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HomeMy WebLinkAboutCity Attorney Memo, Sept 24, 2008MEMO TO: Judy Weyrens FROM: Thomas Jovanovich and Lori L. Athmann DATE: September 24, 2008 RE: S & H/Graceview Development This memorandum is in addition to the City Attorney's August 20, 2008, memorandum and not in lieu of the opinions held therein. 1. PURR. Application process -- documents submitted. In particular the Special Use Permit. How can a special use be granted if the application material required in the Ordinance was not submitted? A. Is the Special Permit Issued in 2002 Valid? The issue was raised as to whether or not the special use permit is valid because all of the regulations and requirements set forth in the Ordinance for granting a PUD may not have been met. In the case of Alexandria Lake Coalition, Inc. v. Douglas County, the Court of Appeals addressed the issue of whether or not permits issue in the absence of strict compliance with the procedures set forth in the zoning ordinance invalidates the permit. There, Alexandria Lake Coalition sought a writ of mandamus from the district court to compel the Douglas County Board to rescind the issuance of a conditional use permit for a townhouse development project which had been granted to the developers. The Coalition argued that the permit was invalid because the County failed to require the developer to secure pre-application approval of the plans for the project from the Planning Advisory Commission. The Court of Appeals held that the County Board's decision to issue a conditional use permit to the developer was not arbitrary or unreasonable. The Board substantially complied with the requirements of the zoning ordinance, and the developer's failure to secure "pre-application approval" of the permit did not harm the Coalition or the public. There is authority for the proposition that a governmental body must strictly follow rules of procedure governing it. See, e.g., State ex rel. Independent School District No. 6 v. Johnson, 65 N.W.2d 668 (Minn.1954). In Chandler v. Kroiss, 190 N.W.2d 472 (Minn.1971), the Supreme Court held that the failure to follow a zoning ordinance precisely in granting a special use permit was not fatal where it was clear that the planning commission and the city council had substantially complied with the requirements of the ordinance in question. In the instant case, any failure to comply with the zoning ordinance is limited to a formal pre- approval application. At the time the permit was issued, a public hearing was held, testimony was given relative to traffic, safety, the nature of the proposed development, any affected owners were given the opportunity to contest the application, and the permit was issued in consideration of that testimony. This stems from an estoppel and vested rights analysis. See Eagle Lake of Becker County Lake Assn v. Becker County Bd. of Com'rs. 738 N.W.2d 788 (Minn. App. 2007) (citing Yeh v. County of Cass, 696 N.W.2d 115 (Minn. App. 2005)(If a Board's ability to rescind permits issued under similar circumstances could provide incentive to land use decision-makers to not comply with the necessary/required procedures, as doing so would allow them to re- address anaction later simply because procedure was not followed). See also Chandler v. Kroiss, 190 N.W.2d 472 (Minn. 1971) (proposition that substance controls over form when making land use decisions). Furthermore, if a special use permit is otherwise valid, the fact that it was granted by motion rather than by resolution is not fatal. Chandler v. Kroiss, 190 N.W.2d 472, 476 (Minn.1971). For the foregoing reasons, the City may be without legal support to now deny a special use permit due solely to its own failure to follow formal application procedures. B. What was covered by the Special Use Permit issued in 2002 Regardless of the purpose and intent for which the special use permit was issued in 2002, a new special use permit must be issued for the apartment complex. In so doing, a public hearing must be held and the Planning Board and City Council will need to consider the ten factors identified under Ordinance Section 52.07, Subd. 3(e), which includes public safety and the need for vehicular approaches to the property so as not to create traffic congestion or interference. The permitted uses established under the 2002 zoning ordinance include single family dwellings, multiple family dwellings, patio homes, rowhouses, townhouses, and twin homes. However, any multiple family dwelling of more than twelve (12) units are only allowed in R-3 zoning districts with a special use permit. See Ordinance Section 52.29, Subd. 4(e). Regardless of whether or not the apartment complex was "included" in the special use permit does not alter the fact that a new special use permit must be issued for the apartment complex. If the Planning Commission determines that the special use permit in 2002 was intended only to permit and approve the PURD with the "mixed