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Hoyt v. City of St. Anthony Village

United States District Court, D. Minnesota

May 20, 2019

BRADLEY A. HOYT and THE VILLAGE, LLC, a Minnesota Limited Liability Company, Plaintiffs,
v.
THE CITY OF ST. ANTHONY VILLAGE; MARK Y; JERRY FAUST; BREANNE ROTHSTEIN; WSB & ASSOCIATES, INC., a Minnesota corporation; STACIE KVILVANG; EHLERS & ASSOCIATES, INC., a Minnesota corporation; and JAY R. LINDGREN, Defendants.

          Samuel M. Johnson and William R. Skolnick, SKOLNICK & JOYCE, P.A., for plaintiffs.

          John M. Baker and Caitlinrose H. Fisher, GREENE ESPEL PLLP, for defendants City of St. Anthony Village, Mark Casey, and Jerry Faust.

          Valerie Sims, Mark J. Heley, and Elizabeth P. Ridley, HELEY, DUNCAN & MELANDER, PLLP, for defendants Breanne Rothstein and WSB & Associates, Inc.

          James J. Thomson, Peter G. Mikhail, and Elizabeth C. Brodeen-Kuo, KENNEDY & GRAVEN, CHARTERED, for defendants Stacie Kvilvang and Ehlers & Associates, Inc.

          Peter M. Lancaster and Ken Jorgensen, DORSEY & WHITNEY LLP, for defendant Jay R. Lindgren.

          ORDER

          Patrick J. Schiltz United States District Judge

         Plaintiff Bradley Hoyt is a property developer; plaintiff The Village, LLC (“The Village”) is one of Hoyt's companies. The Village purchased a dilapidated mobile- home park in defendant City of St. Anthony Village (“City”) with the intention of replacing it with high-density housing. Hoyt eventually concluded that he needed tax- increment financing (“TIF”) to make the project work. City officials were generally supportive of Hoyt's plans, but an outside analysis commissioned by the City concluded that TIF was unnecessary. The advice of the outside analyst is not binding on the City-and the City has not yet decided whether it will provide TIF-but Hoyt and The Village have nevertheless filed this action against the City, various city officials, and other individuals involved in the process, claiming a wide-ranging fraud and civil conspiracy as well as violations of the Fair Housing Act (“FHA”), 42 U.S.C. § 3601 et seq., and the Equal Protection Clause.

         This matter is before the Court on various defense motions to dismiss or for judgment on the pleadings. For the reasons that follow, the motions are granted and the Court dismisses the amended complaint without prejudice.

         I. BACKGROUND[1]

         Continental Property Group (“CPG”) signed a letter of intent to purchase the mobile-home park and then assigned its interest in the park to The Village. Am. Compl. ¶¶ 27, 29. On February 1, 2016, Hoyt and other representatives of The Village met with defendants Mark Casey (the city manager) and Breanne Rothstein (the city planner[2]) to inform them of the letter of intent and discuss the proposed redevelopment of the site. Am. Compl. ¶¶ 28-29. Casey and Rothstein told Hoyt that the City wanted him to have “maximum flexibility” and would not place any limitations on the proposal. Am. Compl. ¶ 29. They also said “the more density the better.” Am. Compl. ¶ 29. Casey and Rothstein made similar remarks at other meetings with Hoyt and his associates. Am. Compl. ¶¶ 30, 34, 54.

         On April 27, 2016, The Village signed a $6 million purchase agreement for the mobile-home park. Am. Compl. ¶ 31. The sale closed on June 13, 2016. Am. Compl. ¶¶ 34, 49-50. At the time, there were 95 occupied homes in the park. Am. Compl. ¶ 16. Shortly after the sale closed, park residents and Aeon (an affordable-housing developer) filed a lawsuit against The Village. Am. Compl. ¶ 51. As described below, the suit was settled at some point in 2017. Am. Compl. ¶ 66.

         A high-density development (such as the development planned by plaintiffs) requires an Environmental Assessment Worksheet (“EAW”). Am. Compl. ¶ 35. The Village accordingly submitted a sketch plan with the preliminary information necessary for preparing an EAW. Am. Comp. ¶ 35. The sketch plan envisioned a total of 837 units, or about 54 units per acre. That exceeded the 40-units-per-acre limitation that was set forth in the City's 2008 Comprehensive Plan. Am. Compl. ¶¶ 35, 40, 69. About 90 of the proposed units met the federal affordable-housing standard. Am. Compl. ¶ 35.

