A05-1493

Pebble Creek Rochester, LLC, et al.,

Appellants,

vs.

City of Rochester,

Respondent.

Filed May 16, 2006

Affirmed

Worke, Judge

Olmsted County District Court

File No. C4-05-1052

Kenneth R. Moen, Moen Law Firm, 202 Riverside Building, 400 South Broadway, Rochester, MN 55904 (for appellants)

George C. Hoff, Justin L. Templin, Hoff, Barry & Kuderer, P.A., 160 Flagship Corporate Center, 775 Prairie Center Drive, , Eden Prairie, MN 55344; and

Terry Adkins, Rochester City Attorney, 201 Fourth Street SE, Room 247, Rochester, MN 55904 (for respondent)

Considered and decided by Dietzen, Presiding Judge; Wright, Judge; and Worke, Judge.

U N P U B L I S H E D O P I N I O N

WORKE, Judge

On appeal in this plat dispute, appellants argue that (a) respondent’s denial of appellants’ final plat application was arbitrary and capricious when appellants satisfied all requirements for plat approval, and (b) it is unlawful for respondent, as a mandatory component of a development agreement, to require appellants to pay a traffic- improvement charge. We affirm.

FACTS

In 2003, appellants Pebble Creek Rochester, LLC and Charles O. DeWitz applied for approval to develop approximately 390 acres (Pebble Creek). Respondent City of Rochester approved the Pebble Creek application subject to eight conditions; among them, execution of a development agreement. Appellants subsequently applied for a preliminary plat to subdivide approximately 53.47 acres of Pebble Creek. Respondent approved the preliminary plat subject to six conditions, including compliance with all conditions of approval of Pebble Creek. Appellants then applied for a final plat, which further subdivided approximately 16.20 acres of the conditionally approved preliminary plat. Respondent approved the final plat subject to five conditions.

In early 2005, respondent conducted public hearings to determine whether the conditions for approval had been satisfied to allow appellants to proceed with development. Discussions revealed that appellants had not satisfied conditions of approval for the preliminary plat—specifically, execution of a development agreement. Discussions then turned to transportation improvements needed to support the development. Appellants suggested that a traffic report indicated that no capacity changes would occur with the development of 16.20 acres and that they should not incur a Traffic Improvement District (TID) charge. A TID is a designated geographic area with substandard streets that require improvement or replacement with new development; developers receive information on improvement costs and the manner in which the city shares the costs. Appellants argued that they would not agree until they were offered a fair and equitable cost share.

Respondent determined that appellants had not satisfied the conditions of approval for the final plat and could not proceed with development. Respondent found that the final plat needed to satisfy the conditions of approval for the preliminary plat. Respondent stated that the “Final Plat [was approved] provided ‘no development will occur . . . and no further development permit will be issued until [respondent] determines public facilities are adequate to accommodate this development.’” Appellants filed a complaint in district court. The district court granted respondent’s motion for summary judgment, and this appeal follows.

D E C I S I O N

On appeal from a summary judgment, this court examines the record to determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990). Although a district court initially reviews a challenge to a municipality’s zoning decision, this court conducts an independent review of the record and decision, without affording deference to the district court. Chase v. City of Minneapolis,401 N.W.2d 408, 412 (Minn. App. 1987).

The parties disagree on this court’s review of respondent’s decision, and neither party’s suggested standard of review is precisely on point. Appellants suggest that we must determine whether respondent’s decision is unreasonable, arbitrary, or capricious, citing Hurrle v. County of Sherburne ex rel. Bd. of Comm’rs, 594 N.W.2d 246, 249 (Minn. App. 1999). But the issue in Hurrle regarded the denial of a preliminary plat application, and here we must decide if respondent was justified in denying appellants permission to proceed with development of a conditionally approved final plat. Respondent suggests that we use a rational-basis standard of review, citing Honn v. City of Coon Rapids, 313 N.W.2d 409, 414-15 (Minn. 1981). But a rational-basis standard of review is used when a municipality renders a legislative decision. Mendota Golf, LLP v. City of Mendota Heights, 708 N.W.2d 162, 180 (Minn. 2006). Because respondent conducted quasi-judicial proceedings before rendering its decision, we will determine whether respondent’s decision was unreasonable, arbitrary, or capricious.[1] See Handicraft Block Ltd. P’ship v. City of Minneapolis, 611 N.W.2d 16, 20 (Minn. 2000) (“[T]he three indicia of quasi-judicial actions can be summarized as follows: (1) investigation into a disputed claim and weighing of evidentiary facts; (2) application of those facts to a prescribed standard; and (3) a binding decision regarding the disputed claim.”).

Appellants argue that respondent’s refusal to acknowledge appellants’ compliance with the provisions of the approved final plat is arbitrary and capricious. Municipalities may adopt regulations governing the development of subdivisions. Minn. Stat. § 462.358 (2004). Additionally, municipalities may condition approval on such matters as “construction and installation of sewers, streets, electric, gas, drainage, and water facilities, and similar utilities and improvements[.]” Minn. Stat. § 462.358, subd. 2a. Municipalities may also condition approval on compliance with “other requirements reasonably related to the provisions of the regulations and to execute development contracts embodying the terms and conditions of approval.” Id. Minn. Stat. § 462.358, subd. 3b provides a two-step process for approval of subdivision plans, involving preliminary-and final-plat approval.

