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State ex rel. Neighbors for East Bank Livability v. City of Minneapolis

Court of Appeals of Minnesota

May 7, 2018

State of Minnesota ex rel., Neighbors for East Bank Livability, et al., Appellants,
v.
City of Minneapolis, Respondent, Alatus, LLC, Respondent.

          Hennepin County District Court File No. 27-CV-16-17020

          Gary A. Van Cleve, Bryan J. Huntington, Larkin Hoffman Daly & Lindgren Ltd., Minneapolis, Minnesota (for appellants)

          Susan L. Segal, Minneapolis City Attorney, Kristin R. Sarff, George N. Henry, Assistant City Attorneys, Minneapolis, Minnesota (for respondent City of Minneapolis)

          Kyle E. Hart, Richard G. Jensen, Fabyanske, Westra, Hart & Thomson, P.A., Minneapolis, Minnesota (for respondent Alatus, LLC)

          Considered and decided by Schellhas, Presiding Judge; Halbrooks, Judge; and Jesson, Judge.

         SYLLABUS

         An adopted small area plan that is incorporated into a city's comprehensive plan is subject to the comprehensive plan's subsequent amendments, unless stated otherwise.

          OPINION

          JESSON, Judge

         To build the tallest building in Minneapolis outside of the downtown area, respondent Alatus needed to obtain both a conditional-use permit and a variance. Minneapolis granted both of these requirements, and appellant Neighbors for East Bank Livability challenged the decisions. Now on appeal, Neighbors for East Bank Livability contends that the city's granting of both the conditional-use permit and variance was improper because the proposed project was inconsistent with the city's comprehensive plan and because there were no unique circumstances regarding the property to justify a variance. We affirm.

         FACTS

         Local governments within Minnesota's metropolitan area are required to adopt comprehensive plans, which are documents to help guide land use and development.[1] And many of these comprehensive plans adopt, and look to, planning documents created by neighborhoods and smaller areas within their borders for guidance. It is the interaction between these city-wide comprehensive plans and the incorporated small area plans that is central to the legal dispute before us today.

         In 2009, Minneapolis adopted its current comprehensive plan, the Minneapolis Plan for Sustainable Growth, to help guide its balancing act between twin desires: the desire to grow rapidly and the desire to maintain its identity. A key component of its plan was setting forth residential density classifications-low, medium, and high-and where each best belonged in the city. Residential high-density buildings were to go primarily in mixed-use areas. The comprehensive plan also mentioned a fourth category, very high density, which would belong in activity centers and growth centers throughout Minneapolis.[2] One of the stated goals of the comprehensive plan was to "[d]evelop small area plans for designated land use features . . . in consultation with neighborhood associations, residents, and other stakeholders." One such neighborhood is Marcy-Holmes.

         Marcy-Holmes is the oldest neighborhood in Minneapolis and includes a mixture of structures that are historical and progressive, residential and commercial, old and new. It is eclectic. Like much of Minneapolis, the neighborhood has recently experienced dramatic growth. This brings the challenge of being open to expansion, but staying true to its identity. To address these concerns, Marcy-Holmes created the Marcy-Holmes Neighborhood Master Plan which, in city-planning vernacular, is referred to as a small area plan.[3] This small area plan provided direction on how Marcy-Holmes should evolve. Its most current form was adopted in 2014, after which it was incorporated into Minneapolis's comprehensive plan.

         This small area plan listed the same density levels as the comprehensive plan with the same ranges: small, medium, and high. The small area plan did not mention the fourth category, very high density, but noted that its high category was for "the areas of most intense use and density." But the density limitations in Minneapolis's comprehensive plan did not remain static for long. In 2016, the city adopted a density-limitation amendment to its comprehensive plan which drastically raised the upper limit of densities allowed, especially in areas within activity and growth centers.

