Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
City of Prior Lake,
Filed February 10, 1998
File No. C9612342
Anthony J. Gleekel, James A. Yarosh, Siegel, Brill, Greupner, Duffy & Foster, P.A., 100 Washington Avenue South, Suite 1300, Minneapolis, MN 55401 (for appellant)
Thomas M. Scott, Matthew J. Foli, Campbell Knutson, P.A., 317 Eagandale Office Center, 1380 Corporate Center Curve, Eagan, MN 55121 (for respondent)
Considered and decided by Huspeni, Presiding Judge, Harten, Judge, and Willis, Judge.
Appellant Prior Lake Oaks challenges the district court's affirmance of respondent city council's denial of an application for rezoning for a planned unit development by its predecessor in interest. The city appeals the court's determination that Prior Lake Oaks has standing to maintain this action. We affirm.
On July 1, 1995, Green entered into an agreement giving RCS Associates, Inc., an option to purchase the property before January 2, 1996. In August 1995, RCS submitted a proposal to the Prior Lake planning commission to build 23 townhouses on the non-wetland portion of the site. Rather than seeking a conditional use permit or a rezoning to R-2, for which townhouses are a permitted use, RCS sought to have the land rezoned as a planned unit development (PUD) under an ordinance that allows "modifications of the strict application of regulations of * * * Residential Districts" in order to "encourage development which will preserve and enhance the worthwhile, natural terrain characteristics and not force intense development to utilize all portions of a given site * * * ." Prior Lake, Minn., Ordinances §§ 5-5-12(A), (C)(12)(e) (1979).
The planning commission held a public hearing on August 28, 1995, at which neighbors spoke unanimously against the plan, expressing concerns that included tree loss and traffic pattern changes resulting from a rerouted road. At a later meeting, the commission voted to recommend denial of the proposal to the city council. Also on August 28, Green and RCS signed a new option contract, which included a provision allowing RCS to assign its interest to "an entity to be formed under the name Wild Oaks."
On January 8, 1996, RCS submitted an amended proposal based on suggestions from city planning staff. This proposal omitted the rerouted road and reduced the number of townhouses from 23 to 20. City planning staff submitted calculations to the planning commission showing that the amended proposal would preserve 47% of the "significant" (over 12" diameter) trees on the site; RCS submitted documentation noting that it could build up to 19 single-family homes on the site consistent with its existing zoning classification but that such a development would destroy 81% of the significant trees. Both the staff and the planning commission recommended approval of the amended proposal.
RCS brought its proposal before the city council on January 16, 1996. The mayor objected to the project on the ground that other PUDs had produced specific benefits for the city as a whole, while this project appeared indistinguishable from an ordinary R-2 townhouse development. In particular, the mayor noted that the only significant "open space" area in the proposal was the wetland, which would already be preserved under its existing C-1 classification. See Prior Lake, Minn., Ordinances § 5-5-12(C)(6) (1979) (requiring PUD to reserve 20% of gross land for "open air recreational use"). The council concurred and denied the motion for rezoning. In support of its decision, the council later adopted five findings of fact concerning soil grading, property values, and aesthetic issues.
In March 1996, RCS's sole shareholder incorporated a limited liability company with other partners but found the name Wild Oaks already in use, so the new company was named Prior Lake Oaks. Later that month, RCS assigned all its rights under the option contract to Prior Lake Oaks. On May 30, 1996, Green conveyed the property to Prior Lake Oaks by quitclaim deed.
In July 1996, Prior Lake Oaks brought the instant action seeking to declare the city's action arbitrary and therefore invalid. The city responded by moving for dismissal on the ground that Prior Lake Oaks lacked standing because it did not exist at the time of the city council decision. The district court denied this motion but ruled for the city on the merits, concluding that the city's denial of a rezoning application was a "legislative determination" and that both the transcript of the city council meeting and the written findings demonstrated that the city had the requisite "rational basis" for refusing to rezone. Prior Lake Oaks appealed, and the city filed a notice of review appealing the standing determination. We affirm.
Prior Lake Oaks claims standing based on its assignment agreement with RCS. "A valid assignment generally operates to vest in the assignee the same right, title, or interest that the assignor had in the thing assigned." State ex rel. Southwell v. Chamberland, 361 N.W.2d 814, 818 (Minn. 1985). "In effect, an assignee stands in the shoes of the assignor." Geldert v. American Nat'l Bank, 506 N.W.2d 22, 29 (Minn. App. 1993), review denied (Minn. Nov. 16, 1993).
