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Harstad v. City of Woodbury

Court of Appeals of Minnesota

September 18, 2017

Martin M. Harstad, et al., Respondents,
v.
City of Woodbury, Appellant.

         Washington County District Court File No. 82-CV-16-115

          Gary A. Van Cleve, Rob A. Stefonowicz, Larkin Hoffman Daly & Lindgren Ltd., Minneapolis, Minnesota (for respondents)

          George C. Hoff, Justin L. Templin, Hoff Barry, P.A., Eden Prairie, Minnesota (for appellant)

          James A. Yarosh, Mark Thieroff, Siegel Brill, P.A., Minneapolis, Minnesota (for amicus curiae Franklin P. Kottschade, et al.)

          Susan L. Naughton, League of Minnesota Cities, St. Paul, Minnesota (for amicus curiae League of Minnesota Cities)

          Considered and decided by Bratvold, Presiding Judge; Rodenberg, Judge; and Jesson, Judge.

         SYLLABUS

         A statutory city lacks express or implied authority under Minn. Stat. § 462.358, subd. 2a (2016), to impose a road assessment as a condition for its approval of a developer's subdivision application.

          OPINION

          BRATVOLD, Judge

         In this declaratory-judgment action, appellant/cross-respondent city challenges the district court's ruling that its road assessment is unlawful. By notice of related appeal, respondent/cross-appellant developer challenges the district court's determinations that its temporary regulatory-takings claim is moot, and that its subdivision application was not approved by operation of law under Minn. Stat. §§ 15.99, subd. 2(a), and 462.358, subd. 3b (2016). We affirm the district court's judgment on all claims.

         FACTS

         Appellant/cross-respondent City of Woodbury (the city) has allocated undeveloped land into three "phases" and has identified "roadway needs" caused by "increased traffic and trips that are generated" by expected development within each phase. Roadway needs include reconstructing existing roads, as well as constructing new roads. Respondent/cross-appellant Martin Harstad seeks to develop 77 acres of phase-two land into a 183-home residential community called "Bailey Park."[1] In this appeal, Harstad challenges the city's decision to condition approval of a subdivision application on payment of a road assessment.

         The city's ordinance provides that it may not approve a proposed subdivision that is "deemed premature." Woodbury, Minn., Code of Ordinances, § 21-16 (2016). The city may deem a subdivision "premature" if streets "to serve the proposed subdivision" are not "available, " which is defined as streets "existing or readily extended and funded" as "consistent with the phasing in the comprehensive plan." Id. § 21-16(e). The city's resolution provides that a new residential development "pays its own way" and "all associated costs" for "public infrastructure" will "be the sole responsibility of the developing property owner." Relevant to this appeal, the city's resolution directs that roadway improvement costs "will normally be collected at the time a property develops per a negotiated major roadway contribution, " also called a "major roadway assessment" (MRA). According to a city official, "prematurity can be avoided if an agreed upon MRA contribution is made."

         The resolution also sets out a formula to calculate the MRA, dividing the total expected cost of improvements by the net developable acreage in each phase to arrive at a per-acre fee. Based on the MRA formula, the city estimated that phase-two developers must pay $20, 230 per acre to fund necessary road improvements. The record evidence established that the city used this per-acre estimate as a "proposal" in "opening negotiation with the development community." The city memorialized the final MRA imposed against a developer in an agreement and described it as a "negotiated contribution."[2]

         On July 23, 2015, Harstad submitted the Bailey Park application to the city. On July 27, 2015, the city sent a letter summarizing deficiencies in the Bailey Park application and stating that it was incomplete. On July 29, Harstad's architect responded in an e-mail. On July 30, the city replied that all deficiencies had been satisfied, except the "items required within 200 feet" of the proposed development. The city stated that "[t]hese items are not necessary for this project to proceed to Planning Commission later in August but the application is considered incomplete from a 60-day rule process without them." Harstad's architect replied that "we will make sure we meet the 200' overlap" on any future resubmittals.

