Opinion
No. A04-1183.
Filed May 31, 2005.
Appeal from the District Court, Anoka County, File No. C7-03-12581.
James M. Susag, Larkin Hoffman Daly Lindgren Ltd., (for respondent City of Oak Grove).
Howard A. Roston, Malkerson Gilliland Martin, Llp, (for appellant).
Considered and decided by Stoneburner, Presiding Judge; Lansing, Judge; and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Daniel Orttel appeals the district court's order granting the City of Oak Grove's petition to acquire by eminent domain four lots owned by Orttel that are located in a redevelopment area designated to remove substandard or blighted structures and provide housing and related facilities for low- and moderate-income senior citizens. Orttel contends that the condemnation of his property does not serve a public purpose, is not necessary, and constitutes an unlawful acquisition of private property. Because the record establishes that the condemnation will remove blighted or substandard structures and advance the public purpose of providing senior housing and related redevelopment, that the acquisition is neither excessive nor for a speculative purpose, and that it is consistent with both the city's comprehensive plan and stated policies, we affirm.
FACTS
Daniel Orttel owns four lots in the Lake George area of the incorporated city of Oak Grove. Three of these lots have structures on them, and the fourth, which is the southernmost lot, is vacant. As part of its overall redevelopment of the area, which it refers to as the "Lake George Redevelopment Project," the city filed a quick-take condemnation petition for all four lots in 2003. The city determined that the condemnation was necessary to remove substandard structures, redevelop the area, provide for a senior residential facility, and develop a senior community.
Orttel challenged the condemnation petition, and the district court conducted a hearing on the challenge. Based on the evidence presented at the hearing, the district court concluded that the condemnation served a public purpose, that it was necessary, and that it was lawful. Orttel appeals each of these determinations.
DECISION
In exercising its statutory authority to condemn, the City of Oak Grove must demonstrate that the condemnation is necessary and authorized by law to achieve a public purpose. Minn. Stat. §§ 117.035, .075 (2004); see also Minn. Stat. § 117.016, subd. 1 (2004) (requiring public purpose in related context of joint acquisition of land by governmental entities). The determination of public purpose and necessity are questions of fact, and thus we affirm a district court's findings on these issues unless the findings are clearly erroneous, suggesting that a mistake has been made. Hous. Redevelopment Auth. v. Schapiro, 297 Minn. 103, 109, 210 N.W.2d 211, 214 (1973); In re Condemnation by Minneapolis Cmty. Dev. Agency v. Opus N.W., 582 N.W.2d 596, 599 (Minn.App. 1998).
I
It is well established that a governmental body may exercise its power of condemnation only for a public use or purpose. Schapiro, 297 Minn. at 106, 210 N.W.2d at 213. Although Minnesota's constitution requires that a taking be for a "public use," Minnesota courts have historically defined "public use" as equivalent to "public purpose" and concluded that, if the governmental action constitutes a public purpose, it also constitutes a public use that permits the exercise of the eminent domain power. Minn. Const. art. I, § 13; Visina v. Freeman, 252 Minn. 177, 187, 89 N.W.2d 635, 645 (1958) (observing that project that has public purpose generally meets public-use requirement for eminent domain); Hous. Redevelopment Auth. v. Walser Auto Sales, Inc., 630 N.W.2d 662, 668 (Minn.App. 2001) (noting that Minnesota courts have used "public use" and "public purpose" interchangeably). Consistent with this determination, 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)).
The city's stated purposes for the entire area include redevelopment of the area according to its comprehensive plan, removal of substandard structures, and the construction of housing for low- and moderate-income senior citizens. The acquisition of blighted areas or the removal of substandard structures serves a public purpose, and the "subsequent transfer of such lands to private parties is incidental to the main public purpose." Schapiro, 297 Minn. at 107, 210 N.W.2d at 213; see also Walser, 630 N.W.2d at 668-69 (determining removal of substandard structures serves public purpose). Condemnation of land in furtherance of a city's redevelopment plan is also a valid public purpose. Walser, 630 N.W.2d at 668-69. Thus, the city's stated reasons constitute a valid public purpose. We turn next to the question of whether the record supports a conclusion that these are in fact the purposes that are achieved by the condemnation.
