STATE OF MINNESOTA IN SUPREME COURT. Martin M. Harstad, et al. RESPONSE TO PETITION FOR REVIEW. Respondents, Appellate Case No.

Transcription

1 STATE OF MINNESOTA IN SUPREME COURT November 2, 2017 Martin M. Harstad, et al. Respondents, v. City of Woodbury, Appellant. RESPONSE TO PETITION FOR REVIEW Appellate Case No. A Date of Filing of Court of Appeals Decision: September 18, 2017 George C. Hoff (45846) Justin L. Templin ( ) Hoff Barry, P.A. 775 Prairie Center Drive, Suite 160 Eden Prairie, Minnesota (952) Attorneys for Appellant Gary A. Van Cleve (156310) Rob A. Stefonowicz ( ) Larkin Hoffman Daly & Lindgren Ltd Norman Center Drive, Suite 1000 Minneapolis, Minnesota (952) Attorneys for Respondents

2 TO: THE SUPREME COURT OF THE STATE OF MINNESOTA. Respondents Martin Harstad, Harstad Hills and Creative Capital (collectively Harstad ) request that the Court deny the petition for review of appellant City of Woodbury ( City ). The Court of Appeals properly held that the Major Roadway Assessment or MRA fee that the City proposed to assess Harstad is illegal, unauthorized and unenforceable pursuant to established law. The City has failed to identify any compelling reason for discretionary review of the well-reasoned Minnesota Court of Appeals decision. I. RESTATEMENT OF THE ISSUE. Did the Court of Appeals properly hold that the City s Major Roadway Assessment or MRA fee lacked express or implied authority under Minn. Stat , subd. 2a? II. STATEMENT OF THE CASE. Harstad, the owner of development property in Woodbury, brought this action in district court challenging the legality of the City s Major Roadway Assessment or MRA fee. The MRA is a fee collected by the City from developing properties to purportedly fund potential, future offsite roadway improvements in the City. When faced with a legal challenge, the City argued that its MRA fee is either expressly or impliedly authorized by the Minnesota Municipal Planning Act (Minn. Stat ), focusing its attention on Minn. Stat subd. 2a ( terms of [subdivision] regulations ). The district court rejected this argument and declared the City s MRA illegal, unauthorized and unenforceable under Minnesota law, citing to this Court s decision in Country Joe v. 1.

3 City of Eagan, 560 N.W.2d 681 (Minn. 1997) (holding the City of Eagan s road unit connection charge illegal and unauthorized by case law or statute). The Court of Appeals affirmed the district court s decision, also citing to and relying on this Court s decision in Country Joe. III. THE SUPREME COURT SHOULD DENY THE CITY S PETITION TO REVIEW THE COURT OF APPEAL S DECISION. The Court should deny discretionary review under Minn. R. Civ. App. P. 117, subd. 2. This case was decided by the application of well-established legal principles and calls for the application of no new legal principle or policy. The Court of Appeals handed down a well-reasoned decision and applied well-established law under Country Joe to reject the City s argument that its MRA is either expressly or impliedly authorized under the Minnesota Municipal Planning Act, specifically, Minn. Stat , subd. 2a. This matter does not, as the City claims, present an issue of first impression, and the City does not otherwise establish a basis for review under Minn. R. App For these reasons, this Court should deny review. A. The MRA is An Illegal Funding Mechanism Created by the City. The City, in its petition for review, seeks to create confusion where none exists. The City does not define in the petition what an MRA fee is. Instead, the City relabels its MRA as an infrastructure fee in its petition. The MRA is a fee imposed by the City upon new developments as a condition of subdivision approval. The MRA is purportedly used to fund potential or possible, future offsite major roadway improvement projects in the City. While the City now claims that its MRA is either expressly or impliedly 2.

4 authorized, it acknowledged in its own planning documents (2000 City of Woodbury Comprehensive Plan/Transportation Plan) that new state legislation was needed before it could legally use such a funding mechanism. Likewise, the City s insurer, League of Minnesota Cities (LMC), acknowledged in its policy papers the lack of legislative authority to impose such fees and its desire to secure legislation permitting such fees. The Court of Appeals, in rejecting the City s arguments, addressed this lack of legislative authority: ADD The supreme court decided Country Joe in 1997, and since that time, the legislature has not amended the relevant language of subdivision 2a or the provisions authorizing cities to impose special assessment and water- and sewerconnection charges. (citations omitted). Had the legislature disagreed with Country Joe s holding, it could have amended any or all of the above-cited statutory provisions. Despite (admittedly) lacking the necessary legislative authority to impose such a fee, the City created the MRA based on a formula that purports to forecast the need for potential, future roadway improvements within phases of the City based on projected City build-out scenarios (into year 2032 and beyond) and traffic projections based on this potential future development. There is no definite timeframe for construction of these potential, future roadway improvements to be funded by the City s MRA. The MRA fee is in addition to, and separate and apart from, any roadway and infrastructure improvements within the development area and/or perimeter roadways that are to be 1 Appellant City s Addendum (ADD). 3.

