When you can’t get what you want by regulation, try litigation. That’s what one family has decided to do, after losing millions on a land deal with Wal-Mart. On December 7, 2005, Sprawl-Busters reported that the City Council in Frankenmuth, Michigan, a beautiful small community known as the “Little Bavaria” of Michigan, had voted to cap the size of retail stores at 65,000 s.f. in one growth zone on the edge of the city. The city assumed, at the time, that their action could precipitate a lawsuit by Wal-Mart, which wanted to build a superstore on the outskirts of this quaint city. “I don’t feel this ordinance is discriminatory,” Mayor Gary C. Rupprecht said in 2005. “But this isn’t over. There’s always the option of litigation.” Wal-Mart’s lawyer said the cap was “exclusionary spot zoning” that lacks a “legitimate public purpose.” “There are problems with this particular proposal, constitutionally speaking,” Wal-Mart’s lawyer warned. “I would urge you to consult your attorney again.” Wal-Mart huffed and puffed, but they never challenged the size cap law. Wal-Mart wanted to build a 143,000-square-foot Wal-Mart Supercenter, but more than 3,000 people concerned about increased crime, traffic and drain on local businesses have signed petitions against the world’s largest retailer. A joint study by the Frankenmuth Economic Development Corp. and Downtown Development Authority released in December of 2005 estimated that a Wal-Mart supercenter would sap $9 million annually from local businesses. The size ordinance, passed Nov. 22, 2005 by the Planning Commission, does not apply to businesses in the entire city. It is aimed at a developing area covering less than 1 square mile along M-83 north of the city’s center. Robert Labelle, an attorney for the anti-Wal-Mart group Citizens for Frankenmuth First, said the ordinance was legal, and that at least 35 other municipalities have adopted big-box measures. “If Frankenmuth can’t adopt this ordinance,” Labelle told the Saginaw News, “no one can.” The Frankenmuth City Council had already passed an ordinance limiting 24-hour retail operations, and requiring businesses to have extensive landscaping and a traffic impact study. Wal-Mart’s regional rep told the media, “I’m concerned that the few are blocking what many want in their community, and what they want is Wal-Mart.” The same spokesman told ABC 12 News: “It is unfortunate when Wal-Mart decided to be a part of this community. It seems every effort was made to block it.” But this week, two people with a special financial interest are “the few” who are trying to block what the city decided was a proper zoning tool to limit growth. Landowners Ronald Loesel, and his brother Arthur, who live now in Lady Lake. Florida, are suing the city they used to live in, for keeping them from making millions off their family’s farmland. “When I look around I see banks, auto dealerships and a shopping mall up the street,” Loesel said at a press conference this week. “I see no reason why a Wal-Mart wouldn’t fit in here.” The Loesel brothers’ lawsuit filed on March 17th seeks damages of $4 million — an amount the brothers say they lost when Frankenmuth officials “improperly” rezoned their 37-acre property by limiting any potential big-box retail development to 65,000 s.f. When the city passed its cap, Wal-Mart backed out of its purchase agreement with the Loesels — but only after fighting with the town for an entire year. Ronald Loesel, who held the press conference without his brother, has his lawyer and a PR firm in tow. He claimed that the city had violated his civil rights. “It never felt right,” Loesel said, charging that Frankenmuth officials unfairly protected local merchants, instead of dealing with Wal-Mart in good faith. “All of a sudden, they changed the rules in the middle of the game.” Loesel’s lawyer used the term “economic protectionism” in referring to the size cap law. The lawsuit will be heard in U.S. District Court in Bay City, Michigan.
Frankenmuth City Manager Charles Graham told the Saginaw News that city officials were merely managing the community’s growth. Judith McCann, one of the founders of Citizens for Frankenmuth First, a grassroots group that sponsored a 2005 Sprawl-Buster’s visit to this town for assistance, said that local residents were worried about crime, traffic, and impact on the local economy of huge superstores. “We did what we felt was in the best interest of the community,” she said. “There are other places where this would fit better.” It’s instructive that Wal-Mart chose not to file a lawsuit. The fact is, zoning power derives from the local police powers of municipalities. Cities and towns have the right to restrict the size and location of land uses. They can set up a zone with unlimited size, and they can set up a zone with limited size. If Wal-Mart does not like what a community comes up with, they can either live by the same limits other retailers must live with, or move to another town that does not care about scale. Many communities have commercial zones with differing requirements by location. In Frankenmuth, they obviously care about scale, and that’s hard to grasp with Wal-Mart’s one-size-fits-all mentality. Wal-Mart has never overturned a simple size cap proposal in court. Size limits are a fundamental control over zoning, similar to height restrictions. Maintaining scale and character of a community by regulating size is a legitimate public purpose. The Loesal’s want their $4 million — but they are not likely to prevail, no matter how many lawyers, and how many lawsuits they file.
