Mary Lane Area Sanitary District v. City of Oconomowoc

2023 WI App 48

COURT OF APPEALS OF WISCONSIN
PUBLISHED OPINION

Case No.: 2022AP1649

Complete Title of Case:

MARY LANE AREA SANITARY DISTRICT,
IXONIA UTILITY DISRICT #2 AND TOWN OF IXONIA,

PLAINTIFFS-CO-APPELLANTS,

VILLAGE OF LAC LA BELLE,

PLAINTIFF-APPELLANT,

V.

CITY OF OCONOMOWOC,

DEFENDANT-RESPONDENT.

Opinion Filed: August 30, 2023
Submitted on Briefs: June 13, 2023
Oral Argument:

JUDGES: Gundrum, P.J., Neubauer and Lazar, JJ.
Concurred:
Dissented:

Co-Appellant
ATTORNEYS: On behalf of the plaintiffs-co-appellants, the cause was submitted on
the briefs of Matthew Parmentier of Dempsey Law Firm, LLP, Fond du
Lac.
Appellant
ATTORNEYS
On behalf of the plaintiff-appellant, the cause was submitted on the
briefs of William S. Cole and Justin H. Lessner of Axley Brynelson,
LLP, Madison.

Respondent
ATTORNEYS: On behalf of the defendant-respondent, the cause was submitted on the
brief of Richard L. Bolton and Lawrie J. Kobza of Boardman & Clark
LLP, Madison.

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2023 WI App 48

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
August 30, 2023
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10 and
RULE 809.62.

Appeal No. 2022AP1649 Cir. Ct. No. 2021CV1043

STATE OF WISCONSIN IN COURT OF APPEALS

MARY LANE AREA SANITARY DISTRICT,
IXONIA UTILITY DISTRICT #2 AND TOWN OF IXONIA,

PLAINTIFFS-CO-APPELLANTS,

VILLAGE OF LAC LA BELLE,

PLAINTIFF-APPELLANT,

V.

CITY OF OCONOMOWOC,

DEFENDANT-RESPONDENT.

APPEAL from an order of the circuit court for Waukesha County:
MICHAEL P. MAXWELL, Judge. Affirmed.

Before Gundrum, P.J., Neubauer and Lazar, JJ.
No. 2022AP1649

¶1 NEUBAUER, J. More than twenty years ago, the City of
Oconomowoc entered into written intergovernmental agreements with several
neighboring municipalities and affiliated sanitary districts under which the City
agreed to accept, treat, and dispose of their wastewater.1 The agreements require
the municipalities to pay certain charges for sewerage treatment and capital costs.
They also include an annual “license fee.” The question in this case is whether the
license fee is valid and enforceable. The municipalities contend that the license fee
violates WIS. STAT. § 66.0821(4)(a), which permits municipalities to “establish
sewerage service charges” that relate to the provision of sewerage service. They
further argue that the license fee violates WIS. STAT. § 66.0628(2), which requires
that fees imposed by municipalities “bear a reasonable relationship to the service
for which [they are] imposed.” They also argue that the City lacks any other legal
authority to charge the fees. The circuit court rejected these arguments and granted
summary judgment to the City, concluding that the undisputed facts established that
the license fee is valid and enforceable consideration for the extension of the service
to these extraterritorial entities, which the City was not required to do. We affirm.

1
We refer to the City of Oconomowoc in this opinion as either “the City” or
“Oconomowoc.” Each of the agreements was entered into as an intergovernmental agreement
under WIS. STAT. § 66.30, which was later renumbered as WIS. STAT. § 66.0301 (2021-22). Thus,
we refer to the municipalities and sanitary districts collectively as the “municipalities,” unless
otherwise noted. See § 66.0301(1)(a) (defining municipality to include “any city, village, town …
sanitary district, [and] sewer utility district”).

All references to the Wisconsin Statutes are to the 2021-22 version unless otherwise noted.

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No. 2022AP1649

BACKGROUND

I. The Wastewater Treatment Agreements

¶2 Oconomowoc owns and operates a wastewater treatment facility. The
municipalities and sanitary districts that brought this action—the Mary Lane Area
Sanitary District, the Town of Ixonia and Ixonia Utility District #2, and the Village
of Lac La Belle—each own and operate wastewater collection systems but do not
have their own treatment facilities. The municipalities entered into
intergovernmental agreements with Oconomowoc in the late 1980s under which
their wastewater would be transported to, and treated at, the City’s facility. The
City and the municipalities entered into amended versions of these agreements in
the late 1990s.

