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Concept Properties, LLP v. City of Minnetrista

April 19, 2005


Hennepin County District Court File No. AP 03-9919.

Considered and decided by Minge, Presiding Judge; Wright, Judge; and Crippen, Judge.*fn1


1. A municipality's decision to redraw its Metropolitan Urban Services Area (MUSA) line as part of a comprehensive plan update is not unreasonable when the municipality predicates its decision on over 12 months of public meetings, bases its decision on the public commitment to rural character and an assessment of available resources, and reduces the MUSA to comply with the Metropolitan Council's directives.

2. A municipality's denial of an application to rezone and amend its comprehensive plan is not arbitrary or capricious when its decision is based on a desire to conform to the recently drafted comprehensive plan and the landowner does not present a compelling reason for amendment.

3. An agency may cure a violation of the simultaneous-written-findings requirement of Minn. Stat. § 15.99, subd. 2 (2002), by rendering a second decision with simultaneous written findings within the statutory or agreed-upon time limit as long as the agency's decision-making process demonstrates an absence of bad faith.

The opinion of the court was delivered by: Wright, Judge



This dispute arises from a series of land-use decisions by respondent City of Minnetrista (the City), which resulted in removing appellant's land from the Metropolitan Urban Services Area (MUSA) and staging its inclusion in the MUSA after 2020. Appellant Concept Properties, LLP, sued the City after the City rejected appellant's attempts to have the property returned to the MUSA at an earlier date and rezoned for residential development at urban densities. The district court entered summary judgment for the City.

On appeal, appellant argues that summary judgment was erroneously entered because the City acted arbitrarily (a) in staging the land for MUSA inclusion after 2020 as part of its 1998 comprehensive plan revisions when the land was formerly part of the MUSA; and (b) in denying appellant's application to have the land returned to the MUSA and rezoned for development at urban densities. Appellant also argues that removing the property from the MUSA after collecting a sewer assessment from a former owner of the property (a) violates appellant's vested right to connect to the city sewer; (b) is barred under the doctrine of equitable estoppel; (c) constitutes an unconstitutional taking, in violation of Minn. Const. art 1, § 13; and (d) deprives appellant of substantive due process of law. Finally, appellant argues that the City failed to comply with Minn. Stat. § 15.99 (2002), thereby warranting automatic approval of appellant's rezoning application. We affirm.


The parties agree that the facts are undisputed. Appellant Concept Properties owns approximately 48.7 acres of real property located at the southwest corner of Halstead Drive and County Road 110W (the subject property) in the city of Minnetrista.

In 1975, a former owner of the subject property paid a $28,020 sewer assessment to the City for sanitary sewer trunk improvements as part of a project designed to expand and improve the sanitary sewer system in the area west of Lake Minnetonka for future development. The City assessed all properties that were then in the MUSA because these properties were anticipated to have sewer availability within the next 20 years. The City, however, did not permit all properties to connect to the sewer upon payment of the assessment. Rather, the benefit conveyed by the assessment was the property's proximity to the sewer.

The MUSA is the designated portion of the metropolitan area in which governmental agencies support urban development by providing necessary public facilities and services, including sewer service. The subject property was represented to be in the MUSA in 1975 and again in the City's 1981 Comprehensive Land Use Plan. In the mid-1980s, however, the City's MUSA was reduced to meet requirements set by the Metropolitan Council. The 1992 comprehensive plan indicates that the subject property was zoned Residential Agriculture (RA), was "guided for rural use," and was part of a "sewer-benefited area."*fn2 The record is unclear as to exactly when the subject property was removed from the MUSA, but as of January 27, 1998, the subject property was no longer within the MUSA.

In 1995, the Minnesota Legislature passed a law requiring all cities to update their comprehensive plans by the end of 1998. 1995 Minn. Laws ch. 176, § 9 (codified at Minn. Stat. § 473.864, subd. 2 (2004)). In 1997, the City began the process of updating its comprehensive plan. As part of this process, Wara Real Estate, the then owner of the subject property, asked the City Planning Commission to stage the subject property for inclusion in the MUSA in 1998. At a planning commission meeting on March 30, 1998, the Planning Commission noted, however, that the subject property was not slated for MUSA inclusion or residential development at urban densities until 2005. At the meeting, the Planning Commission voted 5 to 1 to delay urban development of the subject property until 2010, reasoning that inclusion of the subject property in the MUSA at an earlier date would be "too much, too soon." During its June 15, 1998 meeting, the City Council concurred with the Planning Commission and designated the subject property "MUSA 2010-2015." The City Council also decided that the subject property would retain its current RA zoning classification, which requires a minimum lot size of three acres.

The City Council adopted its 1998 comprehensive plan on June 29, 1998, subject to Metropolitan Council review. See Minn. Stat. § 473.858, subd. 1 (2004) (requiring city to submit completed comprehensive plan to Metropolitan Council for review). The Metropolitan Council rejected the City's comprehensive plan, however, because it did not comport with the regional plan for the seven-county metropolitan area. The Metropolitan Council directed the City to revise the comprehensive plan to designate an "urban reserve" area and implement corresponding zoning ordinances.

