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In re Dahlgren Township

Court of Appeals of Minnesota

December 18, 2017

In re the Matter of Dahlgren Township, City of Carver and the Commissioner of the Office of Administrative Hearings, Minnesota Attorney General's Office

         Carver County District Court File No. 10-CV-16-657

          Lori Swanson, Attorney General, Nathan J. Hartshorn, Assistant Attorney General, St. Paul, Minnesota (for appellant Minnesota Office of Administrative Hearings)

          Robert T. Ruppe, Michael C. Couri, Couri & Ruppe, P.L.L.P., St. Michael, Minnesota (for respondent Dahlgren Township)

          Matthew D. McDougall, R. Lawrence Harris, Melchert Hubert Sjodin, PLLP, Waconia, Minnesota (for respondent City of Carver)

          Considered and decided by Smith, Tracy M., Presiding Judge; Schellhas, Judge; and Smith, John, Judge.

         SYLLABUS

         When parties to an orderly annexation agreement agree to a tax-reimbursement amount, Minn. Stat. § 414.036 (2016) does not restrict that amount.

          OPINION

          SMITH, TRACY M., Judge

         Appellant Office of Administrative Hearings (OAH) appeals the district court's order vacating portions of two OAH orders regarding the orderly annexation of a parcel of real property from respondent Dahlgren Township (the township) to respondent City of Carver (the city).

         The district court concluded that (1) the tax-reimbursement provision of the city and the township's orderly annexation agreement (the agreement) was not preempted by Minn. Stat. § 414.036 and (2) OAH could not assess its costs in this matter to the city and the township, and, even if it could, it had failed to justify its particular allocation of costs. OAH argues that the district court erred in determining that the agreement was not preempted by Minn. Stat. § 414.036 and in holding that OAH could not assess its costs. OAH also asks this court to hold that the city and the township cannot make payment of tax reimbursement by a property owner a condition of annexation.

         Because we agree with the district court on the ultimate outcome regarding the tax-reimbursement amount-although for a different reason-and the assessment of costs, and because we conclude that OAH's third request currently presents a nonjusticiable controversy, we affirm.

         FACTS

         In 2009, the city and the township entered into an orderly annexation agreement that sets out the terms and conditions by which an area of land within the township's borders can be annexed to the city. The agreement provides that the city will not annex any parcel of property within the designated area "until such time as the Township has received reimbursement for the loss of such taxable property in the amount of $500 for each acre described in the City resolution to be annexed to the City. Tax exempt property at time of annexation is not subject to tax reimbursement." The agreement does not specify who must pay this reimbursement.

         In February 2016, the Community Asset Development Group L.L.C. (CADG) decided to purchase and develop property owned by Diedrich and Jeanette Lenzen and located within the area designated for annexation (the property). CADG's planned usage required the extension of the city's utility service to the property, so the Lenzens petitioned the city for immediate orderly annexation. When the Lenzens submitted their petition to the city's city planner, the city planner told them that, in order to process the petition, "a fee of $500 per acre is to be paid to the Township." As a result, CADG, which had not yet purchased the property, issued a check to the township for $2, 165. After the township received the payment, the city passed a resolution to annex the property.

         The city's resolution and a filing fee were submitted to OAH with a request to issue an annexation order. OAH issued an order requiring the city or the township to supplement the record regarding the township's "practice of charging the property owner a fee of $500 per acre for tax reimbursement for the loss to the Township." This order did not approve the annexation. The township complied with OAH's order, and OAH issued an order approving the annexation on the condition that the township return the $2, 165 payment to the Lenzens (OAH was unaware at this time that CADG, not the Lenzens, had paid the reimbursement), authorizing the township to collect from the city $247.61 (the amount the Lenzens had paid in property taxes the previous year), and assessing the city and the township 50% each of OAH's costs for handling the matter. The city and the township sought amendment of that order, indicating to OAH for the first time that CADG, not the Lenzens, had paid the tax reimbursement. Based on this information, OAH issued a new order vacating the prior order and requiring the city or the township to supplement the record regarding CADG's interest in the property, which the city did.

         On June 15, OAH issued an order (the first amended order) approving the annexation contingent on the city adopting a resolution in support of annexation correctly describing the property, [1] authorizing the township to collect $247.61 from the city, and assessing the city and the township 50% each of OAH's costs. This order did not require the township to repay the $2, 165 to CADG as a condition of annexation; however, it did note that the township lacked authority to charge the Lenzens for tax reimbursement and that OAH had no jurisdiction to determine whether the township had any authority to charge non-property-owners for tax reimbursement. The city adopted a resolution correctly describing the property, and on June 21, OAH issued an order (the second amended order) that ordered annexation and kept all other terms and conditions of the first amended order in effect.

         The city and the township both appealed the first and second amended orders to the district court. Although their appeals were not identical, both challenged the provisions of the orders that (1) limited the amount of the tax reimbursement to which the parties could agree and (2) imposed OAH's costs in this matter on the city and the township. After a ...


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