In the absence of countervailing public policy considerations, a cause of action is assignable if it survives the death of a party. See Peterson v. Brown, 457 N.W.2d 745, 748 (Minn. App. 1990), review denied (Minn. Aug. 23, 1990). Minnesota law provides that all causes of action survive except those "arising out of an injury to the person." Minn. Stat. § 573.01 (1996). We conclude that an adverse municipal zoning decision is an injury to a property interest, and a challenge to such a decision under Minn. Stat. § 462.361, subd. 1 (1996), is thus survivable and assignable.
The supreme court has permitted a seller of land to assign to the buyer the right to maintain an action for previous damage to the land "if there is an express provision in the deed." Williams v. Township of Lynd, 312 N.W.2d 110, 113 (Minn. 1981). The city reads this statement to mean that an assignment agreement must expressly state that a particular cause of action is assigned. But Williams takes its holding from Peterson v. Lake Superior Dist. Power Co., 39 N.W.2d 706 (Wis. 1949), which states:
The right to damages for trespass or other injury to real estate previous to the conveyance thereof is assignable, but such right does not pass by a conveyance of the land in the absence of provision in the deed.
Id. at 708 (quoting 16 Am. Jur. Deeds § 297). We interpret the "express provision" language in Williams also to state a limitation, not on whether the right to maintain a given cause of action is assignable, but rather on whether it passes by conveyance in the absence of an express assignment. Williams is therefore inapposite because here there was an express assignment, but it was a transaction independent from the conveyance of the land.
The city does not dispute that RCS was a "person aggrieved" with standing to challenge a zoning decision under Minn. Stat. § 462.361, subd. 1. The relevant portion of the assignment agreement states that RCS "hereby assigns all of its right, title and interest in and to the Option" to Prior Lake Oaks. "The fundamental approach to construing contracts is to allow the intent of the parties to prevail." Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979). The parties clearly intended for Prior Lake Oaks to "stand in the shoes" of RCS with respect to seeking to develop the land at issue. Accepting the city's concession that RCS had standing, Prior Lake Oaks as assignee therefore has standing to maintain this action.
II. The Merits
A. Standard of review
This court independently reviews the record to determine the reasonableness of zoning decisions, without deference to the district court's conclusions. Trisko v. City of Waite Park, 566 N.W.2d 349, 352 (Minn. App. 1997), review denied (Minn. Sept. 25, 1997). But we review the record only to determine whether the zoning body's action was unreasonable, arbitrary, or capricious, and "a city's denial of a land use request is not arbitrary when at least one of the reasons given for the denial satisfies the rational basis test." Id. "When a city council states its reasons for denying [a land use request], we limit our review to the legal sufficiency and the factual bases for those reasons." Id.
In Honn v. City of Coon Rapids, 313 N.W.2d 409 (Minn. 1981), the supreme court stated:
Our case law distinguishes between zoning matters which are legislative in nature (rezoning) and those which are quasi-judicial (variances and special use permits). * * * * [T]he zoning authority is less circumscribed by judicial oversight when it considers zoning or rezoning than when it considers a special use permit or a variance.
Id. at 416-17. While the parties devote considerable energy to debating whether Prior Lake's action was "legislative" or "quasi-judicial" in nature, the reason that municipalities are "less circumscribed" in legislative decisions is that rezoning decisions involve the formulation of public policy restricted only by state statutes, while quasi-judicial determinations involve the application of policy already established by the city's ordinances. See id. (stating that "the approach is different in a special use permit case, where reasonableness is measured by the standard set out in the particular local ordinance, not the statute," which requires only that zoning decisions promote public health, safety, morals, or welfare). The decision to grant or to deny a PUD application is therefore a quasi-judicial decision because this court must determine the reasonableness of the council's action by reference to the PUD ordinance.
But the quasi-judicial nature of the decision-making process here does not force the conclusion that an application for a PUD is equivalent to an application for a conditional use permit as Prior Lake Oaks suggests. If an applicant is willing to comply with all conditions imposed by a municipality, an application for a conditional use permit may be denied only for reasons relating to the public health, safety, or general welfare or to incompatibility with a comprehensive zoning plan. SuperAmerica Group, Inc. v. City of Little Canada, 539 N.W.2d 264, 267 (Minn. App. 1995), review denied (Minn. Jan. 5, 1996). The purpose of a special use permit is to provide for governmental control over land uses that are compatible with the basic use within a particular zone, but should not be allowed as a matter of right. Zylka v. City of Crystal, 283 Minn. 192, 195, 167 N.W.2d 45, 48-49 (1969). But, as interpreted by the city, the function of the PUD ordinance is to allow the city to suspend its ordinary zoning requirements when a developer presents a particularly novel idea for integrating development with natural amenities. We now turn to the question of whether the city's interpretation is supported by the text of the ordinance and, if so, whether it is constitutionally permissible.