We first evaluate the evidence supporting the determination that the condemnation serves the public purpose of removing substandard structures. Although Orttel contends that the city made insufficient findings to support condemnation for this purpose because the resolution referred to in the petition does not specifically refer to substandard structures, the analysis includes not only the recitations in the petition, but also the contents of the underlying record. See Hous. Redevelopment Auth. v. Minneapolis Metro., 259 Minn. 1, 15, 104 N.W.2d 864, 874 (1960) (providing that any evidence in record that supports existence of public purpose is sufficient).
The record contains repeated references to the substandard structures on Orttel's land and the problem of blight. The city initiated an assessment of the property and structures in the redevelopment area in 2001. This assessment, which the city incorporated into its resolutions, indicated that 100% of the structures were substandard, requiring repairs that cost more than 15% of the price of constructing a new structure of the same size. The report explicitly stated that Orttel's two buildings were substandard because they required extensive repairs and did not comply with the city's code. Even if Orttel's structures had not been 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 Schapiro, 210 N.W.2d at 213 (observing that elimination of blight on area basis serves public purpose). The undisputed evidence substantiates that the established public purpose of eliminating blighted or substandard buildings motivated the condemnation; this purpose alone is sufficient to justify the condemnation.
Orttel disputes that the city has authority to condemn for redevelopment and the removal of substandard structures because the city has no housing and redevelopment authority (HRA), and only an HRA may condemn for these reasons. This argument has no merit. The city established the Economic Development Association (EDA) and, pursuant to statutory authority, granted it the powers of an HRA. See Minn. Stat. § 469.091, subd. 1 (2004) (permitting city to establish EDA with authority of HRA). The city properly exercised its authority to identify and condemn areas that are substandard and to initiate redevelopment plans for the welfare of its citizens. Minn. Stat. § 469.003, subd. 1 (2004). The city concluded that the "sound development of the economic security of the people in the City depends upon proper redevelopment of substandard, blighted, and/or marginal property." This conclusion is not arbitrary, unreasonable, or capricious in light of the record and is therefore entitled to deference. See Minneapolis Metro., 259 Minn. at 16, 104 N.W.2d at 875 (identifying appropriate review standard to be whether decision is "arbitrary, unreasonable, or capricious").
Orttel also disputes that the redevelopment of the property is for a public purpose because private developers will be responsible for the project. At the outset, we note that this argument has no implications for the condemnation of the southern portion of the property, which will be the site of a 52-unit senior housing facility. Under an executed contract with the Anoka County Housing and Redevelopment Authority (ACHRA), the county will own and operate this senior facility for the benefit of the city's senior citizens. Therefore, Orttel's argument that private interests override the public purpose cannot apply to the southern portion of the property because no private party will be involved in the ownership or operation of the development.
Turning to the northern parcel of land, the evidence demonstrates that the condemnation of this parcel serves a predominantly public purpose and that any benefit to private developers is incidental. A study of the needs of seniors in the community reported a need for housing, particularly housing for low- and moderate-income seniors and housing that permits greater interaction among people who have difficulty with mobility. The study concluded that the traditional 2.5-acre residential lots are less desirable for the elderly because of age-related health and mobility issues. Among its recommendations for addressing the seniors' housing needs, the report suggested the city consider zoning ordinances and planned unit developments (PUDs) to permit a community with a greater density of housing units that would allow specialized care in senior housing facilities.
Furthermore, the northern parcel of land is an integral part of the city's overall redevelopment plan, which envisions a community for senior citizens with the senior housing facility at its core. Although the city intends to transfer the area to private developers, any economic benefit to a private party is incidental to the city's public purposes of redeveloping the area and providing a senior housing community. The private developers are simply a means of achieving the goal of redevelopment, blight removal, and the construction of housing for low- and moderate-income senior citizens. Although private parties will benefit, nothing in the record suggests that the city's decision was motivated by this potential profit. We therefore conclude that the district court did not err in determining that the condemnation served the valid public purposes of removing blight, redeveloping the Lake George area, and providing housing to Oak Grove's senior citizens.