residential density", a second special use permit still needed to be issued to the developer for the construction of the proposed apartment complex. In that scenario, a special use permit for the apartment complex has never been applied for, approved, or issued. If the Planning Commission determines that the special use permit in 2002 included the construction of the apartment complex, the permit is now void and the developer must re-apply under the current ordinance. The Ordinance provides that if no substantial construction has taken place within one year of the special use permit being issued, the special use permit becomes void. The Planning Commission may, upon request, extend the period for an additional period not to exceed one year. Ordinance Section 52.8. Because no construction has yet to take place on the apartment complex, and more than one year has lapsed since the special use permit was issued, the special use permit is now void. The Ordinance required two separate and distinct special use permits for this development. First, to allow for the mix residential density. Second, to allow for the construction of the apartment complex, a use permitted in R-3 only under a special use permit. Even if the Planning Commission finds that the PURD was for the entire 91 acres, the proposed development required two separate special use permits. 2. Transfer of Property. The Development Agreement for Graceview II includes the following provision: 8.29 Assignment. This Agreement may not be assigned by Developer except upon obtaining the express written consent of the City. The Development Agreement is a contract between the Developer and the City of St. Joseph. It sets forth the rights and duties/obligations of the parties as it pertains to the construction of Phase II. In reviewing the contract as a whole, the reasonable interpretation is that any duties and obligations undertaken by the Developer in the construction of public improvements cannot be assigned -such as to a subcontractor, or another developer. The duties and obligations of the Developer set forth in that particular agreement have been completed. The Agreement does not pertain to the special use permit for mixed housing or the PUD as a whole. This is supported by the fact that the City and the Developer have entered into separate Development Agreements for each stage of the development. The Developer does not have any rights in the PUD or the special use permit. A special use permit is not a personal license, but rather attach to and run with the land. State v. Dotty, 396 N.W.2d 55, 59 (Minn.App.1986). Case law supports the interpretation that the Development Agreement did not prohibit the assignment or transfer of other construction improvements to be undertaken in compliance with the PUD and special use permit not otherwise included in the Stage II Development Agreement. 3. Completion Date. The Development Agreement for Graceview II includes a completion sate. How does this deadline relate to the proposed development. 4.2 Completion Deadlines. The Developer agrees to proceed with said Plan B Improvements entirely at its expense, and to complete said improvements by June 30, 2004, except for final wear course which shall be completed by September 15, 2005. The construction documents shall establish completion dates at or before the dates shown above. The Development Agreement encompasses only the duties and obligations of the Developer specific to those improvements relating to the construction of Graceview II, which does not include any portion or part of the proposed development of Outlot A. The contract is limited to certain improvements, none of which are relevant to the proposed development. If a final plat is approved, the City of St. Joseph will enter into a separate Development Agreement for the improvements relating to this specific development. In other words, there is no language in the Agreement which states that the ongoing nature of the PURD or special use permit is contingent upon the Developer completing the construction of Stage II on time. Any deadlines are specific to those duties undertaken to complete Stage II of the development. Subpart B. After the September 15, 2005, deadline, isn't the developer required to comply with the current Ordinance and the revised Ordinance in 2005 required PUD to have an underlying zoning district so the property in question would have to be rezoned to R-3. The Development Agreement sets forth or establishes the duties and obligation of the Developer as it relates to the construction of the specific development contained in the agreement. If the Developer did not perform his duties under the agreement (i.e. did not meet the September 15, 2005, deadline), he would be in breach of the contract. The City's recourse would be to claim damages, if any, against the Developer arising from their failure to complete the project on time, or seek specific performance or injunctive relief from the Court compelling the