         On August 5, 2015, the city project manager completed a five-day review memorandum to determine "[s]ubmittal completeness." The memorandum listed all of the requirements needed for a complete application with boxes next to each requirement for "complete, " "not complete, " and "not applicable." Two requirements had boxes that were checked "not complete." The 200-foot requirements, which had been incomplete as of July 30, were indicated as "complete" on the memorandum. The memorandum concluded by stating that "[f]urther comments or conditions may need to be addressed" after Harstad submitted revised plans.

         The next day, on August 6, the city project manager left Harstad a voice message, telling Harstad not to "put too much stock into that five-day review" because it was "just a checklist" and "just details." The project manager also stated that she understood why Harstad's plans did not include one of the requirements marked incomplete on the memorandum and "I don't want to say ignore it, but basically ignore that." The project manager concluded that she would get back to Harstad after completing a "full comment letter" and meeting with her staff.

         On September 18, 2015, the city completed a memorandum containing 64 preliminary plat comments and conditions. The memorandum stated that the developer should submit "revised plans addressing these items, " which the city would review, and may result in additional "comments or conditions." The record does not establish that Harstad submitted revised plans.

         No further correspondence occurred regarding the Bailey Park application until November 13, 2015, when the city sent Harstad a memorandum stating proposed area and connection charges for Bailey Park, including a "proposed" MRA of $1, 389, 444. The memorandum stated that "[m]ajor roadway and intersection improvements (i.e., roundabouts, signals, etc.) will be required to accommodate traffic generated by Bailey Park and surrounding areas."

         In a meeting with a senior city planner in December 2015, Harstad objected to paying the MRA and argued the city was required to approve the Bailey Park application because the city had failed to deny it within the applicable statutory time periods. In a letter, the city responded that the Bailey Park application was incomplete because Harstad had not remedied all the deficiencies listed in the July 27 letter. The city told Harstad that the statutory time periods for automatic application approval had not begun to run.

         On January 12, 2016, Harstad filed a verified complaint and petition for a writ of mandamus, alleging ten counts that amount to three claims.[3] First, Harstad sought a declaration that the MRA is unauthorized by Minnesota law and unenforceable. Second, Harstad brought an inverse condemnation claim, alleging that the MRA amounted to a temporary regulatory taking (takings claim). Third, Harstad sought relief compelling the city to approve the Bailey Park application because it had failed to deny the application within the statutory review periods under Minn. Stat. §§ 15.99, subd. 2(a), and 462.358, subd. 3b. During this litigation, the Bailey Park application stalled.

         The parties filed cross-motions for summary judgment. In September 2016, the district court entered summary judgment in favor of the city on all counts. The district court dismissed the MRA and takings claims without prejudice, concluding they were not ripe for judicial review. The district court also dismissed Harstad's application-approval claim with prejudice, reasoning that the time periods for automatic approval under sections 15.99, subdivision 2(a), and 462.358, subdivision 3b, had not begun to run because the Bailey Park application was incomplete.

         In November 2016, after Harstad received reconsideration, the district court vacated its dismissal of the MRA and takings claims. Initially, the district court concluded that the claims were ripe because "Woodbury has indicated to Harstad that it intends to propose that the MRA be imposed on Harstad's development, " and it was in the parties' interests "to be relieved of the uncertainty" about the MRA's legality. The district court also concluded that the MRA was a development "impact fee" and that the city lacked statutory authority under Minn. Stat. § 462.358, subd. 2a, to impose the MRA as a condition of approving a developer's subdivision application. The district court declared the MRA unenforceable and entered partial summary judgment in favor of Harstad on the MRA and takings claims.

         The city filed a letter brief with the district court, arguing that the November order declaring the MRA illegal rendered moot Harstad's takings claim and, therefore, the district court should have dismissed that claim. The district court agreed because the city had "neither imposed nor collected" the MRA from Harstad. Therefore, the district court issued a new order that dismissed Harstad's takings claim with prejudice. As a result of all three summary-judgment decisions, the district court dismissed all but two of the counts in Harstad's complaint with prejudice and directed entry of judgment in favor of Harstad on the two remaining MRA counts. This appeal followed.

         ISSUES

I. Did the district court err in its determination that the city lacks express or implied authority under Minn. Stat. ยง 462.358, subd. 2a, to impose the MRA as a condition of ...

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