II
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 v. State, 390 N.W.2d 757, 764-65 (Minn. 1986); Opus, 582 N.W.2d at 599. 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. "Speculative purposes will not support the assertion of necessity," and a city may not stockpile property. Regents of Univ. of Minn. v. Chi. N.W. Transp. Co., 552 N.W.2d 578, 580 (Minn.App. 1996) (quotation omitted), review denied (Minn. Nov. 20, 1996). But "[p]ublic purpose and necessity cannot be thwarted . . . by alleging that the purpose for condemning the property is too speculative if in fact the project is officially supported by the governmental entity and ordinary agreements are in place to realize the project." Walser, 630 N.W.2d at 670 (quotation omitted).
It cannot reasonably be argued that the removal of substandard structures is a speculative purpose or that condemnation would not achieve that end. The executed contract for the southern part of the land also dispels any claim that the project is speculative. Orttel, however, asserts that the contract with ACHRA is not certain because an environmental assessment, a condition precedent to the contract, has yet to be completed. But the contract permits, as an alternative to the environmental assessment, an indemnity agreement, which is complete and attached to the final contract. Therefore, all conditions precedent to the contract with the ACHRA have been satisfied with the exception of the land's acquisition, which awaits the conclusion of this case. Because the contract is in place to realize the project, the purpose is not speculative.
The record also provides adequate evidence that the redevelopment of the northern parcel is not speculative. The city has a master plan for the redevelopment area that provides a comprehensive blueprint that overcomes a claim of speculation. See Regents, 552 N.W.2d at 580 (basing its decision, in part, on absence of master plan for project). To support his argument, Orttel points to the absence of any contracts, definitive plans about the exact layout or configuration of the northern portion, and the mayor's statement that the details for developing the northern portion were speculative. The mayor, however, did not say that the redevelopment plan, with its proposal to redevelop the entire area, was speculative, and the reference was not made in a context that suggested a legal use of the term.
Because redevelopment is a valid public purpose, the city need only demonstrate that a part of the redevelopment, particularly development in accord with its objective to provide housing for low- and moderate-income senior citizens, is definite. It has met this burden. The record shows that the city created a Tax Increment Financing district to facilitate its plan, the mayor testified that development of the area will proceed in the reasonably near future, and the plan provides that this development will address the senior citizens' housing needs. The city is acting pursuant to a well-established community plan to fulfill the broad purpose of redeveloping the area. And it has determined, in its legislative capacity, that this property is necessary for the redevelopment area. The city's actions were not arbitrary, unreasonable, or capricious.
Orttel's final challenge to the public purpose is that the condemnation of the northern portion should fail because it is excessive. The authority that he advances for this argument is not persuasive. The single Minnesota case cited for this argument provides qualified support because, although it recognizes the general principle that the condemnation cannot exceed the underlying necessity, it bases that recognition on the overarching principle that the court should not interfere with the legislature's determination of the necessary scope of the condemnation to serve its stated purposes. 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."). And Orttel's additional authority involves, unlike the present case, situations in which the city has failed to state any public use or has acknowledged it only needs a small portion of the property. See, e.g., City of Cincinnati v. Vester, 281 U.S. 439, 447, 50 S. Ct. 360, 363-64 (1930) (determining that condemnation was excessive because city offered no proposed use for property and any use would be unrelated to immediate project); Hallock v. State, 300 N.E.2d 430, 432 (N.Y. 1973) (invalidating condemnation because city only needed 300,000 cubic yards of gravel, but sought to acquire 4,300,000 cubic yards).
