Variance “Fix” Signed; Happy Days are Here Again

OK, that’s probably over-selling it.  But it is true that earlier this week the Legislature finished work on legislation to undo last summer’s Supreme Court decision and make zoning variances viable again, and the Governor signed the bill yesterday afternoon.  The new law is effective today.

The new law eliminates almost every difference that existed between the County variance law (MS 394.27, subd. 7) and the variance law used by cities and towns (MS 462.357, subd. 6).  Now everyone will use one standard, “practical difficulties,” defined this way:

“Practical difficulties” … means that the property owner proposes to use the property in a reasonable manner not permitted by the zoning ordinance; the plight of the landowner is due to circumstances unique to the property not created by the landowner; and the variance, if granted, will not alter the essential character of the locality.

This law restores the common practice on variance that existed before the Krummenacher decision last July.  So, as of today, it is again worthwhile to consider a variance for a garage or an out-building – under Krummenacher, these could never happen because the property already had viable economic use in the form of the applicant’s house.

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Selected Legislative Updates

by Andrew Haugen

103F.351: St. Croix Wild and Scenic River Act

 Minn. Stat. 103F.351 is also referred to as the Lower St. Croix and Scenic River Act. This Act protects the Lower St. Croix River Area by establishing certain planning criteria and processes that must be followed within the designated area. The act allows for a Commissioner of Natural Resources to aid in developing a comprehensive master plan for the area, as well as adopt rules that establish certain guidelines for zoning activities within the region.

 The amendment to the Act in the 2010 regular session did not delete or change any current language in the Act. The changes served to add a section “d” in subdivision 4, the Rules portion of the Act. The newly added section “d” allows for commercial, nature-oriented and educational uses that occur in rural districts to be classified as conditional uses on property that meets certain criteria. The language is permissive in that the uses “may be allowed,” and makes no requirement that such lands shall be conditional uses.

 Eligibility requirements include that the use must be located in a rural district as defined by the rest of the Act, that the property was in similar use on May 1, 1974 and on January 1, 2010, and if the use “complies with all dimensional standards in the rules, including variance requirements for any changes to the properties” made after January 1, 2010 and also if the use is “similar in scope” to the use that existed on the property on May 1, 1974.

 118A.05: Deposit and Investment of Local Public Funds: Contracts and Agreements

The amendment to subdivision three of this section allows for securities lending agreements to be entered into with qualifying institutions as long as said institution has a bank office locate in Minnesota. This bank office language replaces the requirement that a qualifying institution have “its principal executive office” in Minnesota.

118A.06: Deposit and Investment of Local Public Funds: Safekeeping; Acknowledgements

The substantive changes in this section act to spell out the various requirements that must be met in order to qualify as a security broker-dealer that may hold investments, contracts or agreements for safekeeping.

The three requirements, which are inclusive, state that the broker-dealer must be registered under Chapter 80A or exempt from registration requirements, that it must be regulated by the SEC, and (in what is the most substantial addition) it “maintain insurance through the Securities Investor Protection Corporation or excess insurance coverage in an amount equal to or greater than the value of the securities held.”

471.59: Joint Exercise of Powers

Amendments to this statute acted to add federally recognized Indian tribe and the Minnesota Historical Society to the list of government units that may, by agreement entered into through action of their governing bodies, participate in joint powers agreements.

The other governmental units already authorized to enter into such agreements include every city, county, town, school district, independent nonprofit firefighting corporation, other political subdivision of Minnesota or another state, another state as a whole, the University of Minnesota and a few other hospital and employment related sectors.

44.01: Municipal Civil Service: Peace Officer

A definition of a “peace officer” was added to section 1 of chapter 44 as subdivision 8(a).

44.10: Municipal Civil Service: Probationary Period

Section 10 amended the probationary period for a peace officer from a length of six months out to twelve months. The amendments were made effective to any peace officer hired under chapter 44 on or after the effective date of the amendments.

412.02: City Elections, Officers, Terms, Vacancies

Amendments added subdivision 1a to this section. The new subdivision states that neither the mayor nor any city council member may be employed by the city. Employed, as defined, means full-time permanent employment under the given city’s employment policy, and the amendment is to take effect August 1, 2010.

326B.121: State Building Code; Application and Enforcement: Municipal Enforcement

Amendments made during the 2010 regular session specifically apply to municipal enforcement of the state building code. The changes allow for a municipality to enact or enforce ordinances that require existing components or systems of any structure to be maintained in a safe and sanitary condition or in good repair. The municipality is limited, however, as it cannot demand standards exceeding those under which the structure was built, reconstructed or altered unless retroactive provisions have been adopted in the State Building Code. 

Amendments to MGDPA

On May 18, Governor Pawlenty signed into law a bill relating to data practices and data classifications. Although not imposing sweeping reforms, the law does contain some noteworthy changes. For example, the bill expanded what types of personnel data are classified as public, including classifying the “terms and conditions of employment relationship” as public data under § 13.43, subd. 2(a)(1); and also classifying “work-related continuing education” as public data in 13.43, subd. 2(a)(7).

