Hotel Controversial: Waterfront development plans may clash with state laws protecting public land

 

Zamira Simkins and Jennifer Martin-Romme
Zenith News

Despite a temporary setback when the Duluth-based ZMC Hotel Management Company put most of its holdings up for sale last fall, the City of Superior remains poised to sell roughly one acre of waterfront land to ZMC for a 50,000-square-foot, 75-room Hampton Inn on the site northeast of Second Street/Highway 53, between the Richard I. Bong Historical Center and Perkins Restaurant. There’s just one problem: The whole project may be illegal.


A June 2003 Superior Port Land Use Plan, prepared by the Duluth-Superior Metropolitan Interstate Council, describes the general (non-parcel-specific) area as “waterfront filled land."

 

A portion of the Metropolitan Interstate Council’s map showing waterfront filled land in darker gray with hotel site circled by Zenith.

 


Filled land is created by “infilling” a navigable waterway with bedrock, soil, and clay. The “ordinary high water mark” is the inland boundary of a natural waterway.


Under Wisconsin’s Public Trust Doctrine, all waterfront filled land in the state is “public trust land,” for which the only permissible uses are harbor or navigation improvements (or recreation if the land is city-owned).


“The waters of Wisconsin shall be forever free!” says Tom German, Deputy Secretary of the Board of Commissioners of Public Land, paraphrasing Article IX, Section 1 of the state constitution from which the Doctrine emerged.


“You need state permission to build on fill,” says German. “If [the proposed hotel site] is, indeed, land that is below the ordinary high water mark, the state can lease that land, but only for very narrow purposes, and a hotel would not fit either definition...A hotel is not a harbor or navigation improvement.”


Superior Planning Director Jason Serck says he is completely confident that the hotel will be far enough inland. “I assure you that it is not on public trust land.”


Superior Mayor Bruce Hagen (who could not be reached for comment) stated at a mayoral candidate’s forum on January 21, “We have offered [ZMC Hotels] the public trust land. The issue there was the public trust land was through the DNR [Department of Natural Resources] of the State of Wisconsin. They gave us the wrong information. We have corrected that. That hotel, if it’s built, will be able to sit on that footprint and serve that area.”


Serck says the incorrect information actually came, not from the DNR, but from Tom German. “He submitted a map that we were using, but it was incorrect...They have their own inventory of mapping, but it’s very, very old.”


Serck says the City hired a private surveyor, who corrected the ordinary high water mark. The City submitted its corrected map to the Public Land Commission last fall, and the Commission is now using the corrected version.


“I don’t know what kind of mapping has been done by City officials,” says German. “They had a brief discussion with us a couple of years ago. My advice has always been: You need to get a survey and you need to have the ordinary high water mark.”


The DNR is the final authority tasked with identifying the ordinary high water mark, and thus the boundaries of fill land. The Public Land Commission would only be involved if the area is, in fact, public trust land and if the proposed use is appropriate, in which case, the Commission handles the lease.


A DNR spokesman says the agency has received no requests from the City of Superior, but will handle all project reviews “on a case-by-case basis.”


The City has not yet submitted its survey to the DNR, in part because City officials have been busy turning the area into a Tax Incremental Finance (TIF) District—which may also be in conflict with the Public Trust Doctrine.


Superior’s Tax Incremental Finance District No. 13 [TID13] is 28.03 acres encompassing residential homes between Second and Third Street from Second Avenue East to Highway 2, and along the shoreline from Second Avenue East all the way through the northeast portion of Barker’s Island.

 

The Department of Revenue’s map of Tax Incremental Finance District 13. The proposed hotel site is in Parcel 1. Identifying tags added by Zenith.

 


[Author disclosure: Zamira Simkins’ home is among those included in TID13. She has been active in protesting both the creation of the TIF District and the plans to construct a hotel on the proposed site.]


Tax Incremental Financing is a way for cities to redevelop blighted and distressed neighborhoods. Given the high upfront costs of reclaiming such properties, cities entice developers by subsidizing project costs—in this case, a nearly $1.5 million subsidy to ZMC Hotels—then, in theory, the city recovers its investment from additional property taxes generated by the TIF District.


TID13 first had to be approved by a Joint Review Board representing all overlapping or affected government entities (school district, county, etc.), and then be accepted by the state Department of Revenue.


At a September 4, 2014, meeting, the Joint Review Board was presented with historical maps and information that the TID boundaries may include public trust land. Serck told the Board, “I spoke with Tom German about this and he said it would not be a problem.” The Board unanimously approved TID13.


The proposed hotel site would never have met the common definition of “blight.” A placid ridge, overlooking the estuary, where a children’s playground marks the head of the Osaugie Trail, it’s not exactly a den of iniquity. It’s used by the neighborhood as a de facto park.


But TIF law contains a second definition of “blight,” to mean “...land upon which buildings or structures have been demolished and which because of obsolete platting, diversity of ownership, deterioration of structures or of site improvements, or otherwise, substantially impairs or arrests the sound growth of the community.”


According to Serck, the area has been historically underdeveloped because it was initially platted “clear out to the channel line, including some of Barker’s Island.”


However, TIF Districts on public trust land are, if not outright illegal, at least absurdly at cross-purposes. “It’s land held in trust by the people,” says German. “I don’t even know how it could be a TIF District,” since the purpose of a TIF is to invest in development that would be impermissible on public trust land in the first place.


“The Department of Revenue approved our TIF plan,” says Serck. “There are TIF Districts all over the state on filled lands,” including in Milwaukee and Green Bay.


Officials at the Department of Revenue confirmed the agency’s approval of TID13 on January 28, 2015, pointing to the stamp of approval it received from the Joint Review Board. They referred any further questions about public trust lands within TID13 to the DNR.

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