¶3 The amended agreements establish the terms and conditions under
which Oconomowoc agreed to accept and treat the municipalities’ wastewater. For
example, each amended agreement identifies a service area from which the
municipality will collect wastewater, requires the municipality to measure the
volume of wastewater it transmits to the City, and obligates the municipality to
comply with the City’s sewer use ordinance. The amended agreements also require
the municipalities to pay monthly charges for wastewater treatment, a share of
capital costs associated with the City’s wastewater treatment infrastructure, and
certain other expenses.

¶4 In addition, each amended agreement requires the municipality to pay
an annual “license fee” to the City. The language in the license fee provisions is
substantially the same across the agreements. For example, the provision in the
amended agreement between the City and the Mary Lane Area Sanitary District
reads as follows:

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No. 2022AP1649

J. LICENSE FEES

(1) In recognition of the receipt of sanitary
sewerage service to remedy environmental
problems without requiring annexation to the
City, the District shall pay the City an annual
license fee for the consideration of service.

(2) The annual license fee for 1996 shall be $52
per residential equivalent connection (REC)
and shall escalate by 4% per year. The District
shall report to the City by January 31 of each
license year period the number of customers
and corresponding residential equivalent
connections, which shall be based at the
election of the District on the actual metered
from non-residential customers.

(3) The license fees shall be due and payable to
the City by March 31 of the calendar year for
which the license fee applies. Any payment
that is not made shall be subject to the same
interest and penalties the City may impose
against City residents.

The license fee provisions in the amended agreements applicable to Lac La Belle
and Ixonia Utility District #2 specify a rate of $58.49 per residential equivalent
connection and contain the same four percent annual escalator as the Mary Lane
agreement.

¶5 Consistent with the City’s agreement with Mary Lane Sanitary Area
District,2 the amended agreement between the City and Ixonia Utility District #2
provides that the City has agreed to accept and treat wastewater originating in the
district “without requiring annexation to the City” “notwithstanding a long standing
policy of requiring annexation before extending sewer service.” The amended
agreement with the Village of Lac La Belle does not include language referring to

2
The Town of Oconomowoc is a party to the agreement between the City and the Mary
Lane Area Sanitary District but is not a party to this action.

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No. 2022AP1649

annexation by the City (because it may not annex land belonging to a village) but
notes that the City “is not obligated to provide wastewater treatment to the Village.”

¶6 The City deposits the license fees in its General Fund Cash account
and uses them to pay general expenses. From 2015 through 2021, the City collected
approximately $190,000 in license fees from Lac La Belle, $420,000 from Ixonia
Utility District #2, and $207,000 from the Mary Lane Area Sanitary District.

II. Proceedings Before the Public Service Commission

¶7 In October 2020, the municipalities filed a complaint against the City
with the Public Service Commission of Wisconsin under WIS. STAT. § 66.0821(5),
which gives the commission “exclusive jurisdiction over complaints alleging
unreasonable or discriminatory sewer rates.” See Kimberly-Clark Corp. v. PSC,
110 Wis. 2d 455, 461, 329 N.W.2d 143 (1983) (construing predecessor to
§ 66.0821(5)). As relevant here, in their complaint, the municipalities alleged that
the license fees were unlawful under § 66.0821(4)(a), which prohibits
municipalities from establishing any sewerage charge that is not related to providing
sewerage service, and that the license fees were “unreasonable rates because [they]
are not related to the cost of providing sewerage service.”

¶8 After briefing by the parties, the commission determined that it lacked
jurisdiction over the complaint because its jurisdiction under WIS. STAT.
§ 66.0821(5) is limited to whether sewerage “rates, rules, and practices” are
unreasonable, and the license fees were not sewerage service charges, i.e., not rates,
rules, or practices, under § 66.0821(4)(a).

¶9 The commission set forth a comprehensive analysis in a twenty-three
page decision to support its conclusion. In regards to the license fee, the commission

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No. 2022AP1649

noted that both of the amended agreements “include sewage treatment rates as well
as capital cost recovery rates related to [the City]’s costs of providing sewerage
services” that are separate from the license fees. The commission reasoned that the
existence of a separate section in the agreements outlining wastewater treatment
services charges undercut the claim that the license fee should be considered a
service charge. Thus, the commission deemed the “core issue[]” between the parties
to be whether the City could charge a payment for agreeing to provide
extraterritorial sewerage service and also charge separate rates for the costs of
sewerage service itself. The commission noted that the City was not required to
provide extraterritorial sewerage service to the municipalities and retained
discretion over whether, and under what conditions, it would do so. The
commission stated that municipalities negotiating intergovernmental agreements
pursuant to WIS. STAT. § 66.0301(2) are free to negotiate over consideration for a
contract and that “[t]here does not appear to be any prohibition under Wisconsin
law for a municipality negotiating a fee for the consideration of providing a
service[.]”3 Thus, because there was no “persuasive indication” that the license fee
was a sewerage service charge (i.e., a rate, rule, or practice), the commission lacked
jurisdiction and dismissed the municipalities’ complaint.

