This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-159 

 

 

Housing and Redevelopment Authority in and for the

City of Bloomington, petitioner,

Respondent,

 

vs.

 

Bloomington Professional Building, LLC, et al.,

Appellants,

 

Wells Fargo Bank, National Association, et al.,

Respondents Below.

 

Filed January 30, 2007

Affirmed

Randall, Judge

 

 

Hennepin County District Court

File No. CD 2783

 

 

Marc J. Manderscheid, David H. Grounds, Briggs and Morgan, P.A., 2200 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for respondent)

 

Howard A. Roston, Bruce D. Malkerson, Patrick B. Steinhoff, Malkerson, Gilliland, Martin, L.L.P., 1900 U.S. Bank Plaza, South Tower, 220 South Sixth Street, Minneapolis, MN  55402 (for appellants)

 

            Considered and decided by Halbrooks, Presiding Judge; Randall, Judge; and Stoneburner, Judge.

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

 

RANDALL, Judge

            On appeal from the district court’s grant of a quick-take condemnation order, appellant property owners argue that the HRA exceeded its power to take private property, took private property that was not “blighted” for a nonpublic purpose and took property that was not necessary.  Additionally, appellants argue that the HRA failed to show a quick-take was necessary.  We find the HRA acted within its authority and the district court properly exercised its discretion.  We affirm.

FACTS

            This case concerns the government acquisition of commercial property located at 3800 West Old Shakopee Road, Bloomington, Minnesota, legally described as Lot 1, Block 1, Ewing Addition (“Foreman Property”).  Appellant Bloomington Professional Building, LLC, a small business owned by Mark and Gail Foreman, purchased the Foreman Property in approximately 1992.  Appellant Foreman & Airhart, Ltd., also a small business owned by Mark and Gail Foreman, is a tenant in the Foreman Property.  Respondent Bloomington Housing and Redevelopment Authority (the “HRA”) is the condemning authority in this matter and is acting on behalf of and for the City of Bloomington.[1]

            The Foreman Property occupies approximately three acres and contains an office building with approximately 6,600 square feet.  The district court found, and the parties do not dispute, that the Foreman Property is not blighted; instead, the Foreman Property “is a modern, updated, beautiful building filled with upstanding tax-paying tenants.  It has been maintained with great personal care by Mark and Gail Foreman, down to the landscaping and the flowers.”  The Foreman Property never received any complaints from the city or tenants regarding its condition or maintenance.

            What is central to the issue is that the Foreman Property is but one of eight parcels identified by the city at the northeast corner of France Avenue and Old Shakopee Road (the “Northeast Quadrant”) for inclusion in its redevelopment plan.  The other seven parcels included single-family homes, a vacant strip mall, and an abandoned gas station.[2]  Originally, the vacant strip mall was acquired for a road improvement project.  The abandoned gas station was acquired for the purpose of eliminating blight with the understanding that a portion of the property would be dedicated to the road improvement project.  The HRA never completed a blight study on the gas station or the strip mall parcels because the gas station was abandoned and boarded up and the vacant strip mall was acquired directly by the city.[3]

            In August of 1998, due to noticeable deterioration in the area and resident complaints, the Bloomington City Council (the “City Council”) identified the Northeast Quadrant “as their number one priority for redevelopment.”  The City Council acted in September of 1998 by passing Ordinance No. 98-43, declaring a moratorium on any new construction in the area.  The moratorium acknowledged complaints from residents resulting from the deterioration in the area due to the abandoned gas station and vacant retail space and that the area remained undeveloped because of relatively small dimensions requiring assembly of adjacent parcels to facilitate redevelopment.  The moratorium granted the HRA and City Council time to create a redevelopment plan. 

            During May of 1999, the HRA and the City’s Planning Commission formed a Planning Advisory Committee (“PAC”) consisting of government officials and citizens.  In January of 2000, the PAC drafted and proposed a redevelopment plan which was ultimately rejected following strong citizen opposition.  Subsequently, the city created a new 12-person committee consisting of ten citizen stakeholders, including Mark Foreman, an HRA representative, and a planning commissioner.  The committee, after meeting several times between October of 2000 and December of 2001, concluded that the Northeast Quadrant needed a comprehensive upgrade in appearance and re-configuration in building space.  Specifically, the committee concluded:

            Road expansion in the area will require the acquisition of the Mobil station and a portion of the parking of the retail center along France Avenue.  The remaining piece of the Mobil station parcel cannot be redeveloped.  The strip mall[’]s parking and access will [be] reduced.  The [Foreman Property] on the site cannot be expanded and is in need of upgrading.  Pedestrian crossings are uncomfortable.