‘Preliminary approval’ means official action taken by a municipality on an application to create a subdivision which establishes the rights and obligations set forth in section 462.358 and the applicable subdivision regulation. In accordance with section 462.358, and unless otherwise specified in the applicable subdivision regulation, preliminary approval may be granted only following the review and approval of a preliminary plat or other map or drawing establishing without limitation the number, layout, and location of lots, tracts, blocks, and parcels to be created, location of streets, roads, utilities and facilities, park and drainage facilities, and lands to be dedicated for public use.

Minn. Stat. § 462.352, subd. 16 (2004). Preliminary approval “is intended to be comprehensive and, in fact, is the most important step in obtaining approval of the subdivision.” Semler Const., Inc. v. City of Hanover, 667 N.W.2d 457, 461 (Minn. App. 2003), review denied (Minn. Oct. 29, 2003).

After the city grants approval of a preliminary plat, the applicant may seek final approval.

Following preliminary approval the applicant may request final approval by the municipality, and upon such request the municipality shall certify final approval within 60 days if the applicant has complied with all conditions and requirements of applicable regulations and all conditions and requirements upon which the preliminary approval is expressly conditioned either through performance or the execution of appropriate agreements assuring performance.

Minn. Stat. § 462.358, subd. 3b. “[T]he statute places primary emphasis on the preliminary plat approval; once the conditions and requirements therein are satisfied, the plat mechanically receives final approval.” Semler,667 N.W.2d at 463.

Here, final-plat approval required satisfaction of the conditions of approval for the preliminary plat, and preliminary-plat approval required satisfaction of the conditions of approval for Pebble Creek. Appellants were required to have or obtain adequate public facilities and to execute a development agreement. Respondent found that one condition of approval involved “inadequate public facilities for the 53-acre parcel covered by the Pebble Creek Preliminary Plat” and that “[t]he need for adequate public facilities is not restricted just to the 16-acre parcel covered by the Final Plat application. . . . [Appellants have] not shown that the current public facilities for the 53-acre parcel are adequate[.]” As stated in Semler, preliminary approval “is intended to be comprehensive and, in fact, is the most important step in obtaining approval[.]” Semler, 667 N.W.2d at 461. Appellants did not satisfy the conditions of approval for the preliminary plat or the conditions of approval for the final plat. Thus, respondent’s decision to deny appellants permission to proceed with development was not unreasonable, arbitrary, or capricious.

Appellants argue that statutes, ordinances, and caselaw regarding requirements of plat approval are irrelevant because respondent approved the final plat. But the preliminary plat and the final plat were conditionally approved. Minn. Stat. § 462.358, subd. 3b, provides that the final plat shall be approved if “the applicant has complied with all conditions . . . upon which the preliminary approval is expressly conditioned[.]” Statutory construction is a question of law, which this court reviews de novo. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 393 (Minn. 1998). The primary object of statutory interpretation is to discern and effectuate the intention of the legislature. Minn. Stat. § 645.16 (2004); Olmanson v. LeSueur County, 693 N.W.2d 876, 879 (Minn. 2005). In doing so, when the meaning of a statutory term is clear, we apply the statute’s plain language. Molloy v. Meier, 679 N.W.2d 711, 723 (Minn. 2004). We construe words and phrases in accordance with common usage, Sprint Spectrum LP v. Comm’r of Revenue, 676 N.W.2d 656, 662 (Minn. 2004), and in the context of the entire statutory provision. ILHC of Eagan, LLC v. County of Dakota, 693 N.W.2d 412, 419 (Minn. 2005). A “condition” is “[a] provision making the effect of a legal instrument contingent on the occurrence of an uncertain future event.” The American Heritage College Dictionary 290 (3d ed. 2000). As stated, municipalities may condition approval of a subdivision under Minn. Stat. § 462.358, subd. 2a. Appellants did not satisfy the conditions of approval; thus, their applications were never approved.

Appellants next argue that they do not have to show adequate public facilities for 53.47 acres because they opted to proceed with an alternative that permitted appellants to work jointly with the city to make facilities adequate. This required appellants to enter into a development agreement. Respondent addressed appellants’ failure to enter into a development agreement, stating that “[Appellants] publicly indicated [] willingness to enter into required and voluntary development agreements with the city. To date, it has not done so.” Thus, although appellants elected to proceed with an alternative, appellants failed to satisfy the requirements of that alternative. Respondent correctly interpreted and applied the relevant statutes and city ordinances in denying appellants’ request to proceed with development. Because appellants have failed to comply with the conditions of approval that they agreed to, we do not need to reach the TID issue.

Affirmed.

[1] Ultimately, the standard of review we use will not affect the decision in this matter.