3
The commission also noted that the agreements explicitly stated that the municipalities
“expressed a willingness to enter into a contract for wastewater treatment pursuant to [WIS. STAT.
§ 66.0301]” and that the parties to the agreements “admitted that these were freely negotiated
contracts and did not dispute any of the wording in the Agreements.” The commission stated that
the agreements made clear that they were negotiated so the municipalities “could obtain otherwise
unavailable wastewater treatment service,” and “[p]resumably, [the municipalities] freely
negotiated with [the City] regarding the fees present in the Agreements and found them to be cost-
effective solutions to their need for wastewater treatment service.”

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No. 2022AP1649

III. Circuit Court Proceedings

¶10 Following the commission’s decision, the municipalities commenced
this action against the City.4 In an amended complaint filed in March 2022, the
municipalities challenged the license fees on three grounds. First, they alleged that
“[t]he [l]icense [f]ees are sewerage service charges within the meaning of WIS.
STAT. § 66.0821(4)” and are invalid under that statute because they “are not related
to the cost of providing sewerage service.” Next, the municipalities alleged that the
fees violate WIS. STAT. § 66.0628 because they do not “bear[] [a] reasonable
relationship to the service for which [they are] imposed.” Finally, the municipalities
alleged that, if the fees are not “sewerage service charges” under § 66.0821(4) and
are not fees governed by § 66.0628, they are invalid because the City lacks any other
source of legal authority for them.

¶11 After the City filed its answer, the parties filed cross-motions for
summary judgment. In a written order dated August 16, 2022, the circuit court
granted the City’s motion and denied the municipalities’ motion. As to the merits
of the municipalities’ claims, the court began its analysis by stating that, “[w]ithout
a timely appeal of the PSC decision, the PSC’s determination that it had no
jurisdiction over [the] License Fees in question due to the License Fees not being a
rate, rule, or practice stands.”

4
The municipalities initially named the commission and asserted a claim for review of its
decision under WIS. STAT. ch. 227. However, after the municipalities failed to timely serve the
commission, the parties agreed to dismiss the commission with prejudice. The City then moved
for summary judgment arguing that the commission’s decision that the license fee was not a
sewerage service charge under WIS. STAT. § 66.0821(4)(a) was dispositive under claim preclusion.
In response, the municipalities amended their complaint to raise additional claims addressed in this
opinion. The City has not reasserted claim preclusion or raised a jurisdictional challenge based on
the commission’s decision, and thus we deem those arguments abandoned. See A.O. Smith Corp.
v. Allstate Ins. Cos., 222 Wis. 2d 475, 491, 588 N.W.2d 285 (Ct. App. 1998).

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No. 2022AP1649

¶12 The circuit court then turned to the broad powers possessed by
municipalities under Wisconsin law. Specifically, the court cited WIS. STAT.
§ 62.11(5), which it described as “confer[ring] broad authority upon cities,” and
concluded that the parties “clearly” were empowered to enter into their respective
agreements and that the City could lawfully negotiate for compensation in exchange
for its agreement to extend its wastewater treatment service beyond its borders:

Oconomowoc and the [municipalities] can clearly contract
under [WIS. STAT.] §§ 62.04 and 62.11(5) and part of the
contract negotiated provides consideration be paid in
exchange for [the City’s] agreement to provide
extraterritorial wastewater treatment services to [the
municipalities]. Oconomowoc was not required to provide
wastewater treatment services to any of the [municipalities],
but Oconomowoc agreed to provide this service under the
terms set forth in their agreements. Oconomowoc had the
right to negotiate for contractual consideration in exchange
for its agreement to provide wastewater treatment service to
entities located outside of its municipal borders.

The court then noted that the “amended complaint does not allege any issues with
the creation of the contract itself.” The court concluded that the “License Fees are
a valid portion of the contract within the authority of Oconomowoc to negotiate”
and that each municipality had “voluntarily consented” to pay them.

DISCUSSION

I. Standard of Review

¶13 “We independently review a grant of summary judgment, using the
same methodology as the circuit court.” Habel v. Estate of Capelli, 2020 WI App
15, ¶7, 391 Wis. 2d 399, 941 N.W.2d 858. Summary judgment “shall be rendered
if the pleadings, depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine issue as to any

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No. 2022AP1649

material fact and that the moving party is entitled to a judgment as a matter of law.”
WIS. STAT. § 802.08(2).

