LLC make in a lawsuit seeking $49 million in damages.
Long before the lawsuit, Wall and his firm appeared to have a good working relationship with village officials, one built on mutual respect and benefit.
Beginning in early 2012, at the urging of Village Administrator Todd Schmidt, what became Main Street Waunakee (MSW) worked on “securing multi-family housing development sites” in the community, according to court documents. It was Schmidt who encouraged MSW to consider developing property in downtown Waunakee. The village made assurances that it would rezone the property and approve a tax-increment financing district to fit the multi-use plan, going as far as gauging property owner interest in selling their homes to make room for the development.
Good faith negotiations went on for more than five years, according to the lawsuit. Zellner had expressed support for the development proposal.
Then, something changed — radically.
‘My brother is a developer’
At a Jan. 4, 2018 listening session, the Village Board president began disparaging the proposal.
“I’m not in favor of this project, period. I will stop this project,” Zellner repeatedly said at the listening session, according to court documents. He said he wanted to shrink the TIF district in order to exclude Wall’s development.
Zellner, who also serves as chairman of the village’s Plan Commission, subsequently exposed his nepotism, telling village officials that he relies on the advice of his developer brother Brad, the lawsuit alleges.
“My brother is a developer and when I have developers offer plans, I run it by him, and if he says, ‘That’s a joke,’ then I agree and it’s a joke,” a lawsuit exhibit notes. Apparently Brad thought Main Street Waunakee’s multi-family residential development a joke.
The problem is, Brad is a competitor of MSW. He’s a partner in LZ Ventures, a Madison-based real estate development company. Brad Zellner and his son Dan, according to public statements, have been working on a plan for a housing development near MSW’s proposed plan since March 2017.
Initially the proposed tax-incentive boundary did not include Brad Zellner’s proposed project. But then suddenly it did. Subsequently, the village removed half of MSW’s proposal from the TIF district, and Brad Zellner’s proposed property was included.
Main Street Waunakee asked that the Village Board president recuse himself from voting or discussing the proposal. They argued that Zellner effectively gave his brother, an unelected official and development competitor, “veto power over all multi-family development proposals,” bypassing the legal government process.
Zellner created an “irreversible bias” and a conflict of interest, stamping his verdict on the proposal before it had a “transparent and fair” public hearing, the lawsuit states.
Zellner reluctantly recused himself, briefly, but then jumped back in to make the final motion that killed MSW’s proposal — a concept that village officials had long asked the development firm to deliver.
The board then took the unusual — and arguably illegal step — of making an additional motion preemptively refusing any plan from the developer viewed as not compliant with the village’s comprehensive plan. Said issue was not on the agenda, but the attorney representing the attorney recommended the board take the further step.
That appears to be a violation of the state’s open meetings law.
MSW’s lawsuit also alleges Village Board member Erin Moran, who ran for election on her opposition to the proposal, also had a conflict of interest.
‘Heavy handed government’
Many community members were opposed to the development. Several voiced opposition at public hearings. But such opposition is no excuse for the alleged conflicts of interest surrounding the proposal.
The board asserted MSW’s plan didn’t fit into the village’s comprehensive plan. MSW argues it does, with the firm amending its proposal to meet the guidelines. It’s clear, the board bowed to public pressure to kill the project.
In a statement, the village said it is “vigorously defending against the allegations made,” but cannot comment any further on the pending litigation. Zellner and Moran directed all questions to the village administrator.
The Wisconsin Supreme Court has invalidated zoning decisions in which the “appearance of impropriety” or a perceived conflict of interest was found.
MSW is suing for damages, particularly lost revenue on the building sale. The development firm has said it would be open to settling but the attorney representing the village has refused to consider mediation.
The developer argues the Waunakee case is a clear-cut violation of due process and equal protection at the hands of an abusive government official.
The very essence of having a constitutional democracy is “to protect citizens from heavy handed government officials who are ‘out to get you’ before you even get to a fair hearing,’” Main Street Waunakee’s attorney wrote in a letter to the local newspaper.