         The City's planning commission held a hearing on the sketch plan in October 2016 and did not raise any concerns. Am. Compl. ¶ 36. Rothstein then prepared an EAW, which found no negative environmental impact and hence no need for an Environmental Impact Study (“EIS”). Am. Compl. ¶¶ 37-38, 56-57. The EAW was presented to the City Council in February 2017, and the City Council agreed that no EIS was necessary. Am. Compl. ¶ 43.

         In February 2017, City staff identified stormwater management as an area of concern regarding the project. Am. Compl. ¶ 44. Representatives from The Village met with City staff and proposed revisions to address the issue. Am. Compl. ¶¶ 45, 63. To accommodate the revisions, The Village entered into a purchase agreement for an adjoining site.[3] Am. Compl. ¶¶ 46, 64. In a May 2, 2017 letter, Rothstein notified plaintiffs that an amendment to the City's 2008 Comprehensive Plan would be necessary if the development included more than 40 units per acre. The City had previously indicated that it could address the issue in the City's 2040 Comprehensive Plan. Am. Compl. ¶¶ 42, 47.

         On June 30, 2017, The Village closed the mobile-home park. Am. Compl. ¶ 53. The following month, The Village submitted development applications to the City. Am. Compl. ¶ 65. The Village's proposal included a separate building that would provide affordable housing. Am. Compl. ¶ 64. After The Village submitted its applications, Aeon and the residents of the mobile-home park settled their lawsuit against The Village. Am. Compl. ¶ 66. Under the settlement agreement, Aeon was put in charge of developing 100 “deeply affordable” housing units. Am. Compl. ¶ 67. In later meetings, the City's mayor (defendant Jerry Faust) told Hoyt that he “hated Aeon, ” that “Aeon builds shit, ” and that Aeon would never be allowed to build any affordable housing in the City. Am. Compl. ¶ 67.

         The development plan came before the City Council on October 10, 2017. Am. Compl. ¶ 70. As noted, the proposed development called for approximately 54 units per acre. Before the City Council took up the development plan, Casey presented a resolution limiting the development to 25 units per acre.[4] Am. Compl. ¶ 70. The City Council then passed a resolution denying the Comprehensive Plan amendments and rejecting the development plan. Am. Compl. ¶ 70.

         A week later, Hoyt met with Faust and several other individuals. Am. Compl. ¶ 74. Hoyt told the City that a development limited to 25 units per acre would require TIF to be financially viable. Am. Compl. ¶ 75. Faust agreed that TIF was appropriate and would be available, and defendant Jay Lindgren (the City attorney) added that Hoyt would have to return ten percent of the TIF to the City to cover the City's costs. Am. Compl. ¶ 76. From October 2017 through the spring of 2018, Hoyt continued to discuss TIF with City representatives, and he prepared a revised development proposal. Am. Compl. ¶¶ 77-78, 80. On January 9, 2018, Lindgren confirmed that the City supported the project and that there were no obstacles to obtaining TIF. Am. Compl. ¶ 78.

         In February 2018, the City approved The Village's revised proposal, which included 430 units, including 90 to 100 “deeply affordable” units.[5] Am. Compl. ¶ 80. The City retained defendant Stacie Kvilvang, an independent consultant, to prepare a TIF analysis. Am. Compl. ¶ 80. Kvilvang issued a memo concluding that TIF was unnecessary. Am. Compl. ¶ 81. Before the City took any action in response to the memo, Hoyt and The Village filed this lawsuit.

         II. ANALYSIS

         A. Standard of Review

         Defendants Lindgren, Rothstein, and WSB have filed motions to dismiss; the remaining defendants have filed motions for judgment on the pleadings. Motions for judgment on the pleadings under Fed.R.Civ.P. 12(c) are assessed under the same standards as motions to dismiss under Fed.R.Civ.P. 12(b)(6). Ashley Cty. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). In reviewing a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), a court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. Aten v. Scottsdale Ins. Co., 511 F.3d 818, 820 (8th Cir. 2008). Although the factual allegations need not be detailed, they must be sufficient to “raise a right to relief ...


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