¶14 The parties’ arguments on appeal require us to examine and interpret
several Wisconsin statutes as well as the terms of their agreements. “The
interpretation and application of statutes are questions of law that we decide
independently of” the circuit court. Admanco, Inc. v. 700 Stanton Drive, LLC,
2010 WI 76, ¶15, 326 Wis. 2d 586, 786 N.W.2d 759. Similarly, the interpretation
of a written contract raises a question of law that we review de novo. Id.

II. WIS. STAT. § 66.0821(4)(a)

¶15 The municipalities’ first claim arises under WIS. STAT.
§ 66.0821(4)(a), which permits a municipality to

establish sewerage service charges in an amount to meet all
or part of the requirements for the construction,
reconstruction, improvement, extension, operation,
maintenance, repair, and depreciation of the sewerage
system, and for the payment of all or part of the principal and
interest of any indebtedness incurred for those purposes,
including the replacement of funds advanced by or paid from
the general fund of the municipality.

Id.5 The statute allows municipalities to set “sewerage service charges” but
prohibits them from “establish[ing] any charge under this paragraph that is not
related to providing sewerage service.” Id.

5
No party develops an argument in support of the circuit court’s statement that the
decision of the commission that the license fee was not a sewerage service charge under WIS. STAT.
§ 66.0821(4)(a) “stands.” Given our agreement, after de novo review, with the commission’s
statutory interpretation upon which its jurisdictional decision was based, we need not address any
preclusive effect of the commission’s decision.

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No. 2022AP1649

¶16 The municipalities argue that the license fees constitute “sewerage
service charges” because the amended agreements with the City state that the fees
are charged in consideration of the City providing sewerage services. And, they
argue that the fees are unlawful under WIS. STAT. § 66.0821(4) because they are not
“related to” the actual costs incurred by the City to provide the service to the
municipalities. In support, they rely on this court’s decision in Fred Rueping
Leather Co. v. City of Fond du Lac, 99 Wis. 2d 1, 298 N.W.2d 227 (Ct. App. 1980),
in which we held that an amendment to a municipal ordinance that added an “in lieu
of tax charge” to a formula for charging customers for sewerage treatment services
was not allowed under the predecessor to § 66.0821(4)(a).

¶17 The City offers several responses. First, it contends that it did not
“establish” the license fees for the purpose of WIS. STAT. § 66.0821(4)(a) because
the fees were not unilaterally imposed by the City, but instead were part of
negotiated agreements. We are not persuaded by this argument. The word
“establish” is not defined in the statute, but its plain and ordinary meaning is broad
enough to include charges instituted by agreement. See, e.g., Establish, WEBSTER’S
THIRD NEW INTERNATIONAL DICTIONARY (unabr. 1993) (“to settle or fix after
consideration or by enactment or agreement”); Lemmer v. Schunk, 2008 WI App
157, ¶10, 314 Wis. 2d 483, 760 N.W.2d 446 (“We may use a dictionary to establish
the common meaning of a word.”).

¶18 The City also denies that the license fees are “sewerage service
charges” and describes them instead as “contractual consideration” for the City’s
“agreement to provide [the municipalities] access to Oconomowoc’s wastewater
treatment services when [it] had no obligation to do so.” The City justifies the fees
as reasonable compensation for extending wastewater treatment service beyond its

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No. 2022AP1649

borders because, in doing so, the City “loses an otherwise competitive edge over
outlying areas that rely on [its] services and amenities.”

¶19 In construing the amended agreements, our goal is “to give effect to
the parties’ intentions.” Tufail v. Midwest Hosp., LLC, 2013 WI 62, ¶25, 348
Wis. 2d 631, 833 N.W.2d 586. “[T]he best indication of the parties’ intent is the
language of the contract itself,” which “[w]e construe … according to its plain or
ordinary meaning.” Town Bank v. City Real Est. Dev., LLC, 2010 WI 134, ¶33,
330 Wis. 2d 340, 793 N.W.2d 476. We also “consider the language of the contract
as a whole, and analyze contract clauses in context, as they are reasonably
understood.” Ryan v. Ryan, 2023 WI App 21, ¶12, 407 Wis. 2d 615, 990 N.W.2d
777 (citation omitted).

¶20 We begin by noting that the amended agreements, in sections entitled
“SEWAGE TREATMENT RATES,” require the municipalities to pay three charges
to the City separate and apart from the license fees. First, the municipalities must
pay the City a charge for sewage treatment that is calculated by applying an
“adjusted sewer user charge rate” to “the total wastewater flow” measured from the
municipality each month. With minor differences in wording that are not material
here, the amended agreements describe this rate as “[f]or the acceptance, treatment
and disposal of sewage transmitted to the City from the [municipality] and for the
operation and maintenance, including DNR mandated replacement fund expenses,
for the treatment facility and interceptor system.” The formula for determining the
rate excludes costs to operate and maintain the City’s own sewerage collection
system but includes costs to operate, maintain, and replace those portions of the
City’s sewerage system that “provide sewerage service to more than one
community.”