More significantly, however, the Legislature reworked a subdivision that will undoubtedly impact public sector labor law. Minn. Stat. § 13.43, subd. 2(b) was amended so that disciplinary action will be not public data if an arbitrator sustains a grievance and reverses all aspects of the disciplinary action. Prior to the amendment, if a disciplinary grievance proceeded to arbitration under a collective bargaining agreement, the final disposition of the grievance, the specific reasons for the disciplinary action, and the data documenting the basis of the discipline were classified as “public data”—even if the grievance was ultimately sustained and the discipline reversed by the arbitrator. With the new amendment, however, if a grievance is sustained and all aspects of the discipline are reversed, then the disposition, the documentation, and the reasons for the disciplinary action are classified as “not public data.” This seems to bring the practical effect of the statute more in tune with its intent. A successful grievant need no longer be concerned that the “facts” giving rise to the disciplinary action will be disseminated to the public. It should be interesting, however, to see how parties interpret the phrase “all aspects of any disciplinary action.” For instance, if an arbitrator reverses a discharge but imposes a suspension, is that a reversal of “all aspects” of the disciplinary action? Perhaps more interesting (read, nuanced), if an arbitrator reverses a discharge and reinstates the employee but does not award backpay, is that a reversal of “all aspects” of discipline?

There were two other interesting amendments tucked into the bill. First, an amendment which classifies the “security features of building plans, building specifications, and building drawings of state-owned facilities and nonstate-owned facilities leased by the state” as “nonpublic data.” Second, parole and county probation authorities have been given access to firearms data (i.e. purchase/transfer documentation and applications for permits to purchase or carry) on individuals subject to their supervision.

Last, the procedure for a responsible government authority to seek permission to temporarily classify data as private or confidential (with respect to data on individuals), or nonpublic or protected nonpublic (with respect to data not on individuals) was amended. Most notably, an application may be withdrawn prior to the commissioner’s decision unless it affects similar government entities. The amended law also permits the responsible authority to request approval for a new or different use or dissemination of the data during the period of temporary classification.

Supreme Court Rules Unallotment Improper

Earlier today, the Supreme Court released its unallotment opinion.  On a 4-3 vote, the Court affirmed Judge Kathleen Gearin’s decision that the Governor’s unallotment of funds was improper.  Chief Justice Magnuson wrote the majority opinion, joined by Justices Page, Meyer and Paul Anderson.  Justice Gildea wrote the dissent, joined by Justices Dietzen and Barry Anderson. 

The case is ostensibly decided on statutory interpretation, thus avoiding a constitutional ruling.  I say “ostensibly,” because the strongest part of the majority opinion’s “interpretation” is its examination of constitutional separation of powers.  Finding ambiguity about the time constraints that govern when unallotment can be exercised, the crucial distinction made by the majority is between budget creation and budget execution.  Finding that our state requires the production of a balanced budget, the Chief Justice reasons that the Governor and Legislature must arrive at a balanced budget before it can be executed.  In the budget-creating process, the majority reasons, the constitution gives the Governor only three true “powers”: approve bills, veto bills, or line-item veto bills.  With these actions, the acts of the Legislature either go into effect, or it has a real-time opportunity to respond through an override or new legislation.  Allowing unallotment at this stage clearly upsets the balance of power; the Governor can artifically create a “shortfall” by vetoing revenue measures, thus allowing a complete re-write of the budget.  The Chief Justice applies this reasoning to conclude that the Legislature could not have intended to simply hand its budget functions over to the Governor.  The majority interprets the statute to only confer unallotment powers to the Governor after the creation of a balanced budget and the start of the budget biennium.  In so doing, the justices conclude that Governor Pawlenty jumped the gun, and support Judge Gearin’s conclusion that the unallotments are void.

The dissent finds no ambiguity in the statute, and chides the majority for “rewriting” the statute.  Justice Gildea then proceeds to find the statute constitutional.  The flaw in the dissent is that it spends no time addressing the constitutional process for creating a budget, instead focusing its energy on responsibility for “avoiding deficit spending.”  Tellingly, in doing so, the dissent never notes that the “deficit” here is artificial – the Governor vetoed the revenue bills that would have put the budget in balance, and declined to call a special session to arrive at a balanced budget through constitutional procedure.  Far from “assisting” the Legislature in “avoiding deficit spending,” the Governor singlehandedly created a deficit and then used unallotment to rewrite the budget to his liking, while denying the Legislature its constitutionally granted opportunities to respond. 

Justice Page concurs separately to suggest that he would have found the unallotment statute unconstitutional largely because its ambiguity allows these crises to arise. 

The Court’s opinion clearly voids the Diet Program unallotments, and in theory should prevent the Governor from following through with the announced unallotments scheduled to take effect on July 1.  The Legislature and the Governor, already fighting about the current projected shortfall, now has to grapple with an additional $1 to $2 billion of projected deficit.

The DNR Gets It

The Star Tribune today has an article following up on the DNR/Lakeland variance dispute, looking at the constituencies behind the fight.  Legislators have introduced a bill to override the recent Supreme Court decision and “restore” the DNR’s role as a veto point for local-government variance decisions.  Interestingly enough, the DNR opposes the effort:

The DNR doesn’t support the legislative bill to restore its authority to support or deny local variances, Shodeen said. Instead, the DNR now prefers to take contested cases — situations where the agency thinks a city or township hasn’t followed laws already in place — to district court.

