Washington County District Court File No. 82-CV-13-832
Frederic W. Knaak, Wayne B. Holstad, Holstad & Knaak, P.L.C., St. Paul, Minnesota (for appellants)
James J. Thomson, Kennedy & Graven, Chartered, Minneapolis, Minnesota (for respondents)
Considered and decided by Rodenberg, Presiding Judge; Larkin, Judge; and Chutich, Judge.
1. The requirements of Minnesota Statutes section 475.521 do not apply to an economic development authority that issues revenue bonds that finance capital improvements.
2. An economic development authority is not required to hold an election before issuing, under Minnesota Statutes section 469.103, revenue bonds that finance capital improvements.
On appeal from summary judgment, appellants Lakes Area Business Association, Cameron and Cassandra Piper, and William Anderson contest respondent Forest Lake Economic Development Corporation's issuance of bonds to finance a redevelopment project in Forest Lake. Appellants contend that an election should have been held before the bonds were issued. Because the bonds were revenue bonds issued by an economic development authority, and because an economic development authority is not required to follow Minnesota Statutes section 475.521 (2012) before issuing revenue bonds to finance capital improvements, we affirm.
In 2007, the City of Forest Lake (city) began considering whether to relocate its city hall and public-safety building. On November 7, 2012, the city, the Forest Lake Economic Development Corporation (referred to by respondents as the Forest Lake Economic Development Authority (the Forest Lake Authority)), and Pace Development, Inc. (Pace) entered into a development agreement. Under the agreement, the Forest Lake Authority purchased certain real property from Pace "for the purpose of constructing and thereafter leasing to the City a multipurpose municipal facility." The property includes most of Northland Mall, a largely vacant strip mall located south of downtown Forest Lake.
The Forest Lake Authority planned to demolish the existing structure, construct a city hall and public-safety facility, and sell three of the lots for private commercial development. According to Aaron Parrish, the city administrator, the Forest Lake Authority "issued revenue bonds that were secured by a lease with the City to support the debt service on the bonds" in the approximate amount of $22.5 million, $1.95 million of which was used to purchase the property. The balance of the bond proceeds was to be used to develop, design, and construct the redevelopment project.
On December 21, 2012, the city received from appellant Cameron Piper a "petition requesting vote on bonds" that contained the signatures of Forest Lake residents. The petition states:
We, the undersigned eligible voters of the City of Forest Lake, pursuant to Minnesota Statutes [section] 475.521, request a vote on the issuance of bonds in the amount of no more than [$22.5 million] to finance the acquisition of land and improvements for and construction of a city hall and public s[a]fety building.
The city did not act on the petition. On that same day, the Forest Lake Authority closed on the purchase of the property.
On February 19, 2013, appellants filed a complaint in district court. Count one alleged that "the actions of the City, in conjunction with the [Forest Lake Authority] in their common scheme  to purchase the Mall without permitting a referendum demanded by citizens in the City as provided by law is illegal and contrary to Minnesota law." Count two asserted that the "actions of the City and the [Forest Lake Authority] have immediately and directly injured the Plaintiff individual taxpayers and other taxpayers in the City by spending, for improper and illegal reasons, public funds for the benefit of individuals and not the City as a whole." Appellants requested a declaratory judgment that (1) "the City must receive the petition demanding a referendum on the ...