B. Interpretation of the PUD ordinance
Interpretation of zoning ordinances is a question of law, and this court reviews a city's interpretation de novo. Medical Servs., Inc. v. City of Savage, 487 N.W.2d 263, 266 (Minn. App. 1992). But a city's interpretation is entitled to some persuasive value. Chanhassen Estates Residents Ass'n v. City of Chanhassen, 342 N.W.2d 335, 340 (Minn. 1984). Courts apply three general rules of construction in interpreting zoning ordinances: (1) terms are given their plain and ordinary meaning, (2) ordinances are construed strictly against the government and in favor of the landowner, and (3) ordinances are construed in light of their underlying policy goals. Medical Servs., 487 N.W.2d at 266. "A municipality may not base the denial of a conditional use permit on land use standards that are unreasonably vague or unreasonably subjective." Trisko, 566 N.W.2d at 353 (citation and internal quotations omitted).
The language of Prior Lake's PUD ordinance supports an interpretation that it is intended to grant broad discretion to the city council. For example, City of Prior Lake Ordinances § 5-5-12(C)(12)(e) (1979) states:
A primary function of the PUD provision is to encourage development which will preserve and enhance the worthwhile, natural terrain characteristics and not force intense development to utilize all portions of a given site in order to arrive at the maximum density allowed. In evaluating each individual proposal, the recognition of this objective will be a basic consideration in granting approval or denial.
The supreme court has held unreasonably vague and subjective a municipality's requirement that a developer demonstrate that a proposed use constituted an "improvement" on the city's comprehensive plan and was "equal to or better than single family usage." C.R. Investments, Inc. v. Village of Shoreview, 304 N.W.2d 320, 327-28 (Minn. 1981). But while provisions of Prior Lake's ordinance, such as section 5-5-12(C)(12)(e), allow the use of subjective criteria, the ordinance does not reduce the entire application procedure to a value judgment as did the provisions in C.R. Here, the subjective criteria relate to aspects of the development that would be difficult to describe more specifically. We do not understand the constitution to require the complete absence of discretion and subjective criteria from municipal zoning, and we therefore conclude that the ordinance is sufficiently specific to satisfy the requirements of due process.
The supreme court has stated that
[t]he setting aside of routine municipal decisions should be reserved for those rare instances in which the City's decision has no rational basis. Except in such cases, it is the duty of the judiciary to exercise restraint and accord appropriate deference to civil authorities in the performance of their duties.
White Bear Docking & Storage, Inc. v. City of White Bear Lake, 324 N.W.2d 174, 176 (Minn. 1982). Here, the applicable canons of construction conflict: the city's interpretation of the ordinance's policy goals is reasonable in light of its language but inconsistent with application of the presumption in favor of the landowner. Because of the limited role of the judiciary in zoning matters, we accept the city's interpretation of its PUD ordinance as a discretionary means of facilitating unique types of development that would be difficult or impossible under other provisions of the zoning code.
C. Compatibility of development with PUD objectives
In light of this interpretation, we now turn to the city council's finding that
[t]he proposed development as a Planned Unit Development will not achieve any greater efficiencies or effectiveness or result in any greater benefit to the general public or residents of the development than would result from conventional development of the site.
This finding is susceptible of more than one interpretation. Prior Lake Oaks argues an absolute interpretation, stating that because it has demonstrated one aspect in which its proposal is more efficient and effective than the 19 single-family homes permissible under the current R-1 zoning--the fact that the clustered townhouses would preserve more trees and not use all of the buildable land on the site--the council's finding is clearly erroneous. But the finding also could be interpreted as an expression of the concerns of the city council as summarized by the mayor at the January 16 meeting. The mayor compared the proposal with five existing PUDs in Prior Lake, each of which includes recreational amenities such as a beach, a golf course, or tennis courts. She continued:
And what do we have here? We have a 3.5 acre protected wetland that is not buildable, unusable and unrecreational. It looks pretty, but it's always going to be there, and that's supposed to be 60 percent of open space for the site.
* * * *
The other side, the build proportion [sic], is an R2 cluster and that's it. * * * I don't see recreational areas. I don't see amenities. I don't see anything.
* * * *
It is a townhome development. That's it. And to me, it truly and really does not meet the intent or merit a PUD status.
Later discussion compared the proposal to a sixth, "failed" PUD.