This strikes me as exactly the right approach.  Every zoning code has variance standards, and there is a decent body of law surrounding what is and what is not a proper variance.  Anyone bothered by a variance decision can take it to district court, where the city’s decision is tested against those existing standards.  The DNR’s rules, on paper, add nothing to those standards.  They just ensures that the DNR controls the decision, without any requirement to consider opposing viewpoints, or any direct accountability to the public.  The rules (and proposed bill) also ensured that the first round of fighting occurred in the administrative-hearing arena.  Bigger problems arise when the DNR uses this process to shift the goalposts – for instance, substituting “compliance with the intent of the scenic river plan” for “will not alter the essential character of the locality.” 

It’s good that the DNR recognizes that in large part, this is a waste, especially when factoring in the data that the process has really only stopped 2 projects in “recent years,” with 7 others proceeding on past DNR opposition.  There’s no compelling reason either in theory or in practice that the DNR’s objections to a local zoning decision not follow the path of everyone else’s objections – an appeal to district court.

Cities sue the State (just not here)

While nobody in Minnesota chose to hit the briefs over the state budget, in Arizona they might not be so reluctant.  Their legislature (which also made comedy headlines recently by floating a proposal to sell and lease back the state capitol building) passed a freeze on local development impact fees.  Thing is, the freeze passed during a special session in which a state sales tax was the only item before the legislature.  So the cities have been handed a strong case – if they want to run the risk of having the Legislature take a hard look at shared revenue next session in return.  Sound familiar?  (Arizona Republic via Governing)

Unallotment – missing a step?

It’s July 1st, and the “final” numbers are out on the unallotment plan for the biennium that starts today.  I’m still not sold on the idea that an executive tool to deal with the shortfalls at the end of a budget year can be used to shape the budget at the outset of the year.  I think I’ve put my finger on why:

Subd. 4.Reduction.

(a) If the commissioner determines that probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the biennium will be less than needed, the commissioner shall, with the approval of the governor, and after consulting the Legislative Advisory Commission, reduce the amount in the budget reserve account as needed to balance expenditures with revenue.

(b) An additional deficit shall, with the approval of the governor, and after consulting the legislative advisory commission, be made up by reducing unexpended allotments of any prior appropriation or transfer. Notwithstanding any other law to the contrary, the commissioner is empowered to defer or suspend prior statutorily created obligations which would prevent effecting such reductions.

(c) If the commissioner determines that probable receipts for any other fund, appropriation, or item will be less than anticipated, and that the amount available for the remainder of the term of the appropriation or for any allotment period will be less than needed, the commissioner shall notify the agency concerned and then reduce the amount allotted or to be allotted so as to prevent a deficit.

The text is from Minn. Stat. 16A.152, with emphasis on what seems to trigger the unallotment process.  Now, the Commissioner of Finance has sent the Governor a message stating that “probable receipts for the general fund will be less than anticipated, and that the amount available for the remainder of the [2010-2011] biennium will be less than needed.”  This is clearly a cut-and-paste from the statute, right down to the brackets to cram in “2010-2011.”  This begs the question: receipts will be less than anticipated when?  The MMB’s actual estimates that would seem to be in play pre-date the Legislature’s last actions.  In other words, the Legislature “anticipated” the amounts of revenue depicted in those forecasts and updates – which is presumably why they passed additional revenues to support the spending bills.  The Commissioner’s letter giving the Governor the green light compares the November 2008 and Feburary 2009 forecasts, revenue performance in March, April and May of this year, and general pessimism to support his determination that 2010 and 2011 revenue will be “less than anticipated.”  (Note, though, that the year-end rollup from MMB projects 2010-2011 revenues as better than expected in the February forecast).  Of course, this is all data that was available when the Legislature passed the budget – which should set the baseline for our “expectations” of revenue.  Not that much changed between May 22 and June 4 to say otherwise.

Putting cynicism aside, here’s the real structural question: how is even the best analysis on or before June 30, 2009 of “less than anticipated” revenues, a credible “determination of probable receipts” over the entire biennium?  The Governor is proposing cuts and shifts to both 2010 and 2011 budget allocations.   Almost by definition, any forecasting done during budgeting, or even projections done now at the outset of the biennium, is “anticipation” of future revenue.  How can today’s numbers logically support a “determination” of shortfall in March 2010?  March 2011?  The records on the last round of unallotment show it to be a dynamic process highly related to the actual reality of incoming revenue.  Now matter how hard anyone tries, there’s no way to make a credible statement about the reality of revenue performance until a significant amount of the data is in and real revenue can be compared against estimates.

Unallotment, as a budget tool, is intended for adjustments to fiscal reality at the end of a fiscal year.    Without even getting into the separation-of-powers concerns raised, it seems pretty evident that it is not a tool to “fix” the budget at the start of a biennium.  Now the question is, who wants to do anything about it?