This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
City of Eagan,
Filed May 23, 2006
Toussaint, Chief Judge
George C. Hoff, Justin L. Templin, Hoff, Barry & Kuderer, P.A., 160 Flagship Corporate Center, 775 Prairie Center Drive, Eden Prairie, MN 55344-7319; and
John M. Baker, Greene Espel, P.L.L.P., 200 South Sixth Street, Suite 1200, Minneapolis, MN 55402-1415 (for appellant)
Andrew D. Parker, Nancy V. Mate, Smith Parker, P.L.L.P, 808 Colwell Building, 123 North Third Street, Minneapolis, MN 55401 (for amicus Metropolitan Council)
Susan L. Naughton, League of Minnesota Cities, 145 University Avenue West, St. Paul, MN 55103-2044 (for amici League of Minnesota Cities and Community Rights Counsel)
Laurie J. Miller, Joseph G. Springer, Fredrikson & Byron, P.A., 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402-1425; and
Miriam Elizabeth Stone, Builders Association of the Twin Cities, 2960 Center Pointe Drive, Roseville, MN 55113 (for amicus The Builders Association of the Twin Cities)
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
On appeal from a declaratory
judgment and an alternative writ of mandamus in this zoning dispute, City of
This zoning dispute involves a property
of about 120 acres in
On September 5, 2003, Rahn agreed to sell the golf course to respondent Wensmann Realty, Inc. (Wensmann), a developer and builder of residential homes. The agreement was contingent on government authorities reclassifying and rezoning the property as mixed-use residential. By a May 2004 letter to the city, Wensmann applied for an amendment to the city’s comprehensive guide plan allowing residential development of the golf course. After a public hearing and an advisory planning commission recommendation that the city deny Wensmann’s application, the city council unanimously denied it.
Rahn and Wensmann subsequently entered into an option agreement giving Wensmann the right to commence litigation to compel the city and any other governmental agencies to grant the permits and approvals necessary for its proposed residential development. Rahn agreed to join in the litigation.
Wensmann commenced this declaratory judgment action and alternative petition for a writ of mandamus in district court. The court heard cross-motions for summary judgment and granted declaratory relief and alternatively a writ of mandamus in favor of Wensmann. It ordered that the city “immediately amend” the plan and submit the amendment for approval by the Metropolitan Council. If the city did not comply with the order within 30 days, the court would order the city to commence an eminent domain proceeding. The city filed this appeal, and this court granted three motions to file amicus briefs.
Mendota Golf v. City of Mendota Heights, 708 N.W.2d 162 (Minn.
2006), reaffirmed the rational basis standard of review for declaratory
judgments in land use decisions.
The city argues that its decision to deny the amendment to the comprehensive plan was necessarily rational because the decision conformed to the plan, which was rational. Rahn and Wensmann contend that this is not the law; if this were the case, all requests for amendments would be denied.
Mendota Golf addresses similar arguments. The historic use of the property as a golf
course, the recent update of the comprehensive plan, and the public hearing comments
indicating that citizens valued the open space and recreational opportunities provided
by a golf course supported the conclusion that a “municipality has legitimate
interests in protecting open and recreational space, as well as reaffirming
historical land use designations.” Mendota Golf, 708 N.W.2d at 181. These legitimate interests constituted a
rational basis to deny the application to amend the plan.
The “legitimate interests”
recognized in Mendota Golf are nearly
identical to the reasons stated here.
The property had been used as a golf course since 1967; the city plan had
recently been updated in 2001; and the record indicates that
The city also cites concerns about traffic and overcrowded schools as rational bases for denying the amendment. Rahn and Wensmann argue that the city relied “primarily on vague, unsubstantiated resident testimony” to support these concerns. But our review of the record indicates that the city relied on other sources to conclude that traffic would increase and schools would be overcrowded. The city planning report contained facts on and analyses of both of these issues. The school district’s own projection of enrollment statistics and the “capacity” for each school indicate that the schools have an ongoing problem with overcapacity. Therefore, the city had additional rational bases for its denial of the application to amend the plan.
The district court
determined that the city’s “denial of Wensmann’s application to amend the city’s
Comprehensive Guide Plan constitutes governmental inaction that has effected an
unconstitutional taking of the subject property under Penn Central Transp. Co. v.
a. Economic Impact of Government Action
The city argues that the economic impact of a regulation must be judged by the difference in the economic value of the property just before the offending regulation against its value just after the regulation. Rahn and Wensmann argue that economic impact must be measured by the difference in value between the property as currently guided and zoned and the property guided and zoned as they requested. Here, government action or inaction did not change the status of the property, so there was no economic impact attributable to the city.
The record does not establish that the denial of the application in 2004, which maintained the existing long-term use of the property, diminished the property’s value. Various other factors impacted the value, including national trends, overbuilding in the area, and the size of the golf course. Absent facts indicating that the denial of the application had a substantial negative economic impact to the property, the first element of the takings claim is not met.
b. Regulation’s Interference with Investment-Backed Expectations
The city argues that Rahn had no reasonable investment-backed expectation to develop its land as residential property because Rahn purchased the land as an established golf course with the intention of continuing to operate it as a golf course.
The second element
of a takings-claim analysis is not met if the applicant for rezoning “knew at
the time of purchase that the property was subject to a zoning restriction.” Myron
v. City of Plymouth, 562 N.W.2d 21, 23-24 (Minn. App. 1997), aff’d without opinion, 581 N.W.2d 815 (
Rahn and Wensmann
argue that Wensmann was entitled to a reasonable rate of return on its
investment property but they provide no legal support for this argument. While return on investment may be considered,
it must be considered within the context of the three-part Penn Central inquiry and must have some relation to the governmental
action under scrutiny. See, e.g., Penn Central, 438 U.S. at
129, 98 S. Ct. a 2662 (stating only that parties accepted that existing use did
permit reasonable return on investment and proceeding with analysis from
there); State by Powderly v. Erickson,
285 N.W.2d 84, 90 (
Rahn and Wensmann also argue that it was reasonable to expect the city to approve the application because the city had taken some actions contemplating the possibility of developing Carriage Hills in the future. These actions, however, did not compel the city to amend its plan and, in light of all of the facts, did not support a reasonable expectation by Rahn that the application would be granted.
c. Character of Regulation
The character of the regulatory action was to maintain the existing comprehensive plan. The city had recently reviewed its plan, fulfilled the Metropolitan Land Planning Act requirements, and adopted a plan reflecting the legitimate interests of the city, its citizens, and the greater metropolitan area. In light of the city’s broad and substantial interests, any harm to the individual property owner in maintaining the existing restriction does not appear to be one that should be borne by the entire community.
Applying the Penn Central test and recognizing the holding in Myron, there is no legal or factual basis for Rahn and Wensmann’s takings claim.
 The city
and the Metropolitan Council challenge the district court’s authority to order
the city to “immediately amend” the plan and the Metropolitan Council to
approve the plan. Because this court’s
determination that the city did not act arbitrarily is dispositive and requires
reversal of the district court’s decision, we do not address the challenge to
the district court’s authority for such orders.
But we note that mandamus has been held not appropriate to compel the
city to amend its comprehensive plan. Mendota Golf v. City of Mendota Heights, 708 N.W.2d 162, 175 (
Rahn is the owner of the property and a party to this lawsuit and because we
reverse the district court on the takings issue, we note but do not decide the
city’s argument that “Wensmann’s option agreement is not a property interest
that forms a viable basis for a takings claim.”
See Brooks Inv. Co. v. City of
Rahn and Wensmann also rely on Lucas v.