 

            The Committee considered options for improving access to the proposed redeveloped site.  Public Works expressed the desire to align driveways from Valley West and any future development on the Northeast.  In order to accomplish this, additional homes must be acquired.

 

            This quadrant has been identified for over twenty years in City Planning Division documents as needing an upgrade in appearance and configuration of building space.  The proposed roadway improvement which through right-of-way acquisition would further constrain the use of this site for its current purposes, and the opportunity to coordinate this corner redevelopment with that of the Northwest corner of the intersection, together suggest that this is the time to proceed with redevelopment.

 

In order to accomplish these recommendations, the committee suggested:

·        Assemble eight properties at this quadrant, three commercial and five residential, through a public redevelopment project to provide a multilevel complex of office and limited retail space.

·        Design considerations for the quadrant include positioning the building westward toward the intersection with parking toward the east without creating a canyon-like appearance along France Avenue.

·        Appropriate entry and exit points on both France Avenue and Old Shakopee Road must be created that are consistent with the overall road improvement plan and installation of an additional traffic light on France Avenue.

 

Mark Foreman, as a committee member, participated in the planning process and supported redevelopment, understanding that he would be selected to redevelop the Northeast Quadrant.  On August 1, 2002, Mark Foreman sent the HRA a letter of intent to redevelop the Northeast Quadrant, followed on November 8, 2002, by a comprehensive development proposal.[4]  The HRA rejected the Foreman/Boisclair proposal because the proposal was in direct opposition to the comprehensive redevelopment plan for the area.  In June of 2003, Mark and Gail Foreman submitted a second proposal, which the HRA rejected.  The HRA subsequently requested proposals from other developers.

            In May of 2005, following seven years of planning and investigation, the city passed Resolution No. 2005-12, “propos[ing] to establish the France Old Shakopee Road Redevelopment Project (the “Project”) for the purpose of publicly assisting in the acquisition of blighted property, assembling land sufficient for development, clearing areas acquired and financing other qualifying public improvements relating to construction of new housing, retail, or office in the area. . . .”  A comprehensive redevelopment plan was created,[5] followed by two additional resolutions passed by the city related to the redevelopment. 

            Appellants introduced evidence, through the testimony of an expert, a registered architect, that the Northeast Quadrant redevelopment was feasible without taking the Foreman Property.  Appellants’ expert presented alternative development options for the Northeast Quadrant which excluded the taking of the Foreman Property.  HRA never did consider a redevelopment plan without including the Foreman Property in the redevelopment.

            The HRA sought to take title and possession to the Foreman Property pursuant to Minn. Stat. § 117.042 (2004), the “quick-take” statute.  Resolution No. 2005-14 stated:

            Section 3.  For the reasons set forth herein and in order to move forward with the redevelopment activities contemplated by the Redevelopment Plan, the HRA hereby determines that it is necessary to complete the assemblage of land for the proposed redevelopment of the northeast corner of France Avenue South and Old Shakopee Road as quickly as possible, and to proceed without delay pursuant to the provisions of Minnesota Statutes Section 117.042. . . . Legal counsel for the HRA is hereby further directed to take all actions to promptly acquire the Real Property, including to commence and complete quick take proceedings for the acquisition of the Real Property pursuant to Minnesota Statutes Section 117.042.

 

The HRA entered into a development contract with Greco Real Estate Company, LLC (“Greco”).  Greco was ready to begin construction on the project in approximately March or April of 2006, or promptly after title to the Northeast Quadrant properties was transferred to Greco.  Greco’s project manager on the Northeast Quadrant redevelopment project was asked what Greco’s response would be if the project was delayed for a year.  The project manager responded, “I can not answer that.  I don’t know the answer to that at this point.”

            The district court found that the taking of the Foreman Property was for a public purpose, was reasonably necessary to that purpose, and was not arbitrary or capricious.  The district court also granted the HRA’s motion to acquire title to the Foreman Property pursuant to the quick-take statute.

D E C I S I O N

I.

            Appellants contend that the HRA exceeded its authority in condemning the Foreman Property.  We disagree.  To take property by eminent domain, a condemning authority must establish that:  (1) the taking is for a public use under the Fifth Amendment to the United States Constitution and Minn. Const. art. 1, § 13; and (2) the taking is necessary.  City of Duluth v. State, 390 N.W.2d 757, 762-64 (Minn. 1986).  Minnesota law provides that an authority may “by the exercise of the power of eminent domain, in the manner provided by chapter 117, acquire real property which it may deem necessary for its purposes, after the adoption by it of a resolution declaring that the acquisition of the real property is necessary . . . to carry out a redevelopment project.”[6]  Minn. Stat. § 469.012, subd. 1g(a)(2) (2004).  A “redevelopment project” is defined as “any work or undertaking” to acquire “blighted areas and other real property for the purpose of removing, preventing, or reducing blight, blighting factors, or the causes of blight.” Minn. Stat. § 469.002, subd. 14(1) (2004).

