Interim Ordinance Escape Hatch Affirmed

Today, the Supreme Court affirms the prior decisions in Pawn America v. St. Louis Park, confirming that there still is a “right way” to dodge a controversial project.  A little over a year ago, the Court of Appeals released its opinion in this case on the same day it released Pigs R Us LLC v Compton Township.  I thought the cases paralleled each other: landowner applies for permit, intially gets permit, citizens raise Cain, city/town backtracks and looks for a way out.  Compton Township chose to hastily rewrite its ordinance to rule out swine facilities; St. Louis Park voted to commission a zoning study and adopt an interim ordinance blocking pawnshops.  Both governments were clearly taking evasive action to avoid granting a permit to an unpopular use, but St. Louis Park prevailed in court while Compton Township has been forced to grant the permit and likely pay damages.  When the Supreme Court granted cert to Pawn America last October, it raised concern that the interim-ordinance dodge would disappear.

Not to worry.  The central question posed by Pawn America was whether the Court would grab hold of the implied “good faith” requirement that’s always been read into the interim ordinance statute (courtesy of a Supreme Court decision on moratoria issued the same day the statute was adopted) to dig into the City’s “real” reason for throwing up an interim ordinance, or whether mechanical compliance with the statute will do.  Justice Barry Anderson removes the doubt (and the need to overrule any past cases) in a footnote:

We view good faith, in this context, as non-arbitrary and non-capricious actions of municipalities, and not as a heightened standard of behavior that city officials must meet in order to exercise authority under Minn. Stat. § 462.355, subd. 4(a).

So there you go.  An interim ordinance is just like any other ordinance – it will be reviewed for “whether the ordinance is reasonably related to the planning process and the public health, safety, and welfare, or whether it is unreasonable, arbitrary, or capricious.”  In other words, a very low bar.

All that’s left is whether the city “is conducting studies or has authorized a study to be conducted,” the prerequisite to adopting an interim ordinance.  St. Louis Park cut this as close as you can, putting the study authorization and the interim ordinance into the very same resolution for simultaneous adoption.  Justice Anderson (writing for a unanimous Court, by the way) shrugs and holds simultaneous adoption is OK.  I’m sure it helped that St. Louis Park quickly followed up and conducted the study, adopting new rules within 4 months, but this isn’t a part of the new rule.  Commission a planning or zoning study, and you’re clear to adopt an interim ordinance relating to the subject(s) of study – even in the same motion with the study authorization.  As long as there’s a rational basis for the study, the other contextual details – such as the application that brought the matter to the City’s attention – won’t matter.

Let’s note that the Court is on a tear lately with land use decisions that negate long-standing practices in the field, practices often backed by a fair amount of either pre-statute precedent (like this one) or Court of Appeals precedent.  DNR authority in shoreland areas, variances in general, 15.99 practice, and now interim ordinances.

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Court of Appeals 08.24.10

A couple of cases of interest on the unpublished list today:

Dayspring Development, LLC v.  Little Canada:  A case on its third trip to the Court; this time, the Court holds that the LLC lacks standing to seek compensation for a regulatory taking that occurred between 2003 and 2005.  At the time of the taking, the principal officer of the LLC owned the property individually, only quitclaiming the property to the LLC after the City relented and granted a final plat and development agreement.  The Court determines that the interest in takings compensation is separate from the general ownership interest, and the transfer of property to the LLC failed to convey the right to takings compensation.  This is not the usual outcome for a regulatory takings case, but the Court felt that because the takings period was finite (ending with the plat approval), the right to compensation should be treated as a standard eminent-domain claim, accruing to the owner at the time of the taking, unless the interest is specifically conveyed.  The logic is simple enough, but don’t be surprised if the Supreme Court picks it up to chew over the need for a separate transfer of the right to compensation.

Otsego v. New River Hospital District:  What drives a judge to quote classic-rock standards in an opinion?  Read Judge Johnson’s concurrence in this case and decide for yourself.  I can’t decide whether it’s a stellar display of legal principle applying over personal opinion, or just a judge throwing a tantrum after being talked out of legislating from the bench.  The opinion certainly makes clear that launching an appeal when your only argument is “arbitrary and capricious” is normally a fool’s errand.  Where Judge Johnson loses me is that it’s not because of a weak legal standard or drafting problem in the Legislature; it’s the proper separation of powers in government that keeps the courts from playing Monday-morning quarterback with executive and legislative decisions.  In short, it’s a feature, not a bug.  This opinion should immediately go into the curriculum of high-school civics classes throughout the state.

Harmsen v. Minneapolis: Notable for the return of a normal application of the Ridgewood estoppel analysis.  “Normal,” in the sense that affirmative misconduct – malfeasance – is required to prevent the enforcement of otherwise valid law.   Last month, in North Oaks v. Sarpal, a different three-judge panel seemed to throw that requirement overboard when it held that “erroneous government advice” was enough to satisfy the test (or at least was enough to back up a trial court judge who thought so).  It’s not at all clear how “erroneous advice” differs from any other mistake a planning department employee might make, but that’s now the central holding of a published Court of Appeals opinion.  The facts in Harmsen don’t set up a great conflict between the opinions, but it shows that the Sarpal decision needs to be harmonized, somehow, with the Ridgewood-KMart line of cases on wrongful conduct.  If “malfeasance” is not the standard, then the standard effectively becomes “Does the judge blame the city or the owner for the problem?” – especially if the decision is only reviewed for abuse of discretion.

The DNR Adjusts

In the last several months, the Supreme Court has eviscerated the DNR’s ability to directly manage shoreline property development.  The DNR had exercised review authority over shoreline variances and insisted that its agency rules overrode local ordinances, even when local ordinances had been DNR-approved.  Those powers have now vanished, and in March the DNR suggested that it was going to simply challenge “bad” local decisions in district court.

Today’s Star Tribune reports that the agency is following through on that plan.  As it turns out, for all the Court has done to limit the DNR this year, the Krummenacher variance decision will likely give the agency its mojo back.  The DNR has sued a township in western Minnesota to nullify a variance granted to allow a lake home within 15 feet of the shoreline.  The news story, and the Star Tribune’s prior reporting, makes clear just how much of a seismic shift the Krummenacher holding creates; local officials in the area estimate that 70% – 90% of variance requests are approved by local officials.  In the past, just about anybody who presented something out of line with zoning was simply advised to apply for a variance.  Again, if the use made sense (or at least didn’t offend anyone), the variance was easy to get as long as the “problem” arguably creating the need for a variance wasn’t the owner’s fault.  At this point, cities and towns should just stop suggesting that owners should seek variances, as the standard is now extremely difficult to satisfy.  That, and if it involves a shoreline, bluffline, or scenic area, the DNR will sue you for approving it.