Developer to perform the duties under the contract. For all of the reasons set forth above, the Development Agreement does not pertain to the PURD or the special use permit. This is different than the opinion set forth in the City Attorney's August 25, 2008, legal memo which states that after one year following preliminary approval, the subdivider becomes subject to all applicable performance conditions and requirements of the comprehensive plan and official control, which includes rezoning districts. The question presented is based upon the language of the Developer's Agreement and does not involve the same legal concept. The distinction is that the issue presented in the legal memo deals with municipal statutory law, whereby the issue presented arising out of the Developer's Agreement is based on contract law. There is nothing in the Development Agreement which places this type of contingency on the completion of Stage II of the development. 4. Does the 2002 or the 2008 zoning ordinance apply? The PURD for mixed residential housing was approved in 2002. In 2004, the zoning ordinance was modified. Counties may amend their ordinances and change the status of conditional uses. Minn.Stat. 394.25, Subd. 10 and Minn.Stat. 394.301, Subd. 3 (2006). Generally, as long as the provisions of a zoning ordinance are not incompatible with the state law and are supported by a rational basis related to promoting the public health, safety, morals or general welfare; counties have broad legislative discretion regarding the content of the ordinances. See Honn v. Cit~f Coon Rapids, 313 N.W.2d 409, 414015 (Minn.1981). St. Joseph Ordinance 13 addresses what version of ordinances should apply and the ordinances in effect at the time of issuance would apply. It states that assuming that the special use permit has not lapsed (which in this case it did prior to the amendment), the "repeal of prior ordinances and adoption" of new ordinances shall not effect in any manner "rights and liabilities existing "at the time of repeal and enactment" of new ordinances. Ordinance 13. Because from and after March 7, 2003, the permit became void, and the developer has yet to reapply, any re-application would be controlled by the existing 2008 zoning ordinance. The Court of Appeals addressed the issue of "vested rights" when granting a CUP under the zoning ordinance as it existed at the time the developer filed the application instead of the amended version of the ordinance that was in effect when the county approved the permit in the case of Eagle Lake of Becker County Lake Assn v. Becker County Bd. of Com'rs. 738 N.W.2d 788 (Minn. App. 2007). In avested-rights analysis, courts ask whether a developer has progressed sufficiently with construction or otherwise to acquire a vested right in completing the project under the prior land-use regulations. Ye7~ 696 N.W.2d at 131-32. The vested-rights doctrine exists to protect landowners from unfair changes in zoning laws targeted at stopping partially completed development. Icl • see also Nae~ele Oz~tdo~~r Adve~°. Co. c~• Minneai~c~lis v. Ci ~ ofLakeville, 532 N.W.2d 249, 254 (Minn.App.1995) (holding that, when appellant did not submit permit application until four years after the ordinance in question was amended, appellant had no vested rights), review denied (Minn. July 20, 1995). However, any "right" to construct multiple dwellings containing more than 12 units in R-3 terminated when the special use permit expired and became void. Furthermore, Courts have also applied the estoppel doctrine in cases similar to the one at hand. The estoppel doctrine may be applied "where justice demands" in order to prevent a local government from inappropriately "exercising its zoning powers." I'eh 696 N.W.2d at 131. Thus, "estoppel is available as a defense against the government if the government's wrongful conduct threatens to work a serious injustice and if the public's interest would not be unduly damaged by the imposition of estoppel." Icl. (quotation omitted). "But if there is no wrongful conduct by the government, this court's inquiry should stop." Icl In Eagle Lake of Becker County Lake, the Court held that estoppel may be proper if there were any representations by county officials that the former ordinance would apply. Here, there is no wrongful conduct on the party of the City. It was only due to the developer's own failure to either substantially construct the multiple dwelling units, or request an extension, within the time line established under the ordinance. For these reasons, estoppel does not apply to the case at hand. 7. Senior Housing. How was this labeled in the PURD. It falls under R-3. Is there a difference between the two housing types? The same analysis would apply as that discussed above relative to apartment complexes. Although senior living units are a permitted use in R-3 residential district, any "multiple family dwelling" of more than 12 units, which is what is proposed, requires a special use permit.