The record does not support a claim that the area designated for condemnation is excessive. The city has a redevelopment plan for the area with the substantiated purpose of building a senior citizen community and infrastructure for the senior-housing facility, including a septic system, holding ponds, and a road. Although the city might be able to find an alternative placement for this infrastructure, the city's determination that improving the existing infrastructure on the northern parcel is more economical and beneficial to the senior facility than any alternative suffices to demonstrate the necessity of acquiring the entire area. Significantly, the condemnation of the northern portion of the property is a necessary step in realizing the larger purpose of redevelopment. Because the condemnation of the property does not exceed the scope of the redevelopment area, which the city found necessary, it is not excessive.
III
Orttel's remaining arguments challenge the lawfulness of the condemnation within the context of the comprehensive plan and the adequacy of the condemnation petition. A city may not "adopt any fiscal device or official control which is in conflict with its comprehensive plan." Minn. Stat. § 473.858, subd. 1 (2004). A comprehensive plan contains objectives, policies, standards and programs to guide public and private land use. PTL, L.L.C. v. Chisago County Bd. of Comm'rs, 656 N.W.2d 567, 574 (Minn.App. 2003). Cities adopt official controls, such as zoning ordinances and PUDs, to implement the policies and goals of the land use plan. Id. Therefore, a plan that complies with the city's zoning ordinance conforms, by definition, with the comprehensive plan because the official controls act as the regulatory implementation of the comprehensive plan's general policies. Id. (concluding that comprehensive plan is insufficient basis to deny preliminary plat approval when proposed use is inconsistent with comprehensive plan).
Orttel, however, has failed to establish that the condemnation or redevelopment plan conflicts with the comprehensive plan. He is correct that the minimum lot size for the area, as it is classified on the land use map, is 2.5 acres and that the PUD, the zoning ordinance, and the redevelopment plan call for a lot size of 10,000 square feet. This anticipated deviation, however, does not represent a conflict for three reasons.
First, the comprehensive plan contemplates a flexible land use approach and permits zoning ordinances that are "consistent with the spirit and philosophy of this comprehensive plan." The redevelopment plan is consistent with the comprehensive plan's policies of maintaining a rural setting while providing for its citizen's residential needs. A PUD that is consistent with the comprehensive plan's intent does not violate the comprehensive plan.
Second, the comprehensive plan anticipated that PUDs and zoning ordinances would alter lot sizes and provide for clustering. Several sections of the plan explicitly refer to the use of these official controls to carry out the purpose of the plan. As part of its discussion of density in residential districts, the plan notes that the blanket density of the "residential district would be established with the provision that a planned unit development could be proposed that would cluster units and/or reduce land area requirements." And, in its implementation section, the comprehensive plan notes that PUDs would "permit relaxing of strict (and often cookie cutter) lot and building siting provisions. Specific lot sizes, lot widths or depths, frontages, and setbacks could be varied based on an overall site development plan." Because the comprehensive plan explicitly provided for the modification of density requirements, the city's redevelopment plan does not conflict with it.
Third, the redevelopment plan complies with the amended zoning ordinance and the overlay PUD. Because these official controls act to implement the comprehensive plan, consistency with these controls also indicates consistency with the comprehensive plan. Furthermore, in deciding to pass a zoning amendment rather than amend the comprehensive plan, the council specifically noted the zoning amendment's conformity to the comprehensive plan as a cluster development, recognizing that "the general understanding of a cluster development is reduced lot size and a community collector system." In light of the city council's observations that the PUD and zoning ordinance were enacted in compliance with the plan, the condemnation does not conflict with the comprehensive plan and is therefore lawful.
Orttel's final argument is that the condemnation is unlawful because Oak Grove did not meet the statutory requirements for filing a petition for condemnation. A condemning authority must file a petition that identifies the subject property and states "for what purposes it is proposed to be taken." Minn. Stat. § 117.055 (2004). Oak Grove's petition explains that it is acting upon a finding that it needs to eliminate substandard structures and redevelop the area. It also references a city council resolution that states the city has a public purpose in condemning the land for redevelopment. This reference to the resolution does not suggest that the city's findings were confined to this resolution, and the record contains numerous references to the city's conclusions about the need to remove substandard structures, construct low- and moderate-income senior housing, and redevelop the area. The statute simply requires that the party state the purpose for taking the land, and the petition does this on its face.