         This new density increase quickly became relevant, as respondent Alatus desired to construct a project far exceeding the un-amended density limits. Alatus proposed constructing a building at 200 Central Avenue Southeast and 113 Second Street Southeast in Minneapolis, situated in Marcy-Holmes. This location is also within the East Hennepin Activity Center, which is near the Downtown Growth Center. The area is a C2 zoning district, which is defined as a neighborhood corridor commercial district. Minneapolis, Minn., Code of Ordinances § 521.10(3) (2017). This exact area contains several high-rises, including the LaRive Condominiums, which are approximately 310 feet in height. The proposed Alatus project is a mixed-use 42-story building, standing at approximately 483 feet tall. The first four levels of the project would make up a podium, the fifth floor would be an amenity level, and the next 37 levels would encompass a tower. While the footprint of the podium would encompass much of the building site, the footprint of the tower is less than half of the podium. Topping the tower would be a mechanical penthouse level. The building would include 214 residential dwelling units, and 6, 500 square feet of ground-floor commercial space. The residential density of the proposed projected would be approximately 268 residential dwelling units per acre (du/acre).[4] The project would include nearly 400 parking spaces, located in the first four levels of the building and in three levels below grade.

         Due to the large scale and breadth of the project, it did not fully comply with Minneapolis's zoning ordinances. Alatus needed to obtain both a conditional-use permit and a variance to construct the building.[5] Alatus needed the conditional-use permit because of the height of the proposed project.[6] The maximum height for buildings in the C2 zoning district is 56 feet, but the proposed height of this project exceeded 483 feet. Alatus also needed a variance for the floor-area ratio of the proposed project.[7] Floor-area ratio refers to the total amount of floor area in a building, divided by the area of the lot.[8] The maximum floor-area ratio in the C2 zoning district is 1.7, while the project has a proposed floor-area ratio of 14.42.

         The process for obtaining a conditional-use permit and variance starts with seeking approval from the Minneapolis city planning commission. Before the commission makes a decision, the department of community planning and economic development (CPED) generally reviews the application and makes a recommendation.[9] From there, review is available by appealing the decision to the zoning and planning committee, which recommends its decision to the ultimate decision maker-the Minneapolis City Council.

         Alatus completed its application for a conditional-use permit and variance in July 2016.[10] CPED prepared an assessment report of the application in August 2016. This report made detailed findings suggesting that the proposed project was appropriate to be built in Marcy-Holmes because, among other reasons, it was compatible with the surrounding area and it was consistent with the policy and goals of Minneapolis's comprehensive plan and Marcy-Holmes's small area plan. CPED recommended that the city grant the conditional-use permit and variance. At the end of August 2016, the city planning commission voted to approve both the conditional-use permit and variance applications. The commission also adopted CPED's findings.

         Appellant Neighbors for East Bank Livability appealed this decision to the zoning and planning committee. This committee conducted a hearing regarding the appeal in September 2016 and subsequently issued recommended findings of fact. These findings incorporated the CPED findings and made several additional findings favorable to granting the conditional-use permit and variance. The committee also noted that Marcy-Holmes's official neighborhood organization supported the project. The zoning and planning committee then recommended that the Minneapolis City Council deny the appeal and approve the applications for the conditional-use permit and variance. In October 2016, the Minneapolis City Council unanimously adopted the zoning and planning committee report.

         In November 2016, Neighbors for East Bank Livability filed a complaint against the City of Minneapolis and Alatus, both of whom are respondents on appeal. Among other counts, the complaint sought declaratory judgment against Minneapolis, seeking a determination that granting the conditional-use permit and variance was improper.[11] The district court granted summary judgment against Neighbors for East Bank Livability and determined that the city did not err in granting the conditional-use permit or variance. The district court explained that the project was consistent with both the comprehensive plan and small area plan, and furthered the goals of both plans.

         Neighbors for East Bank Livability appeals.

         ISSUES

         I. Was the city's issuance of the conditional-use permit and variance unreasonable, arbitrary, or capricious because the proposed project was inconsistent with the comprehensive plan?

         II. Was the city's issuance of the variance unreasonable, arbitrary, or capricious because the practical difficulties in complying with the ordinance was ...


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