            The district court found that the HRA plainly had statutory authority in the present case based on Minn. Stat. § 469.012, subd. 1g, since the HRA acted for a public purpose and in a public way.  Appellants disagree and argue that under Minn. Stat. § 469.001 (2004), the HRA exceeded its authority by condemning the Foreman Property for reasons other than the statutorily prescribed purposes of housing development or clearing and redeveloping of blighted areas.  Appellants rely on Minn. Stat. § 469.001, claiming that section 469.001 grants power to a condemning authority.  Section 469.001 states the overriding purposes of sections 469.001 to 469.047.  Minn. Stat. § 469.001.  Section 469.012, specifically subdivision 1g, grants a condemning authority the power to take property.  Hous. & Redevelopment Auth. v. Walser Auto Sales, Inc., 630 N.W.2d 662, 666-67 (Minn. App. 2001) (stating that Minn. Stat. § 469.012 grants an HRA authority to take property), affirmed by 641 N.W.2d 885 (Minn. 2002).[7]

            At trial, a witness for respondent conceded that the redevelopment plan did not include housing as one of its purposes.  The record, including Ordinance No. 98-43, Resolution No. 2005-12, and Resolution No. 2005-14, indicates that blight in the area was always a concern.  Specifically, the abandoned gas station and vacant retail mall were obsolete structures.  Due to limitations in lot sizes and layout, the city could not redevelop the Northeast Quadrant, including both the gas station and retail mall lots, absent assembly of adjacent parcels.  By definition, “blighted area” includes “any area with buildings or improvements which, by reason of dilapidation, obsolescence,[8] overcrowding, faulty arrangement or design, lack of ventilation, light, and sanitary facilitates, excessive land coverage, deleterious land use, or obsolete layout, or any combination of these or other factors, are detrimental to the safety, health, morals, or welfare of the community.  Minn. Stat. § 469.002, subd. 11 (2004).  The statutory definition of blighted area includes both the condition of the service station and retail mall as well as the layout issues confronting the city.  It is irrelevant that the Foreman Property failed to meet the definition of blight because a city acts within its power by eliminating blight on an area basis rather than a structure-by-structure basis.  See Hous. & Redevelopment Auth. v. Schapiro, 297 Minn. 103, 107, 210 N.W.2d 211, 213 (1973) (observing that elimination of blight on an area basis serves public purpose).  Therefore, the HRA did not exceed its authority in condemning appellants’ property.

II.

            The Minnesota Supreme Court recently stated that

            [b]efore condemning private land, a condemning authority . . . must determine that there is a public use for the land and that the taking is reasonably necessary or convenient for the furtherance of that public use.  Although we have said that questions of public use and necessity are “judicial questions,” the scope of judicial review of the condemning authority's determination of these questions is actually narrower than that characterization might imply.  This is because the determinations of the condemning authority are regarded as legislative decisions which will be overturned only when they are “manifestly arbitrary or unreasonable.”  Thus, there are two levels of deference paid to condemnation decisions:  the district court gives deference to the legislative determination of public purpose and necessity of the condemning authority and the appellate courts give deference to the findings of the district court, using the clearly erroneous standard.

Lundell v. Coop. Power Ass’n., 707 N.W.2d 376, 380-81 (Minn. 2006) (citations and footnote omitted).  Thus, the burden of showing reasonable necessity or convenience for the taking is on the condemning authority.  Id. The district court then reviews the legislative decision to ensure that it was not made in a manifestly arbitrary or unreasonable manner.  Id. at 381.  Finally, at the appellate level, the determination of public purpose and necessity are questions of fact, and the court determines whether the district court clearly erred in its findings on whether the condemning authority met its burden.  Id.; see Schapiro, 297 Minn. at 109, 210 N.W.2d at 214 (affirming a district court’s findings unless the findings are clearly erroneous, suggesting that a mistake has been made).

            When determining whether a district court’s findings of fact are clearly erroneous, an appellate court “takes the view of the evidence which is most favorable to the trial court’s findings” and defers to district court credibility determinations.  Trondson v. Janikula, 458 N.W.2d 679, 682 (Minn. 1990); Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).  This court will not rule the finding clearly erroneous unless we are “left with the definite and firm conviction that a mistake [was] made.”  Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quoting Gjovik v. Strope, 401 N.W.2d 664, 667 (Minn. 1987)).