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No. 2022AP1649

¶21 The second charge identified in the amended agreements is a “capital
cost recovery rate,” which is “[f]or the recovery of capital costs associated with the
City’s treatment plant and interceptors.” The agreements state that this charge
“represents the [municipality]’s equitable and proportionate share of depreciation
and rate of return on the City’s treatment facility and interceptors.”

¶22 Finally, the amended agreements allow the City to bill the
municipalities for certain “non-capital expenses for incidental maintenance and
supplies incurred directly” in providing service to them. The agreements specify
that the City will bill each municipality for the sewerage treatment charge, capital
costs, and noncapital expenses on a monthly basis.

¶23 The amended agreements treat the license fees differently from these
charges in three important respects. First, the amount of the license fees is not
determined with reference to any actual, estimated, or projected costs or expenses
for “the construction, reconstruction, improvement, extension, operation,
maintenance, repair, and depreciation of the sewerage system.” See WIS. STAT.
§ 66.0821(4)(a). Instead, the fees are determined by multiplying a fixed dollar
amount by the number of “residential equivalent connection[s]” in the municipality
in a specified year and then increasing that amount by four percent in each
subsequent year. Second, and relatedly, the purpose of the fees appears unrelated
to constructing, operating, maintaining, or improving the City’s sewerage system.
Instead, the amended agreements impose the fee obligation “[i]n recognition of”
each municipality’s “receipt of sanitary sewerage service” from the City and “for
the consideration of” that service. Third, the fees are to be paid by March 31 of
each year, rather than monthly. Additionally, the City admitted in discovery that it
does not use the fees to meet the costs and expenses associated with its sewerage
treatment facilities, but instead for payment of general expenses.

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No. 2022AP1649

¶24 Returning to the statutory language, WIS. STAT. § 66.0821(4)(a)
enables a municipality to establish “sewerage service charges” to meet certain costs
associated with its sewerage system. As we recognized in Fred Rueping, these
charges may be assessed “for essentially two purposes: (1) to recover expenses for
construction, reconstruction, improvement, extension, operation, maintenance,
repair and depreciation of the sewerage facility, and (2) to meet debt obligations
incurred because of operational expenses of the system.” Fred Rueping, 99 Wis. 2d
at 4. But the mere fact that municipalities are statutorily empowered to establish
these charges does not mean that any amount paid to a municipality by a user of the
system in connection with sewerage treatment service necessarily constitutes a
“sewerage service charge[]” that must be tied to the municipality’s costs to
construct, operate, maintain, and repair the system. Nor do we see any language in
the statute that expressly or by inference precludes a municipality from receiving
compensation connected to its provision of sewage treatment services in addition to
sewerage service charges.

¶25 Construing the amended agreements as a whole, and the provisions
discussed above in context and as they would reasonably be understood, we agree
with the City that the license fees do not constitute “sewerage service charges” under
WIS. STAT. § 66.0821(4)(a) and that the statute does not preclude the City from
collecting the fees. The language used by the parties to describe the license fees
indicates that they are not intended to meet the costs incurred by the City to maintain
and operate its treatment system, but instead are consideration for the City’s
agreement to extend sewerage treatment services to customers located outside the
City’s borders.

¶26 It is undisputed that two, if not three, of the monthly charges described
in the sections entitled “SEWAGE TREATMENT RATES” are “sewerage service

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No. 2022AP1649

charges.” Those charges are expressly linked to the City’s “acceptance, treatment
and disposal of sewage transmitted … from the [municipalities]” as well as the
City’s “operation and maintenance,” capital costs, depreciation, and other expenses
associated with providing service to the municipalities. Construing the monthly
charges as “sewerage service charges” and the annual license fees as separate
consideration for the City’s agreement to extend its service to the municipalities in
the first place harmonizes these provisions, gives each an independent effect
consistent with its terms, and results in a reasonable interpretation of the
agreements. See Greiling v. Genz, 264 Wis. 146, 154, 59 N.W.2d 241 (1953)
(recognizing the “cardinal principle of [contract] construction that the entire
agreement must be viewed as a whole in construing the intent of the parties, and that
all provisions should, if possible, be so interpreted as to harmonize with each
other”).