The mayor's comments, with which several other council members expressed agreement, support an interpretation that the council's fourth finding was intended to indicate that, while Prior Lake Oaks' proposal might result in some benefit in greater tree preservation, it does not benefit the public or the development's residents to the degree contemplated by the PUD ordinance. The council's primary concern appears to be the integrity of the PUD ordinance, particularly in view of RCS's apparent inclusion of the wetland in the PUD solely to meet the ordinance's minimum open-space requirement. Prior Lake Oaks does not dispute the city council's description of existing PUDs in Prior Lake. We therefore conclude that the city's finding that RCS's proposal fails to provide the same level of benefits to the general public or development residents as do most existing PUDs is factually supported and that the council's concern with preventing undue expansion of the scope of the ordinance is a rational basis for its decision.
D. Other findings
On the record before us, however, the city has failed to provide factual support for its remaining findings. The city's first finding stated that the proposed grading plan, showing removal of "several feet of soil from the top of the highest point on the site, causing a potential adverse impact on many of the remaining trees * * * ." The first of three staff reports notes that the original proposal called for removal of several feet of soil from two points on the site, both some distance from the slope where most of the remaining trees would be concentrated. The staff report regarding the revised plan does not specify the amount of soil removal and nothing in any report addresses the effect of grading on trees. This finding is therefore unsupported by the record.
The council's second and third findings allege that the proposed development is "aesthetically displeasing" because of the "generic character" of the townhouse design and that the "single design" is "not in keeping with the character of the neighborhood" and "could" result in a negative impact on property values. The record contains only a few small diagrams of individual townhouses, indicates that existing homes in the neighborhood vary widely, and makes no reference to property values. We conclude that these findings also lack adequate factual support.
The city's remaining finding states that RCS's proposal does not demonstrate the use of new technologies, a higher standard of development, or a "more efficient use of land, open space or public facilities." The PUD ordinance "encourages" these elements, but they are not required. See Prior Lake, Minn., Ordinances § 5-5-12(B) (1979). Furthermore, the "higher standard" language resembles a requirement found overly vague and suggestive in C.R., 304 N.W.2d at 328. The language regarding efficient use of land and open space is erroneous in absolute terms because the proposal is "more efficient" than single-family development in terms of tree preservation; to the extent that the fifth finding could be interpreted to indicate that the proposal fails to provide the level of benefit necessary to justify a PUD, it merely restates the fourth finding.
In summary, the city's concern with the integrity of its PUD ordinance provides sufficient ground to support its denial of the request for rezoning for a PUD. But on the record before us, the city has not substantiated any reason to reject the proposal other than its failure to meet PUD standards. It appears that the zoning code leaves available other avenues by which Prior Lake Oaks might pursue the project. This conflict between a developer's apparent good-faith attempt to respond to tree preservation concerns and the city's good-faith attempt to preserve the integrity of its PUD ordinance could perhaps have been resolved more appropriately by means other than litigation.
[ ]1 This distinguishes the New Mexico case on which the city in large measure relies, Webb v. Fox, 737 P.2d 82 (N.M. App. 1987). In Webb, the court held that a permit applicant who had expressed interest in buying the property, but had entered into no contract, was not an "aggrieved person" for purposes of New Mexico's equivalent to section 462.361. Id. at 85. The owner had also failed to attest to the proposed use in writing as the statute required. Id. Here, the option contract granted RCS a legal interest sufficient to confer standing. See Naegele Outdoor Advertising Co. of Minneapolis v. City of Lakeville, 532 N.W.2d 249, 254 (Minn. App. 1995) (stating that transactions based on contract may give rise to property interest for due process purposes), review denied (Minn. July 20, 1995).
[ ]2 This finding is conclusory in form, as are several of the others to some degree. The supreme court has held that a municipal body must "have the reasons for its decision recorded or reduced to writing and in more than just a conclusory fashion." Honn, 313 N.W.2d at 416. Outside the zoning context, Minnesota courts have required agencies to explain on what evidence they are relying and how that evidence connects rationally with their choice of action. See, e.g., Hiawatha Aviation of Rochester, Inc. v. Minnesota Dep't of Health, 375 N.W.2d 496, 501 (Minn. App. 1985), aff'd, 389 N.W.2d 507 (Minn. 1986). But in the area of zoning, this court has shown somewhat more deference. See, e.g., R.A. Putnam & Assoc., Inc. v. City of Mendota Heights, 510 N.W.2d 264, 266, 268 (Minn. App. 1994) (upholding decision based in part on finding that "[t]he proposed project does not limit development to a scale appropriate to the existing terrain and surrounding land use"), review denied (Minn. Mar. 15, 1994); see also City of Mounds View v. Johnson, 377 N.W.2d 476, 479 (Minn. App. 1985) (upholding rational basis despite conclusory findings), review denied (Minn. Jan. 23, 1986). Here, the reasons in support of the single valid rational basis presented were aired at a public hearing, recorded, and included in the record for our review in transcript form.