The Metropolitan Council also required the City to reduce the MUSA's rate of expansion because "the plan called for a MUSA more than double what would be needed to accommodate the forecasts." Thus, at the direction of the Metropolitan Council, the City rezoned the subject property, along with approximately 75 other parcels, as an urban reserve area and redesignated it "beyond 2020 MUSA." As part of the urban reserve area, the subject property is a staged development district (SDD), which requires a minimum lot size of ten acres, instead of the former three-acre minimum. As a result, the subject property cannot be developed for single-family residential use at urban densities until after 2020.

On April 22, 1999, the Commission held a public meeting to discuss the MUSA adjustments. Although notice of the meeting was sent to Chuck Alcon at Wara Real Estate and published in the local paper, no representative for the subject property attended the meeting. The City Council adopted the final comprehensive plan on May 17, 1999.

In October 1998, in the midst of the City's revision of the comprehensive plan to incorporate the regional policies outlined by the Metropolitan Council, Concept Properties purchased the subject property from Wara Real Estate. Prior to Concept Properties' purchase, the City represented to Concept Properties that, based on the comprehensive plan, the subject property would be included in the MUSA in 2005, without advising Concept Properties that the comprehensive plan would be undergoing further revisions.

In March 2002, after Concept Properties learned that it could not develop the subject property for single-family residential use until after 2020, Concept Properties submitted an application to the City to amend the comprehensive plan by placing the subject property in the MUSA. Concept Properties also requested that the subject property be rezoned from a SDD to a medium-density single-family residential district (R2), which would permit a 20,000-square-foot lot minimum rather than a 10-acre minimum.

The city engineer reviewed Concept Properties' application and determined that "adequate infrastructure appeared to be in place" but a water tower would be necessary to serve the property. On April 22, 2002, the Planning Commission held a public hearing on the application. Members of the public voiced numerous concerns about developing the subject property, citing drainage, density, traffic, and safety issues. The Planning Commission voted to grant Concept Properties' request to include the subject property in the MUSA, but it denied the rezoning request.

In May 2002, the City Council held additional public meetings on the application, at which the public raised similar concerns about increased density. Concept Properties granted the City several written extensions of the 60-day statutory deadline for zoning-application decisions to facilitate further research and additional consideration of the application. May 27, 2003, was the final deadline. The City Council resumed discussion of the application at its meeting on March 3, 2003, during which the mayor, council members, and landowners debated the merits of Concept Properties' application.

On May 5, 2003, after more discussion, the City Council denied Concept Properties' requests by oral vote of 3 to 2. A resolution with formal findings of denial was issued on May 19, 2003, in conjunction with a vote of 5 to 0 to deny the application.

In denying Concept Properties' application, the City found in pertinent part that (1) the SDD zoning designation was consistent with the subject property's status as "urban reserve" according to the comprehensive plan, and R2 zoning would be inconsistent with the comprehensive plan; (2) there was no compelling reason to amend the comprehensive plan; and (3) the City could not serve the subject property, if developed as requested, with an adequate supply of water for fire protection services unless the City constructed an additional water tower, which was not provided for in its capital improvement plan. On May 27, 2003, the City mailed a copy of the findings to Concept Properties' representative.

Concept Properties brought an action in district court, alleging that the City's decisions to shift the subject property to the "beyond 2020" MUSA category in the comprehensive plan and to deny its subsequent request to place the subject property back in the MUSA were arbitrary and capricious. Concept Properties also alleged that, by assessing the subject property for sewer improvements in 1975 and later removing the property from the MUSA, the City denied it procedural and substantive due process, impermissibly took property without just compensation, violated its vested right to connect to the sewer, and denied it equal protection of the law. Concept Properties further alleged violations of Minn. Stat. § 15.99 (2002). After the City filed notice to remove the action to federal court, Concept Properties voluntarily dismissed its federal constitutional claims.

The City moved for partial summary judgment on the issue of the City's compliance with Minn. Stat. § 15.99, which was granted. The City and Concept Properties later filed cross-motions for summary judgment on Concept Properties' remaining claims, and the district court granted summary judgment in favor of the City. This appeal followed.


I. Was respondent-City's decision, as part of its comprehensive plan revisions, to designate the subject property for inclusion in the MUSA after 2020 arbitrary and capricious?

II. Was respondent-City's reliance on its comprehensive plan a sufficient legal basis for its decision to deny appellant's application to revise the MUSA to include the subject property and to rezone the subject property to allow 20,000-square-foot lots?

III. Does appellant possess a vested right to connect to the city sewer based on a prior landowner's payment of an assessment for sewer improvements?

IV. Is respondent-City estopped from denying a request for the subject property to be included in the MUSA when respondent-City collected a sewer assessment from a prior landowner for sewer improvements?

V. Did respondent-City impermissibly take appellant's property without just compensation by designating the subject property for inclusion in the MUSA after 2020, when a sewer assessment had been paid?

VI. Did respondent-City violate appellant's right to substantive due process by designating the subject property for inclusion in the MUSA after 2020, when a sewer assessment had been paid?

VII. Did respondent-City violate Minn. Stat. ยง 15.99, subd. 2 (2002), by failing to state the reasons for denial at the time of its oral decision to deny a rezoning application and by failing to send the subsequent written findings ...

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