¶27 Our decision in Fred Rueping does not compel a contrary conclusion.
In that case, the city of Fond du Lac inserted an “in lieu of tax charge” into a formula
used to charge customers for sewerage treatment services that was based on the
gross book value of fixed assets multiplied by the value of the local and school tax
rate. Fred Rueping, 99 Wis. 2d at 2-3. We concluded that the charge was not
permitted under the predecessor to WIS. STAT. § 66.0821(4)(a) because it did not
reflect the recoverable costs of the sewerage treatment services and thus was not an
allowable method of sewerage treatment cost recovery. Fred Rueping, 99 Wis. 2d
at 5. Fred Rueping did not address the issue here—whether a charge is a sewerage
service charge in the first instance. The license fees at issue here do not factor into
the calculation of the charges owed by the municipalities for sewerage treatment
service. Thus, they need not be tied to the costs that “sewerage service charges” are
required to meet under § 66.0821(4)(a).

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III. WIS. STAT. § 66.0628

¶28 The municipalities next argue that even if the license fees are not
“sewerage service charges” under WIS. STAT. § 66.0821(4)(a), they are subject to
WIS. STAT. § 66.0628(2), which states that “[a]ny fee that is imposed by a political
subdivision shall bear a reasonable relationship to the service for which the fee is
imposed.”6 A fee bears a reasonable relationship to a service under this statute if
“the cost charged by a political subdivision for a service provided to a person [does]
not exceed the political subdivision’s reasonable direct costs that are associated with
any activity undertaken by the political subdivision that is related to the fee.”
Sec. 66.0628(1)(b).

¶29 The parties’ arguments concerning WIS. STAT. § 66.0628(2) are
similar to those they advance under WIS. STAT. § 66.0821(4)(a). The municipalities
contend that the fees do not bear a “reasonable relationship” to the sewerage
treatment services provided by the City because they are not related to the cost of
those services. The City disagrees, arguing that the license fees were not “imposed”
unilaterally by the City, but instead were negotiated by the parties, and that
§ 66.0628(2) does not prohibit the City from negotiating for fees other than those
that fall within the statute. In reply, Lac La Belle argues that it presented evidence
from its former president, George Stumpf, that the fee was “imposed” by the City
because Lac La Belle had no option other than to enter into a sewerage treatment
agreement with the City and the City insisted that the license fee be included in the
agreement.

6
The City is a “[p]olitical subdivision” for the purpose of the statute. See WIS. STAT.
§ 66.0628(1)(a).

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No. 2022AP1649

¶30 Before addressing the parties’ arguments, we note that WIS. STAT.
§ 66.0628(4)(a) provides that

[a]ny person aggrieved by a fee imposed by a political
subdivision because the person does not believe that the fee
bears a reasonable relationship to the service for which the
fee is imposed may appeal the reasonableness of the fee to
the tax appeals commission by filing a petition with the
commission within 90 days after the fee is due and payable.

No party argues that this provision requires aggrieved persons to bring their claims
to the tax appeals commission first. Thus, consistent with a recent decision from
this court, “we leave that question unaddressed and assume the statute still allows
for a separate right of action in the circuit court.” See Garfield Baptist Church v.
City of Pewaukee, No. 2018AP673, unpublished slip op. ¶18 (WI App July 24,
2019).7

¶31 We agree with the City that the license fees do not violate WIS. STAT.
§ 66.0628(2) for two reasons. The first turns on the statutory requirement that the
fee be “imposed by a political subdivision.” Id. Cases arising under the statute
provide examples of such fees. In Edgerton Contractors, Inc. v. City of
Wauwatosa, 2010 WI App 45, ¶¶16-25, 324 Wis. 2d 256, 781 N.W.2d 228, for
example, we considered the reasonableness of an erosion control inspection fee
contained in Wauwatosa’s Consolidated Fee Schedule, which the city adopted by
resolution. Similarly, in Rusk v. City of Milwaukee, 2007 WI App 7, ¶20, 298
Wis. 2d 407, 727 N.W.2d 358 (2006), we held that building reinspection fees
contained in the Milwaukee Code of Ordinances were reasonable under the statute.
In those cases, the cities “imposed” the fees unilaterally through legislative

7
Though unpublished, this court’s opinion in Garfield Baptist Church v. City of
Pewaukee, No. 2018AP673, unpublished slip op. (WI App July 24, 2019), may be cited under WIS.
STAT. RULE 809.23(3)(b).

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No. 2022AP1649

enactments; persons seeking the services for which the fees were associated were
not afforded an opportunity to consent to the fees. Edgerton Contractors, 324
Wis. 2d 256, ¶3; Rusk, 298 Wis. 2d 407, ¶2. In contrast, the license fees at issue in
this case were included in agreements the City negotiated with the municipalities.