A.  Public Purpose

            Appellants argue that the HRA condemned the Foreman Property for an unconstitutional private purpose.  A governmental body may exercise its power of condemnation only for a public use or purpose.[9] Schapiro, 297 Minn. at 106, 210 N.W.2d at 213.  An incidental benefit to a private interest from the condemnation “does not deprive the activity of its public nature if its primary purpose is public.” Port Auth. v. Groppoli, 295 Minn. 1, 7, 202 N.W.2d 371, 374 (1972) (quoting Port Auth. v. Fisher, 269 Minn. 276, 288, 132 N.W.2d 183, 192 (1964)).

Appellants argue that condemning the Foreman Property for the purpose of transferring it to another private entity, Greco, for redevelopment, does not constitute a public purpose.  Appellants acknowledge that transferring property to another private party does not in and of itself render a taking unconstitutional.  See Schapiro, 297 Minn. at 107, 210 N.W.2d at 213 (“[The] subsequent transfer of such lands to private parties is incidental to the main public purpose.”).  Here, however, appellants argue that the city’s predominant purpose was transferring the property to a private developer.  The district court stated that the “proposed taking is for the purpose of economic development, the creation of a new urban village, and the rejuvenation of an intersection that has now been largely cleared of previous buildings and uses.”

            Additionally, appellants argue that the city’s plan lacks a predominant public purpose as evidenced by the lack of construction resulting in public facilities, an increase in the local tax base, an increase in employment, or any other tangible benefit to the public.  The city’s stated purposes for the Northeast Quadrant include redevelopment of the area according to its comprehensive plan, removal of blighted and obsolete structures, assembling land sufficient to effectuate the redevelopment plan, and the improvement and construction of streets, utilities, retail, and/or office space.  See Hous. & Redevelopment Auth. v. Minneapolis Metro., 259 Minn. 1, 15, 104 N.W.2d 864, 874 (1960) (providing that any evidence in the record supporting the existence of public purpose is sufficient).  The acquisition of blighted areas or the removal of substandard structures serves a public purpose.  Schapiro, 297 Minn. at 107, 210 N.W.2d at 213.  Additionally, a public purpose can be served when a condemning authority takes land to create a new business development.  See Kelo v. City of New London, Conn., et al., 125 S. Ct. 2655, 2661-62 (2005) (stating that the city’s economic development plan satisfied the public use requirement, even though the city was not planning to open condemned land to use by general public, where plan served public purpose).

If it appears that the record contains some evidence, however informal, that the taking serves a public purpose, there is nothing left for the courts to pass upon . . . The court is precluded from substituting its own judgment for that of the [public body] as to what may be necessary and proper to carry out the purpose of the plan. 

 

Walser, 630 N.W.2d at 666 (quoting In re Minneapolis Cmty. Dev. Agency (MCDA) v. Opus N.W., L.L.C., 582 N.W.2d 596, 598 (Minn. App. 1998)).

It is clear that the Foreman Property itself is not obsolete, blighted, or otherwise substandard.  Consequently, appellants argue that the city’s taking constituted abuse of the HRA’s authority amounting to an infringement on appellants’ constitutional rights.  As previously pointed out, if a building in the area sought to be redeveloped is not substandard, this does not necessarily invalidate the taking.[10]  Schapiro, 210 N.W.2d at 213.  Even if the Foreman Property was not individually substandard or blighted, the city acts within its power by eliminating blight on an area basis rather than a structure-by-structure basis.  See id. (observing that elimination of blight on an area basis serves public purpose).

            The Foreman Property is an integral part of the city’s overall redevelopment plan.  See Walser, 630 N.W.2d at 668-69 (finding that condemnation of land in furtherance of a city’s comprehensive redevelopment plan is a valid public purpose).  Although the city intends to transfer the area to private developers (of many, Mark Foreman hoped to be one), any economic benefit to a private party is incidental to the city’s public purposes of redeveloping the area in order to eliminate obsolete structures, ease traffic concerns, and increase the areas productivity.  The private developers are simply a means of achieving the redevelopment.  Although private parties will benefit, nothing in the record suggests that the city’s decision was motivated by this potential profit.