5 paid 100% by Harstad, as is detailed in the City s planning memorandum. The MRA is to fund the City s potential, future offsite roadway improvements elsewhere in the City. The MRA formula estimates Total City Roadway Costs based on the long-range projections and divides that number by the total net developable acreage in each phase to calculate a per acre MRA. The City s MRA for new developments in Phase 2, where the Harstad property is located, is $20,400 per acre (or $1,398,444 as calculated for Harstad s property). Again, the MRA fee collected is to purportedly fund possible, future offsite roadway improvements in the City. The City diverts and deflects from the actual issue whether the MRA is expressly or impliedly authorized by law by arguing that this matter raises issues or doubts as to the form of financial security under the subdivision statute, the ability to enter into development agreements, or whether there is a statutory distinction between improvements inside or outside the subdivision parcel. The Court of Appeals properly focused on the lack of authority (express or implied) to charge a roadway fee under subdivision 2a. ADD 35. It rejected the City s arguments because neither the statutory power to require security, nor the power to enter into a development agreement is (either expressly or by implication) the power to assess a roadway fee. ADD 35, FN5. And it provided that [i]nstead, we focus on whether subdivision 2a implies that the city may charge developers an assessment to fund any road improvement, regardless of whether the road is within or outside a particular subdivision. ADD 35 (emphasis in original). 4.

6 The Court of Appeals decision confirms, consistent with established law, that the City lacks express or implied authority for its MRA fee. B. The Court of Appeals Properly Held that the MRA Lacks Express or Implied Authority. The Court of Appeals applied well-established law that the City, as a statutory city, has no powers beyond those expressly conferred by statute or implied as necessary in aid of those powers which have been expressly conferred. ADD 31 (quoting Country Joe, 560 N.W.2d at 683). The Court of Appeals disposed of the City s argument that Minn. Stat , subd. 2a, provides express authority for the MRA by correctly stating that subdivision 2a does not expressly authorize the collection of an MRA fee (or any other fee or assessment). Id. at 33. It properly concluded that subdivision 2a is unambiguous and does not by its plain language authorize the city to condition subdivision approval on payment of a road assessment. Rather, subdivision 2a allows city planning. ADD 33 (emphasis added). Subdivision 2a s reference to a cash deposit or other financial security to assure construction of subdivision improvements according to the specifications of the [City] does not grant authority to the City to impose or collect roadway assessments. Id. The MRA is aimed at funding possible future, major offsite roadway improvements that may not even be constructed. Funds would be held indefinitely because there is no specific timeline for these projected roadway improvements. The Court of Appeals properly concluded that subdivision 2a does not expressly authorize the city to impose the MRA. ADD

7 The Court of Appeals also correctly concluded that , subd. 2a, does not impliedly authorize the City to charge the MRA. ADD 35. The Court of Appeals applied Country Joe s holding that the Municipal Planning Act provides broad planning power but that does not necessarily imply... broad financing power under the act. Id. at 36 (quoting Country Joe at 684) (also citing First Baptist Church of St. Paul v. City of St. Paul, 884 N.W.2d 355, 361 (Minn. 2016) (emphasis in original). In fact, the legislature s actions support the opposition conclusion. See Country Joe at 684. This Court in Country Joe addressed the city s contention that the road connection charge is a valid exercise of its implied municipal planning authority under Minn. Stat. ch. 462 and held that the authority to impose a road connection charge cannot be implied from the city s municipal planning authority. See Country Joe at (emphasis added). 2 The Court of Appeals here reached the same conclusion as Country Joe. ADD 36. Moreover, consistent with this Court s analysis in Country Joe, the Court of Appeals rejected the City s implied authority argument, indicating that the legislature specifically authorized special assessments under Minn. Ch. 429 as the municipal funding mechanism for road improvements[;] accordingly, no funding mechanism need be implied to effectuate the legislative grant of authority to undertake road improvements. 2 The City incorrectly asserts that Country Joe does not address Minn. Stat Petition, p. 5, FN1. Country Joe addressed the entirety of the Minnesota Municipal Planning Act, including Country Joe at

8 ADD 36-7 (quoting Country Joe at 684). The MRA is not a special assessment under Minn. Ch ADD 37 at FN 7. The Court of Appeals also pointed out that while the legislature expressly allowed sewer and water connection charges under Minn. Stat , subd. 3, the failure to include road charges under the same statutory section was not the result of legislative oversight because [the legislature] passed statutory provisions expressly establishing special assessments as the mechanism by which cities are empowered to finance road improvements. ADD 37 (quoting Country Joe at 684). Finally, the Court of Appeals appropriately notes that this Court decided Country Joe in 1997, and since that time the legislature has not amended the provisions of the Municipal Planning Act or otherwise acted to authorize fees such as the City s MRA to fund roadway improvements. ADD 38. The Court of Appeals, accordingly, rejected the City s MRA arguments and affirmed the district court s decision based on long-standing law in Minnesota. For all the above-stated reasons, the Court should deny the City s petition for review. Dated: November 2, 2017 s/ Rob A. Stefonowicz Rob A. Stefonowicz ( ) Gary A. Van Cleve (156310) Larkin Hoffman Daly & Lindgren Ltd Norman Center Drive, Suite 1000 Minneapolis, Minnesota (952) rstefonowicz@larkinhoffman.com gvancleve@larkinhoffman.com Attorneys for Respondents 7.

9 Martin M. Harstad; Harstad Hills, Inc., a Minnesota corporation; and Creative Capital Holdings, LP, a Minnesota Limited Partnership, Respondents, STATE OF MINNESOTA IN SUPREME COURT A v. City of Woodbury, a Minnesota municipal corporation, CERTIFICATION OF LENGTH OF DOCUMENT Appellant. I hereby certify that this document conforms to the requirements of the applicable rules, is produced with a proportional font, and the length of this document is 1,742 words. This document was prepared using Word Dated: November 2, 2017 s/ Rob A. Stefonowicz Gary A. Van Cleve (156310) Rob A. Stefonowicz ( ) Larkin Hoffman Daly & Lindgren, Ltd Norman Center Drive, Suite 1000 Minneapolis, Minnesota (952) gvancleve@larkinhoffman.com rstefonowicz@larkinhoffman.com Attorneys for Respondents , v. 1