¶32 Lac La Belle argues that the fee was “imposed” on it because it had
no other option for wastewater treatment service and the City insisted that the fees
be part of the agreement. Lac La Belle relies on an affidavit from Stumpf as support
for this argument, but the affidavit does not show as a matter of law that the City
“imposed” the fee or create a genuine issue of material fact on that issue. In the
affidavit, Stumpf stated merely that DNR asked that Lac La Belle send its
wastewater to the City and that Stumpf believed that Lac La Belle lacked any other
option for wastewater treatment:

The grant money provided by the DNR to the Village for the
sewer line in the late 1980’s was provided with the request
from the DNR that the Village use the City’s wastewater
treatment facility instead of constructing its own facility. It
was my belief that the Village had no choice but to enter into
an agreement with the City for treatment of its wastewater
given the DNR’s directive.

(Emphases added.) A request that Lac La Belle send its wastewater to the City and
Stumpf’s subjective belief that Lac La Belle lacked any other alternative do not
establish that the City “imposed” the license fee.

¶33 The second reason why the license fees do not violate WIS. STAT.
§ 66.0628(2) is that the fees are not charged for sewerage treatment services. As
discussed above, the amended agreements assess a monthly charge for sewerage
treatment services that is distinct from the license fees. The license fees are separate
consideration for the City’s agreement to extend its wastewater treatment service
beyond its borders. In this respect, the parties’ description of this consideration as

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a fee is somewhat misleading because it is not imposed in exchange for a service or
to regulate or supervise an activity. See Edgerton Contractors, 324 Wis. 2d 256,
¶16 (“When municipalities elect to impose fees for regulation purposes … the fees
must be designed to cover the cost of regulation and must be reasonable.”); M&I
First Nat’l Bank v. Episcopal Homes Mgmt., Inc., 195 Wis. 2d 485, 501, 536
N.W.2d 175 (Ct. App. 1995) (stating that the “labels which parties use in their
agreements are not always controlling”).

IV. Other Arguments

¶34 The municipalities advance several other arguments as to why the
license fees are invalid, but none is persuasive. First, they argue that even if the fees
are not unlawful under WIS. STAT. §§ 66.0628 and 66.0821, there is no legal
authority that permits the City to assess them. The circuit court cited two statutes,
WIS. STAT. §§ 62.11(5) and 62.04, as providing broad authority to the City to
negotiate for the license fees. We agree with the circuit court’s conclusion.

¶35 WISCONSIN STAT. § 66.0301(2) specifically authorizes “any
municipality [to] contract with other municipalities … for the receipt or furnishing
of services.” Mary Lane and Ixonia acknowledge this statute but point out that
§ 66.0301(2) provides that a municipality may only “act under the contract to the
extent of its lawful powers and duties” and argue that it does not give the City
“substantive authority” to collect the license fees. Even if some additional authority
were required, WIS. STAT. §§ 62.04 and 62.11(5) authorize the City to agree to
extend its wastewater treatment service to the municipalities in exchange for the
license fees.

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¶36 WISCONSIN STAT. § 62.11(5), which addresses the powers held by the
common council of a city, states as follows:

Except as elsewhere in the statutes specifically provided, the
council shall have the management and control of the city
property, finances, highways, navigable waters, and the
public service, and shall have power to act for the
government and good order of the city, for its commercial
benefit, and for the health, safety, and welfare of the public,
and may carry out its powers by license, regulation,
suppression, borrowing of money, tax levy, appropriation,
fine, imprisonment, confiscation, and other necessary or
convenient means. The powers hereby conferred shall be in
addition to all other grants, and shall be limited only by
express language.

WISCONSIN STAT. § 62.04 directs us to construe the authority conferred in
§ 62.11(5) broadly:

For the purpose of giving to cities the largest measure of self-
government compatible with the constitution and general
law, it is hereby declared that [WIS. STAT. §§] 62.01 to 62.26
shall be liberally construed in favor of the rights, powers and
privileges of cities to promote the general welfare, peace,
good order and prosperity of such cities and the inhabitants
thereof.

As we have previously recognized, these statutes confer upon cities “all powers not
denied them by other statutes or the constitution.” Metropolitan Milwaukee Ass’n
of Com., Inc. v. City of Milwaukee, 2011 WI App 45, ¶81, 332 Wis. 2d 459, 798
N.W.2d 287. Together, they confer wide-ranging authority on a city’s governing
body to manage and control the city’s property and to act for the city’s “commercial
benefit” and the wellbeing of its residents through “license, regulation, … and other
necessary or convenient means.” Sec. 62.11(5). Here, the City decided to make
certain of its property available to the municipalities for wastewater treatment
service on the terms and conditions it negotiated in the amended agreements.
Section 62.11(5) unquestionably conferred authority upon the City to do so.