B.  Necessity

            Appellants argue that the condemnation of the Foreman Property was unnecessary.  The condemning authority bears the burden of proving that a taking is necessary.  Regents of Univ. of Minn. v. Chi. & Nw. Transp. Co., 552 N.W.2d 578, 580 (Minn. App. 1996) (citation omitted), review denied (Minn. Nov. 20, 1996).  The condemning authority need not prove absolute necessity, but must establish that the condemnation is “reasonably necessary or convenient for the furtherance of a proper purpose.”  City of Duluth, 390 N.W.2d at 764-65.  “To overcome a condemning authority’s finding of necessity there must be overwhelming evidence that the taking is not necessary.”  Lundell, 707 N.W.2d at 381. 

            Appellants argue that the HRA never produced any evidence that the taking was necessary to accomplish its redevelopment objectives.  We disagree.  The district court found “that assemblage of additional property was necessary, including the Foreman Property in the northeast quadrant, is reasonable and flows from the comprehensive development plan.”  The limitations in lot sizes and layout made it necessary for the city to take the Foreman Property.  In 1998, when the city began considering redevelopment of the area, the city acknowledged the problem of “relatively small dimensions” in lot sizes and the need to assemble adjacent parcels in order to eliminate the “eyesore.”  Throughout the following seven years, the city entertained proposals and considered various redevelopment scenarios, continuously concluding that the Northeast Quadrant could not be redeveloped due to lot size without the assembly of adjacent parcels.  Therefore, the HRA concluded that the Foreman Property was required in order to complete its comprehensive plan.  See Berman v. Parker, 348 U.S. 26, 35-36, 75 S. Ct. 98, 104 (1954) (“the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch.”).

            Appellants contend that the HRA never considered excluding the Foreman Property in its redevelopment plan.  Appellants’ expert testified that the Northeast Quadrant is fully developable without the HRA acquiring the Foreman Property.  However, a party cannot disprove the necessity of a condemnation simply by suggesting alternatives to the plan.  City of Duluth, 390 N.W.2d at 766 (stating that merely suggesting possible alternatives to the city’s plan does not support a finding of arbitrariness); see Fairchild v. City of St. Paul, 46 Minn. 540, 543, 49 N.W. 325, 325 (1891) (“As the legislature is the sole judge of the public necessity which requires or renders expedient the exercise of the power of eminent domain, so it is the exclusive judge of the amount of land . . . which the public end to be subserved requires shall be taken.”).  Further, appellants suggested alternatives do not satisfy their burden of showing by overwhelming evidence that the proposed taking of property was not necessary.  City of Duluth, 390 N.W.2d at 764 (requiring a property owner to show that the condemning authority’s actions were unlawful, manifestly arbitrary, or unreasonable, or that the evidence against necessity was practically conclusive against the authority).

            The city engaged in seven years of deliberate investigation and the district court concluded that due to lot size and layout issues the Foreman Property was necessary to effectuate the city’s comprehensive redevelopment plan.  Throughout the planning process, all parties, including Mark Foreman, appeared to be in agreement, until Foreman’s proposal was rejected.  Appellants have not shown that the Foreman Property was unnecessary.

III.

            Appellants argue that the district court erred in granting the HRA’s motion for an immediate transfer of title and possession pursuant to Minn. Stat. § 117.042 (2004),  the quick-take provision, because no evidence was presented supporting the need for a quick-take.  We disagree.  Section 117.042 provides in relevant part:

            Whenever the petitioner shall require title and possession of all or part of the owner’s property prior to the filing of an award by the court appointed commissioners, the petitioner shall, at least 90 days prior to the date on which possession is to be taken, notify the owner of the intent to possess . . . .

 

The quick-take provision focuses on when the condemning authority can take property instead of how or if it actually can.  See In re Condemnation by City of Minneapolis, 632 N.W.2d 586, 587 (Minn. 2001) (explaining that quick-take procedures “allow a condemning authority to acquire immediate title to and possession of property even before damages for the taking are determined.”).  Use of the quick-take statute is limited to cases where the condemning authority can “reasonably determine that it needs the property before the commissioners’ award could be filed.”  City of Minneapolis v. Wurtele, 291 N.W.2d 386, 396 (Minn. 1980). 

            Here, the HRA and the city acquired all of the parcels in the Northeast Quadrant necessary to completeitsredevelopment plan, except for the Foreman Property.  The district court granted the quick-take acknowledging that transferring title creates certainty.  See id. (granting quick take since the city needed to assure itself and its developers of clear title before making further investments in the project).  The district court was concerned that an additional delay during the next phase, the damages phase, could cause investors or other parties to back out of the development plan. 

            Finally, Greco was ready to begin construction as soon as the HRA acquired and transferred title to Greco.  Taking into account an appellate court’s deferential review of a condemning authority’s decisions (when supported by the record), the HRA’s decision to seek a quick-take of appellants’ property was proper.

Affirmed.