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¶37 The municipalities disagree, citing WIS. STAT. §§ 66.0628 and
66.0821(4)(a) as express limitations on the City’s authority with respect to sewerage
treatment charges. They also argue that §§ 66.0628 and 66.0821(4)(a) are the more
recent and specific—and therefore controlling—statutes applicable in this case. See
Kramer v. City of Hayward, 57 Wis. 2d 302, 311, 203 Wis. 2d 871 (1973) (citing
“the rule that the specific statute controls when a specific statute and general statute
relate to the same subject matter”); Nicolet Mins. Co. v. Town of Nashville, 2002
WI App 50, ¶17, 250 Wis. 2d 831, 641 N.W.2d 497 (stating that “a more recent
statute controls and exists as an exception to a general statute covering the same
subject matter” (citation omitted)).

¶38 The municipalities’ arguments fail because, as we have explained,
neither WIS. STAT. § 66.0628 nor WIS. STAT. § 66.0821(4)(a) apply to the license
fees. Those statutes are neither more recent nor more specific on the subject of the
license fees and thus do not control over, or provide an exception to, the broad
authority conferred by WIS. STAT. § 62.11(5).8

¶39 Finally, Lac La Belle argues that the license fee was not “freely
bargained” because DNR “instructed” it to contract with the City for wastewater
treatment services. Lac La Belle points to the Stumpf affidavit for support, but as
we explained above, Stumpf stated only that DNR “request[ed]” that Lac La Belle
use the City’s wastewater treatment facility and that he believed it lacked other
viable options for this service. These statements are simply not sufficient to

8
For the same reason, we reject Lac La Belle’s argument that the license fee provisions
are ultra vires.

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No. 2022AP1649

establish that Lac La Belle did not freely and voluntarily consent to the license fee
provision in its contract.9

¶40 Lac La Belle also argues that contracts for the provision of critical
public services like sewerage treatment should not generally be thought of as freely
bargained because “the public necessity of such services dictates each municipality
cannot simply press its leverage and demand the maximum ‘the market will bear.’”
Because municipalities must arrange for sewerage treatment, this argument goes,
they face “an inherent imbalance in negotiating power” that warrants, as a matter of
public policy, the invalidation of any contract provisions that are unreasonable.

¶41 We reject this argument for two reasons. First, the only source of
public policy identified by Lac La Belle are the two statutes we have concluded do
not apply to the license fees, WIS. STAT. §§ 66.0628 and 66.0821. Lac La Belle
points to no other statute, regulation, or judicial opinion as support for a public
policy restricting the permissible terms of contracts for critical public services to
those that are reasonable.

¶42 Moreover, Lac La Belle directs us to no rules, standards, or guidelines
by which we might assess the reasonableness of the license fees. As the City notes,
our supreme court previously concluded that several statutes pertaining to
annexation of unincorporated areas by a city and the extension of sewerage service
to those areas reflect a legislative judgment that annexation is “a reasonable quid
pro quo that a city could require before extending sewer services to the area.”

9
We note that neither Lac La Belle nor any of the other municipalities sought to invalidate
the license fee provisions in the contracts on the grounds that they were involuntary,
unconscionable, or lacking in consideration. Their sole request is based on public policy grounds,
which is better addressed to the legislature and governor, particularly given the comprehensive
statutory scheme we have addressed.

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See Town of Hallie v. City of Chippewa Falls, 105 Wis. 2d 533, 540-41, 314
N.W.2d 321 (1982). If a city may reasonably insist on annexing unincorporated
territory before providing sewerage treatment service to it, why could it not instead
condition the extension of such service beyond its borders, which arguably puts it
in a less competitive position vis-à-vis economic growth and development, on the
payment of compensation like the license fees at issue here? Why would annexation
be a reasonable quid pro quo, but not payment of the license fees? Lac La Belle
offers no answers to these questions and points us to no legal standards we could
use to answer them. Absent such guidance, we decline to impose our own
evaluation of the reasonableness of the license fees on the parties’ agreements.

CONCLUSION

¶43 For the reasons stated above, the license fees are not “sewerage
service charges” for the purpose of WIS. STAT. § 66.0821(4)(a) and are not subject
to WIS. STAT. § 66.0628(2). Nor have the municipalities established that the City
lacked the authority to negotiate the license fees into its wastewater treatment
services agreements with them. The municipalities may regret agreeing to pay the
fees, but they have not carried their burden to show that the circuit court erred in
concluding that the fee provisions are valid and enforceable. Accordingly, the
circuit court’s order granting the City’s summary judgment motion is affirmed.

By the Court.—Order affirmed.

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